A wake up call

Today’s Private Business Barometer from PricewaterhouseCoopers gives us a great snapshot of the medium-sized business sector and it appears, from a financial standpoint at least, that things are going along okay after a difficult year.

The average profit and sales growth over the last 12 months was 5.8% and 6.8%, which is a very solid result.

But just don’t ask the companies how they did it – the survey reveals an amazing 40% of businesses have no idea why they exceeded or missed their revenue targets last year.

It’s an extraordinarily high figure and one that PwC partner Greg Will says highlights a huge lack of planning by many companies, who got lax during the good years and then failed to have any plans in place as the economy stalled.

Yes, planning was extremely tough during the downturn, as conditions chopped and changed almost monthly. But to have so many entrepreneurs admit they had no idea why their business has missed or beaten its forecasts is worrying. It would seem we were very, very lucky that the downturn wasn’t as bad as first feared.

The lax planning appears certain to continue into the recovery, with only 20% of businesses saying they actually had recovery plans in place. Again, this is not good enough.

As Will explains, a recovery plan doesn’t need to be anything fancy. Say you are a manufacturing business. Take time to think about how your business would be affected if you picked up a few big orders. What would it mean for people, raw material and distribution?

“All of those things can’t happen overnight. If you are not looking at being proactive, you could miss some very good opportunities just because you haven’t got the resources on hand,” Will says.

Similarly, have a quick think about what might happen if rates rose by a further 1% or even a further 2%. How will this impact your growth plans for the next few years?

Finally, a quick word on social networking, which has been covered by PwC for the first time.

The survey shows that only one third of businesses actually use social networking, which is quite amazing.

Those that do, use it for networking with peers and clients (30.2%) communicating with clients and customers (26.6%) and advertising products and services (21.8%). LinkedIn and Facebook are easily the most popular sites, followed by Twitter.

But what’s holding so many companies back? Will thinks it’s got a lot to do with the age of some medium-sized company owners and managers, and a general skepticism about the return on investment in social networking.

Well, the message for these skeptics remains the same.

There is a good chance that your customers are on social networks talking about you right now. If you’re not engaging with them, maybe your competition is.

Don’t forget to register for the SmartCompany webinar this Thursday 22nd October at 2pm – Are you using change as an opportunity to grow? Insights from the PricewaterhouseCoopers Private Business Barometer.