The UK’s 5.5 million SMEs are the backbone of the economy, contributing significantly to job creation, innovation and GDP. However, 95% ultimately fail, which is a heart breaking statistic.
With less than 25% of SMEs having a written down, shared Business Plan, it doesn’t take a brain surgeon to figure out the correlation. The lack of a well written Business Plan can be a grave misstep for SMEs. The pitfalls of not having a plan have far-reaching consequences, often fatal, hindering their potential for success.
Business planning is necessary. Here’s how not having a business plan impacts a small business.
Directionless: A Business Plan serves as a roadmap (SatNav) for the future. Without it, SMEs are left to navigate the competitive and fast changing business landscape aimlessly. This can lead to wasted resources, erratic decision-making, and vulnerability to economic downturns.
Stunted growth: A lack of strategic planning prevents SMEs from identifying new markets or scaling operations. This results in stagnation, missed opportunities, and an inability to compete with more agile competitors.
Financial instability: Businesses without growth plans find it challenging to secure funding. Lenders and investors are more likely to support SMEs with a clear vision, purpose and strategy for growth. This financial shortfall can hamper essential investments and working capital, hindering progress.
Ineffective resource allocation: Without a plan, SMEs often allocate resources haphazardly. They don’t recruit early enough or they rush it and get it wrong. This leads to inefficiencies and underutilisation of capital, manpower, and time.
Innovation lag: SMEs that lack a growth plan also miss out on embracing new technologies or innovative. This can result in becoming outdated and less competitive and less profitable in the long run.
Uncertain employee morale: Employees in SMEs thrive when they have a clear sense of vision, direction and purpose. A lack of a plan leads to uncertainty, decreased morale, and high turnover rates.
SMEs that neglect to develop a Business Plan are exposing themselves to several pitfalls that have often severe repercussions. A well written (single page) plan provides not only a roadmap but also a vision, purpose, measures and strategies, helping you to overcome challenges and seize opportunities.
In an ever-evolving business world, it’s vital for SMEs to develop and regularly update their growth plan to ensure a brighter and more prosperous future.
Click here for access to Strategy On A Page, the unique business planning tool Tendo uses with all of our 1-2-1 clients, and get started on yours today.