Almost half of Australian businesses (47 per cent) spend either no time (11 per cent) or less than two hours a week (36 per cent) planning for their business and future success, new research from Commonwealth Bank has found.

And many businesses that spend more than two hours a week on planning say this activity is not highly effective or that they have no way to specifically measure its impact.

Commonwealth Bank has looked into the major stress points and planning effectiveness among Australian businesses as it makes available its new business planning and insights tool to more of our business customers following a smaller release earlier this year.

Claire Roberts, Commonwealth Bank Executive General Manager Business Banking SME, said: “Business owners and managers are saying they don’t have a lot of time for planning or that this investment in time is not as effective as they want or expect.

“What we know is that small businesses in particular are usually time poor, and not all have the right tools to support effective business planning. So in releasing the Daily IQ tool via our online banking platforms, to our small to medium business customers this month after an initial release to smaller group earlier in the year, business planning and monitoring has never been easier.” 

Daily IQ, provided at zero cost to Commonwealth Bank customers and available through their online banking, combines business and financial analytics to provide firms with personalised business insights into their cash flow, business performance (including against their industry), as well as the purchasing behaviours of customers including repeat purchases, average spend, age, and location.

The business ‘stress points study’ also found 45 per cent of businesses are spending more than 100 hours a year on business planning (over two hours a week), which includes 16 per cent that allocate more than 260 hours each year (over five hours a week).

While many businesses are dedicating a significant amount of time to forward planning, the majority (54 per cent) have indicated they are falling short of realising its full potential, claiming that their planning activity is not highly effective. In addition, more than one in four do not have the ability to measure their planning outcomes.

Commonwealth Bank’s research also shows that the most stressful areas of running a business for vast majority of Australian businesses are:

• Financial and revenue performance (47 per cent moderate to high stress).
• Sourcing business growth opportunities (41 per cent moderate to high stress).
• Managing cash flow (41 per cent moderate to high stress).

“The issues keeping business owners and operators up at night are, in part, linked to the changing business landscape.  In the past, we typically saw cash flow as the cause of the greatest level of concern, but businesses now have to consider the impact of a broader range of longer-term factors, such as disruptive technologies and international competition.”

In a stark finding, despite financial performance and competition being ranked among the greatest areas of stress, most businesses (54 per cent) have limited to no understanding of how their financial performance is tracking year-on-year, or how they compare to their industry peers (74 per cent).

“Having an intimate understanding of financial performance, the industry in which you operate, and about customer needs and preferences, can really set a business apart in a competitive marketplace and that is why we have developed our Daily IQ so businesses can easily obtain business insights from a range of data,” Ms Roberts said.
 
Ms Roberts said the research suggests that businesses with a positive outlook were likely to spend more time planning and measure its impact, have systems in place to track and understand customers, have the ability to precisely identify their year-on-year financial performance and have a stronger understanding of how they compare to others in their industry.

Notes

Available case studies

• The following businesses are available to discuss the impact of the research findings on their business and outlook for business planning. This includes providing commentary on how they effectively plan to manage top stress points and external pressures, and the tools they use that provide a competitive edge.
      1. A national multichannel retail business with an 80-store network across Australia, New Zealand and the US. This     business is using data and insights to carefully track their financial performance, and using customer analytics to plan     new store openings and targeted marketing activity.
      2. A fast-growing Queensland based hospitality group operating multiple bars and restaurants. This business is using     customer and sales data to more effectively allocate staff during peak times, and to increase the effectiveness of their     marketing activities.

About the research

• Commonwealth Bank surveyed decision makers within 321 Australian businesses with annual turnover of up to $100 million. The survey focused on the degree of stress experienced relating to key areas of running their business, effectiveness and measurability of business planning activities, and how well they understand their own organisations. The survey was conducted by KPMG Acuity on behalf of Commonwealth Bank.

About Daily IQ

• The market leading Daily IQ tool provides business customers with access to a data and analytics service accessible through online banking portals CommBiz and Netbank at no cost. The platform focuses on three key areas designed to optimise cash flow, enhance performance and to help businesses better understand and grow their customers.
• To optimise cash flow, the tool analyses linked accounts to visualise the cash position and the cash coming in and out of a business either daily, weekly or monthly. It also tracks against the same period last year.
• To optimise financial performance, a business can visualise their sales metrics, busiest times of the day and week by transaction volumes, and total card sales compared to last year.  It also includes an industry sales comparison tool, which uses Commonwealth Bank card data to compare sales against the broader industry, as well as a foreign exchange forecasting tool to assist with the management any potential foreign exchange exposure.
• To better understand their customers and grow the number of customers, an analysis of Commonwealth Bank card sales powers insights into new versus repeat customers and key details such as average sale per customer, average total spend, transaction size and number of visits. Businesses can also look at average customer gender, age and location.