According to SmallBusinessUK, four in ten small companies don’t make it past five years, while one-third of small to medium size enterprises (SMEs) don’t make it past their 10th birthday. The reality is that SMEs often struggle to compete with larger corporate brands and the economic squeeze has resulted in the development of a ‘cash-conscious society’.
Subsequently, this means businesses are having to think and act smarter to secure the revenue they need.
That’s why formulating a strategic plan is vitally important in order to give your business every chance of succeeding. Yet, despite this factor, Barclays recently stated that around one in four small businesses doesn’t have any strategy in place to support their business growth.
The MD for Business Lending and Enterprise at Barclays, Rebecca McNeil, recently commented, “Having a business plan is fundamental for a small business. It defines exactly what you want to achieve, how you plan to achieve it across a set time period and is a sure fire way to ensure that growth targets and plans are being met.”
“Importantly, when a business is in trouble, having a solid plan can help to steer it back to good health. A lack of succession plan can put the future success of a business at risk, so this needs to be considered far earlier and more formally than the results show. What’s important is that small businesses feel confident about their future and have the necessary tools in place for growth,” she added.
Findings from Exact also concur, revealing that 70% of SMEs who had a plan in place were more likely to be profitable than 52% who didn’t have one.
Further research found that only 47% of small businesses in the UK have a recorded business plan in place while 25% just have an informal verbal one. Additionally, only half of SMEs have a succession plan.
In essence, this means that businesses who do have a strategy in place, might not be going into enough detail.
Understanding the importance of an in-depth business strategy
In it’s simplest form, a business strategy is ultimately a plan for future operations and functionality of a company over the next few years.
However, there are a lot more elements to consider here. It goes beyond the basic understanding of finances and marketing. Instead, an in-depth business strategy should analyse the core values of what you want to achieve, establishing a client/customer persona, as well as recognising and continually monitoring the market for opportunities to seize upon. And that’s only scratching the surface.
A successful formal business strategy is one that is dynamic and can be adjusted as your business develops. To achieve this, these long-term strategies are often more precise when they are implemented by experts outside of your business. By outsourcing this element, you can use their impartial knowledge and time to create and execute it over the next few years.
Ultimately, a strong strategy should cover all basis and stands the test of time. This can make it easier to get business loan applications accepted and aid future plans to grow and expand. The Founder of Palo Alto Software, Tim Berry, included a fascinating survey for an article on Small Biz Trends, revealing that 36% of businesses with an extensive plan in place were able to secure a loan. While 64% had grown their business as a result.
Creating a dynamic business strategy to help you grow can take time and serious effort. In 2014, Barclays collated some statistics to form ‘The Top 10 impacts on small business revenue growth.’ Interestingly, 10% of SMEs cited obtaining new funding as their biggest challenge, while 26% of them equally voted for issues in enhancing or improving products or services and entering a new market.
The truth of the matter is that all of these challenges could be addressed with the right business strategy in place. A successful SME is one who builds a team around them to ensure the business always stays one step ahead and has their long-term goals in mind. Your business strategy needs to go beyond analysing your competitors and doing the basics, instead, it needs to be versatile enough to adapt to the unpredictable nature of the current market.
If you don’t have a plan in place, or simply don’t have the resource to manage it every day, you may want to consider outsourcing to a business strategist who can offer you impartial advice and guidance. A different viewpoint and level of added expertise can help you maximise your strategy and increase your chances of enjoying a fruitful (and profitable) future.
Simone Domenico Casadei Bernardi is Managing Director of European Business Advisory, a consulting company that focuses on helping foreign entrepreneurs and companies to start or develop their business in Europe, United States of America, South America and Middle/Far East.