Business high fliers could be in for a bumpy landing
06/12/2006

Entrepreneurs who fly by the seat of their pants could see their ambitions nosedive unless they get a grip on strategic direction, says a business adviser.

Kevin O'Brien, a partner at UK top 30 accountancy and professional services firm DTE, warns that the gutsy, enterprising spirit that gets many businesses off the ground may not be enough without strong commercial leadership and financial management.

"I have been preparing business plans for more than 20 years for all types of businesses, including manufacturers, import/export operations and professional services firms, yet I never cease to be amazed by inappropriate financial arrangements," says O'Brien.

"Even companies that have been established for some time struggle to step up to the next level if they don't recognise the need to plan strategically, rather than keeping things ticking over at an operational level."

For new companies, a business plan evaluates the viability of a proposed business idea and identifies the amount and type of funding required. There are several ways to structure finance, depending on the type of business and security available, if any. A wrong decision can hit the bottom line hard.

Typically, poorly prepared plans underestimate the total funding required for a venture to fly.

O'Brien continues: "Once a robust plan has been prepared, it is important to know where to take it. Professional advisers, such as DTE, have established networks that include banks and asset-based lenders who offer traditional funding streams. There are also more specialised lending sources such as the government-backed Small Firms Loans Guarantee Scheme."

Established businesses with ambitions to expand must also ensure that any business plan is watertight before approaching potential funders.

"A plan will be needed to increase funding, or to acquire assets, or other businesses as part of a major growth strategy, and thorough knowledge of the owner managed business sector is vital in locating the right lender," adds O'Brien.

"Your business plan can make the critical difference between success and failure, so getting it right first time is well worth the extra cost - not least because it will be recovered many times over through increased profits and higher productivity."