Why Your Company Needs a Good Business Plan
Some recent surveys have indicated that there is a correlation for small businesses between having a business plan and the profits they make. This suggests that any SME without a business plan could be losing out on potential profits. That may seem quite a surprising assessment but significantly more companies with a business plan made a profit than those companies that did not have a business plan. In some industries only around half of companies with a business plan made a profit whereas nearly three-quarters with a plan made a profit. That is a stark difference indicating that good business planning is more likely to result in success, and when you say it like that it is perhaps not so surprising.
Some businesses do not have a formal plan of any sort and some do not feel they need a business plan. But having no business plan could mean a company is not achieving its full potential, even if it is making a profit.
So why do some businesses not have a business plan or not feel the need for one?
It is possible that some businesses have a very simple business model, for instance a consultancy firm with just a few employees. It may also be possible that some small business owners do not know where to start in putting a plan together – it can seem like a daunting prospect and it does take time and effort. However, most accountants can help prepare a business plan and the benefits, in terms of increased profits, could be substantial.
Some of the very extensive business plans that I have seen publicly available online can actually be a further deterrent to small businesses because they are often for very large, complex businesses. But a business plan does not need to be long or excessively detailed to be effective and you can start to reap the benefits of business planning with just a simple but concise plan; whereas failure to plan at all could be affecting your potential to grow and increase profits.
If you know you need a business plan but don’t know where to start take a look at our post “The Basic Elements of a Business Plan“.
Tuchbands is a firm of accountants in North London that offer a wide range of business-related services including:
- Preparation of financial forecasts
- Assistance with loan applications
- Ways of minimising your tax liability
- Handling HMRC investigations