More than 1.5 million UK SMEs don't have a business plan, and they could be missing out on an extra 20% of profit as a result, according to business software provider Exact.
Their research shows that over a third of the UK's 4.8 million SMEs are failing to reach their full profit potential because they don't have a business plan. The survey has found that SMEs that had a business plan in place last year were consistently more profitable than those that did not.
Even so, 34% of small firms did not have a business plan and the majority of respondents without a plan (68%) said they didn't see the need for one.
The research was undertaken to better understand the challenges SMEs face in achieving their business goals. The top three business objectives for the SMEs surveyed were increasing profits, increasing revenue growth and attracting new customers.
The results also showed that those who had a business plan in place were more than twice as successful in achieving these goals than those who did not (achieving a 69% success rate versus 31%).
Lucy Fox, general manager, UK Cloud Solutions for Exact, said: "The findings clearly show there are many SMEs who are missing out on the added value a business plan can offer, the consequence being that many may be failing to reach their full growth and business potential as a result."
She added: "While the results should serve as a bit of a wake-up call, they also highlight that more needs to be done to address some of the misconceptions over what is involved in the planning process. Many don't seem to realise that with the help of a trusted financial advisor, like an accountant, creating a plan can be done easily and the benefits can be enormous."
The research revealed that 23% of those without a plan said they were "too busy" to prepare one, while 8% said they didn't have anyone to help them and 5% said they weren't comfortable with numbers.
Howard Jackson, managing director of FD Solutions, said: "The fact that so many SMEs do not appear to have a plan is worrying, not least in light of the fact that much of the UK economy depends on their success. A business plan helps identify long-term objectives, provides a blueprint of how you go about achieving those goals and provides metrics to help with checking your progress on that journey."