Commonwealth Bank research reveals many small and medium enterprises (SMEs) are hopeful of growing their revenue and profit this financial year even though a third are yet to have a business plan in place.
The research, based on a survey of more than 500 SMEs, found many businesses are optimistic about the potential for financial progress as we enter into the new financial year, with more businesses anticipating increases rather than decreases in revenue (45 per cent increase; 28 per cent decrease) and profit (40 per cent increase; 33 per cent decrease).
When it comes to planning for the financial year ahead, smaller businesses are less prepared. Of those businesses with an annual turnover of less than $1 million, 44 per cent do not have a business plan in place, compared with 22 per cent of SMEs with an annual turnover of between $1 and $10 million.
More than half (51 per cent) of SMEs were yet to commence work on their 2015 business plans at the time of the survey*, and only a small proportion of respondents (16 per cent) had started revising their business plans.
While future planning may not always be a high priority for time-poor business owners, it’s not too late to put some simple strategies in place to maximise business performance this financial year, said Adam Bennett, Executive General Manager Local Business Banking, Commonwealth Bank.
“While it’s encouraging to see some small businesses have revised their new financial year business plans, many are not using this tool to better identify opportunities and understand future risks facing their business,” Mr Bennett said.
“Start small and keep it simple. The first step towards developing a sound business plan is clarifying your business goals and key success drivers. A business plan built on these fundamentals will help keep you on track this financial year.”
The research also found the top priorities for SMEs this financial year are cost reduction (29 per cent), sales and marketing (23 per cent) and better use of technology (14 per cent). Key concerns for the new financial year include domestic economic conditions (55 per cent), government policy (52 per cent) and rising fuel and energy costs (41 per cent).
“The research indicates that managing costs and improving sales and marketing performance are the key priorities for small businesses this financial year. A business plan provides SMEs with a framework to define and achieve these goals, while also outlining a clear vision and strategy to enhance business performance.
“A large number of businesses expect short term profit growth and a robust business plan can assist with mapping out a path to realising this uplift. A business plan includes financial forecasting, which allows businesses to keep track of ongoing cash-flow and capital requirements to lay the foundation for longer term growth,” Mr Bennett said.
To assist SMEs prepare a business plan, Commonwealth Bank has created a Business Plan Toolkit. It is an easy to use, step-by-step guide to developing a business plan, and can be downloaded from: https://www.commbank.com.au/business/can/business-templates-and-forms/business-plan-toolkit.html.
*Notes to Editor:
A total of 507 businesses with an annual turnover of less than $10 million were surveyed from 23 – 27 May 2014 by independent research company, ACA research.