Planning to profit – valuable lessons from Clever Companies Survey

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‘Planning’ may be dismissed as an unsexy topic by many businesses, but those who plan don’t think so.

Results from the PricewaterhouseCoopers Clever Companies Insight show that companies that plan for the long term are more than twice as likely to expect improving profits over the year ahead.

Business NZ chief executive Phil O’Reilly says although it’s an obvious finding, it’s a powerful example of the difference planning can make.

“It confirms, once again, that the basics work -- budgeting, thinking ahead, building manager capability, having a plan and executing it. SMEs tend to think these things are complicated, but they don’t need to be and this is a message we need to get across.

“It’s a challenge for business advisors to help companies see the value of this.”

Mr O’Reilly says the survey, of almost 800 businesses, offers useful analysis of how companies are reacting to today’s business environment and provides government a useful tool in developing policies across a number of areas such as tax, sustainability and climate change and for informing the Government’s Skills Strategy, where considerable work is being done around building manager capability.

“It draws attention to some of the issues government officials are dealing with and also illustrates some of the messages Business NZ and PricewaterhouseCoopers have highlighted.”

PricewaterhouseCoopers Partner Robbie Gimblett says those companies that don’t plan are taking unnecessary risks in today’s economy. “If you’re not planning for a changing environment, you run the risk of going backwards - and even losing money in real terms,” he says.

“The business planners we surveyed are using clever tactics, including looking to increase marketing, open new markets, manage stock better and change their sales-force incentives, to help ride-out the economic conditions.

“Many companies are under pressure now, so it’s more important than ever to sometimes pull yourself out of the day-to-day running of the business and look ahead.”

On the topic of exit strategies, where the survey found almost 31 per cent of privately owned businesses are planning a change of ownership, Mr O’Reilly says the survey is a call to action.

“Business owners should be using their business advisors to think about better exit strategies. If business owners can’t exit, they are often left with no alternative but to close the business down, which is a terrible loss to the New Zealand economy and the communities in which they operate,” Mr O’Reilly says.

The Insight was conducted in partnership with Business NZ, and surveyed almost 800 businesses – the majority privately owned – across the country. It reveals key findings in four areas: Planning, exporting, succession and sustainability and climate change.