RSM Bird Cameron’s thinkBIG 2011 study reveals micro SMEs that don’t plan are experiencing less growth than larger SMEs

May 5, 2011RSM Bird Cameron’s thinkBIG 2011 study has revealed that Australia’s micro-small to medium-sized enterprise (SME) owners’ are less likely to undertake formal business processing than their larger counterparts, and may be forfeiting growth as a result.

RSM Bird Cameron undertook its fifth thinkBIG research study in March 2011, and benchmarked the planning practices of SME owners and the impact of recent global financial conditions on businesses.

The study shows that SME owners who conduct planning are significantly more likely to experience revenue growth, with 80 per cent who planned their business experiencing revenue growth over the last two years compared with 60 per cent who did not plan. There is, however, still a considerable gap between the planning practices of smaller SMEs and larger SMEs.

Andrew Graham, national head of business solutions, RSM Bird Cameron, said, “71 per cent of micro SMEs don’t plan. RSM Bird Cameron’s thinkBIG found that only 49 per cent of owners in businesses with three to five employees and 29 per cent with one to two employees plan their businesses on a formal basis.

“thinkBIG 2011 also revealed that these businesses were significantly less likely to have experienced revenue growth over the last two years.”

64 per cent of micro SMEs mistakenly believe that their business is too small for formal planning.

ThinkBIG 2011 also reveals that 25 per cent of micro SMEs are forgoing salary to fund the business.

Graham said, “Micro SMEs need to ensure they have plans in place to grow the business, even when they are still in the ‘set up’ stage. It is never too early, and no business is ever too small to establish good practices when it comes to business planning.

“Having a business plan in place will ensure that micro SMEs can stop using their own salary to fund the business. Forgoing salary should be a very short-term business tactic not part of an ongoing funding strategy.”

-ENDS-

thinkBIG 2011 fast facts

Planning the business
* 93 per cent of respondents from SMEs with 50+ employees undertake formal planning compared with 29 per cent from SMEs with 1-2 employees.

* 80 per cent of respondents who undertook formal business planning reported revenue growth over the last two years compared with 60 per cent of respondents who did not conduct formal business planning.

* 27 per cent of SMEs with three to five employees experienced no revenue growth or a decline in the past two years and 21 per cent of SMEs with one to two employees experienced no revenue growth or a decline in the past two years compared with 50 per cent of SMEs with 50+ employees that experienced revenue growth of 15-29 per cent.

* 64 per cent of respondents who do not plan their business formally said it is because the business is too small – this is in line with thinkBIG findings in 2010, 2009 and 2007

* 26 per cent of SMEs said they don’t plan because they don’t know their market well enough, 19 per cent because they don’t know how to complete a plan and 18 per cent because they do not have time.

* 27 per cent of respondents from SMEs with one to two employees are significantly more likely to rely on foregone salary as their main source of funding. 29 per cent of respondents from SMEs with three to five employees are significantly more likely to rely on foregone salary as their main source of funding.

About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia with national ownership and profit sharing and offers a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the sixth largest network of independent accounting and consulting firms in the world.

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