As we enter the new financial year, it’s clear the challenges of COVID-19 will be with us for at least several months more. Fortunately, there are technology solutions that can help small business during this difficult time. They can boost the likelihood of being paid promptly, reduce the compliance burden of tasks such as JobKeeper, Read More…
Australia’s small businesses: optimistic or foolhardy?
Mon 2 November 2015 - 11:20 amFeatured | Management | Managing | Managing | Marketing | Marketing | Opinion | Small Business | Starting | Strategy
One of the requirements for businesses to secure a bank loan is to have a formal business plan in place. According to the State Government of Victoria’s Business Victoria website, “When applying for a business loan, it’s essential to prepare a detailed business plan and fully inform the lender about your proposed venture. This information helps the lender to provide you with the right type of finance and advice.”
However, new research from DBM Consultants’ Business Financial Services Monitor (BFSM) shows that having a business plan is not the norm for most micro and small businesses across Australia, with only four in ten small business having a business plan, and micro businesses trailing behind with only one in five.
With these figures equating to an astonishing 77 per cent of businesses* not having a business plan, let alone a marketing plan (86 per cent), it’s an indication that small and micro businesses are either optimistic about the future of their business, or are too busy dealing with the day-to-day aspects of their businesses.
Whilst the majority of Australian businesses are very small, and quite a few don’t borrow money, it’s important for businesses of all sizes to recognise the importance of having a business plan as not only does it serve as a compliance document, but it gets people actively thinking about and documenting where they want their business to be in the medium to long term.
Results from our recent BFSM show that certain industries across Australia are notably more prone to play things by ear, with companies in construction, agribusiness and utility services the least likely to have a business plan, equating to less than 15 per cent amongst them. At the other end of the spectrum are mining and education – however, perhaps surprisingly, only around four in ten of them have a business plan. Across all industries, it’s alarming that of all small and medium Australian businesses only 23 per cent have a plan in place.
Findings from the BFSM show an even lower up-take by companies for a marketing plan – with just over a quarter (27 per cent) of small businesses and 12 per cent of micro businesses having one. In a time where we have much greater capabilities for managing our own marketing, through the digitisation of key communication channels, it perhaps comes as more of a surprise that small and micro businesses don’t have a marketing place in plan, than it does a business plan.
Whilst many companies believe that investing in a business or marketing plan is a big expense, especially those that are small in size or more traditional in their operations, it’s important that businesses at least assess the value these plans can bring to their business before ruling them out – looking long term at the benefits such planning can have, not only on the bottom line but on the reputation and morale of the company.
About the author:
This article was written by Maria Claridad, Director of DBM Consultants, a leading provider of research based advice and engaged by many of Australia’s largest blue chip companies and government organisations. Maria has had more than 20 years experience as an advisor to major financial institutions in Australia and Asia.