Why small businesses that do not plan often fail
Small business planning is very important as SMEs that fail to plan are certainly planning to fail. You’ve probably heard that phrase many times but don’t dismiss it as a cliché, learn to live by its rules. Small businesses are often so busy treading water, they spend all their energy and attention on staying afloat. Learning how to write or make a business plan is quite essential and it’s a key step for most SMEs. But if you want to do better than ‘just about managing’, you really need to plan for the future – after all, if you don’t know where you’re heading, how do you know which direction you need to go in?
There is a myth that a huge percentage of new start-ups don’t survive the first year, but this has recently been debunked – in fact, it appears that in the UK, more than 8 out of 10 companies succeed in the first 12 months, and between a third and a half are still trading after five years.
Plan to succeed
These success rates could be down to the support that’s now available for new entrepreneurs. There are a lot of organisations that help start-ups and small businesses succeed. In Hertfordshire, the organisation Wenta has been providing advice and support – a lot of which is free of charge – for entrepreneurs across the county for over 30 years.
Writing your business plan isn’t just a good idea when it comes to applying for loans and support, it will also help you focus your ideas about your company and clarify the direction you need to take it in. Online, the government has published advice about writing a good business plan, along with links to templates and examples to help you draw up your own plans.
Planning the accounts
Our director Keith Grover pointed out that when it comes to planning your accounts, it’s always useful to have a discussion with a qualified accountant as early as possible.
“If you’re borrowing a start-up loan from the bank, for instance, you will need to plan ahead to make sure your accounts system is in place to provide them with the documentation they’ll need in the future, e.g. Profit & Loss accounts, balance sheets, quarterly accounts etc.
“You will also benefit from advice about your business structure – limited company, sole trader etc – and the tax implications that might arise.
Some business people also find it useful to put in place a business agreements at this point, detailing the arrangements to extricate themselves from any trouble that might happen in the future.”
So, failing to plan could have disastrous implications for your new business – planning to succeed will put your company on the right road.
Keeping your accounts in order will help you make better business decisions. We can help you plan for the future when it comes to account management and your tax returns. If you would like to talk to us to see how we can help you, call us on 01992 444466.