BUSINESS PLANNING FAILURE THREATENS FUTURE OF UK SME’S

54% of businesses have no written business plan and are endangering their future prosperity and survival, according to research carried out by PKF Accountants.

While 45% of businesses claimed to be working to a plan, 46% said they had a strategy but no plan, and 9% described themselves as having no plan at all. The most common reason given for having no plan was that the ‘owner makes the decisions’ (25%), followed by ‘no time to formulate a plan’, ‘just moving the business forward’ and that ‘the company is reactive’ – each on 17%.

Encouragingly, 65% of the companies interviewed said they were projecting growth of up to 25% in 2007 while a further 23% anticipate even greater growth. Nearly a third of companies (31%) said they were planning to make one or more acquisition in the year ahead with the majority of these (66%) looking to acquire a competitor.

PKF Corporate Finance Partner, Mark Lister welcomed the level of confidence among SMEs but sounded a note of caution. “The research findings suggest that businesses are riding the wave of relative economic prosperity in the UK but many appear to be forgetting some business basics“, he said.

“Businesses need to balance their drive for growth with ensuring that strategies for tackling tougher times are in place. Recent interest rate rises should sound a warning that favourable economic conditions should not be taken for granted; Managing Directors need to plan for the future so that their businesses are capable of surviving and thriving during leaner periods too.”

“Effective planning is critical when building a successful business and, while companies can succeed without proper planning, the most effective are generally those that are aware of the opportunities and threats in the marketplace so that they can plan how to achieve targets and monitor their progress. Growth is generally good for business but companies need to understand the implications so that they don’t create ‘boom and bust’ situations.”