Wednesday, 3rd December 2008
The National Australia Bank's Business Planning Survey has revealed a resounding level of complacency amongst business owners when it comes to planning for the future, with 40 per cent not completing a business plan.
Despite being faced with increasingly uncertain economic conditions as 2009 approaches, 32 per cent of SMEs believe they are too small to warrant a business plan, 21 per cent lack time to write one and 15 per cent believe they don't need one.
Geoff Greer, Regional General Manager of Business Banking Australia says it has never been more important for Australian businesses to plan for what's ahead, warning that business owners are playing a potentially dangerous game without one.
"Australian businesses are taking a big risk, if they enter 2009 without an up to date business plan. While in recent times a booming economy has meant many businesses have enjoyed success without a great deal of planning, as business conditions plummet and belts tighten, small businesses need to plan for unsteady times ahead," says Greer.
The survey indicates a false assumption held by many businesses that they can be too small for a business plan. Greer says that this group is particularly vulnerable to instability in the market and economy, and without a business plan, they may face the full force of any flux in the economy.
"Smaller SMEs do not have the buffer or protection of larger organisations. This is why it is critical that businesses of any size have a business plan, which will help them survive the tough times, as well as grow and succeed in their market."
The most likely businesses to complete an annual business plan were those with a turnover over $1 million (41%), those in capital cities (25%), and those in the accommodation, café or restaurant (28%) or services (25%).
"A good business plan doesn't need to be long and complicated It should act as the basic blueprint for your business to provide you with a clear direction, taking into account the variables and external factors which may impact your business.
"A business plan should not be an afterthought. You should set achievable and measurable business goals and consider the economic, geographic and business environment you are working under," Greer said.
"A strategy that incorporates financial planning and succession planning will help your business grow. Unexpected costs, business conditions and any pending crisis will have been planned for, making your business much more resilient and prepared for the challenges ahead."
Geoff Greer suggests the following for Australian small businesses starting a business plan for 2009:
- Trading cycles, costs and expected cash-flow should be reviewed and reassessed. If you believe that the tightening market will affect one of these aspects record it in your business plan. There is no use planning for a best case scenario, as businesses needs to plan for the reality of their environment.
- Get support and advice from your business peers and experts who have an in-depth knowledge of finance and business. Planning around a changing business environment can be challenging, so utilise all resources available.
- Make your business goals clear, measurable and time specific. Ask yourself: What am I selling? Who will benefit from my service? What will make my business different? Where do I want to be in six months/ one year/ ten years?
- Undertake a SWOT analysis of your business. It is important to gain insights into the economic, geographic and business environment you are entering. This will also help you establish and refine your goals.
- Consider your market and who you are competing with for your customers' attention. At NAB we see many business owners who enter the market with no idea what they are up against. It pays to know about the business in the next suburb offering the same service only at a better price.
Important note NAB has not taken into account your objectives, financial situation or needs and recommends that you consider whether any advice in this article is appropriate for your circumstances.
About NAB Business and Private Banking The National Australia Bank employs over 5,650 business banking specialists and 450 financial planners and specialists at over 158 business banking centres Australia wide. It is one of the market leaders in providing business banking services to Australian business. For further information visit www.nab.com.au/business.
For further information:
Media Yolande Hutchinson Ph: 0409 656 136