Small businesses haven't grown over past five years
One in three small and micro businesses have failed to grow in the last five years, according to latest research by AAT (Association of Accounting Technicians). A study of one thousand small and micro businesses across the UK discovered that 33% had failed to experience growth in revenue, whilst 31% hadn’t experienced an increase in profits since 2010.
More than one in two small and micro businesses (56%) were able to identify clear factors they think are holding their company back from expanding. The reasons businesses gave for their failure to grow are:
- A lack of capital to expand
- Too much red tape
- A lack of support from banks
- Uncertain global economic conditions
Amongst the worst affected sectors where businesses said they hadn’t grown in the last five years are:
- IT and Telecoms, where 43% of businesses reported no growth
- Arts, where 39% of businesses reported no growth
- Construction, where 34% of businesses reported no growth
- Retail, where 30% of businesses reported no growth
- Professional Services, where 33% of businesses reported no growth
Despite a gloomy review of the past five years, forecasts were much more optimistic, with 76% of small firms expecting an increase in revenue and 78% predicting profits to rise over the next five years.
Yet despite the optimistic sentiment, a staggering 58% of small and micro business owners admitted to not having a business plan to help them grow, with 10% said they wished they had one but did not know how to put one together.
Mark Farrar, Chief Executive of AAT said: “Growing your company can be one of the hardest stages in the life of a business but with the right skills it can be done. Growth can put pressure on cash flow which is why many businesses fail when they’re expanding. Having the necessary financial skills and a clearly defined business plan are essential tools to help firms expand successfully.”
One of the most important things growing companies need is to ensure cash flow is effectively managed and the company has a robust but agile business plan. Whilst a strong sense of direction is important, it’s also necessary to develop contingency plans should market conditions or the competitive landscape change.“
After turnover and profit, increasing awareness was the third most popular category for growth with 29% of respondents wishing to increase their presence in the market place. These findings were also bolstered by the high number of businesses identifying the need for better marketing, PR and web skills (31%), citing it as the most important factor that would help them grow their business.
This was posted in Bdaily's Members' News section by AAT (Association of Accounting Technicians) .
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