Business operations

		“We do have a business plan – we call it our Painted Picture. It articulates exactly what we want our business to look like in 2013, and details the objectives and strategies required to achieve our goals. We deliberately wrote Painted Picture in a way that ensured our plans were openly shared and very clear for everyone in the business.”
		“I look at our strategic plan on a regular basis, usually weekly or fortnightly, just to see that we are on track. Having a formal plan has pushed the business forward quite quickly without losing the family values and ethos of the business. I share the overall picture with the staff, so that they have a very clear picture of my vision for the business.”
		“As a retailer, we live by changing. We need to constantly evolve and constantly change what we are doing to be relevant to our customers. We are driven by two areas for change: technological innovation and the need to change for our customers. If we continued to do the same as we did three or four years ago, we would probably be out of business now.”

Funding and people are common challenges

Private businesses most often reported struggling with funding and people issues in their day-to-day operations. Growing concerns were finding competent staff, reported by 44 per cent of businesses (up from 37 per cent in the last PwC Private Business Barometer), and competitive pricing, nominated by 38 per cent of respondents (up from 16 per cent).		This increase is consistent with slowing sales and reduced prices leading to tighter profit margins. More than one-quarter (28 per cent) of businesses said funding and cash flow were key challenges, while nearly one-fifth (18 per cent) nominated cost controls. Almost 30 per cent said competition – either domestic or international – presented a challenge. PwC believes these results reflect the impact on businesses of the recovering Australian economy and robust dollar.

Businesses scrutinising strategic plans more carefully

Almost all (94 per cent) of private businesses told us they relied on a business or strategic plan to guide decision making. They review their plans more regularly than in previous editions of the PwC Private Business Barometer, with 54 per cent of respondents examining these documents more than once a year. One third (33 per cent) review their plans annually, while only six per cent review their plans every two years or more. Businesses need to consider what a robust business plan should include. We believe some of the core elements of a business plan should address: Financial targets and key performance indicators A definition of the market What makes the business’s product or service different from those offered by competitors A statement about people, culture and values Marketing strategy How the company will grow.

Plans help keep businesses focused

Private businesses are using business plans to develop strategies and grow rather than as a tool to obtain finance. Just one per cent of businesses said they primarily developed a plan to meet bank or credit application requirements – down from 75 per cent during the financial crisis in August 2009. More than one quarter (27 per cent) of businesses surveyed developed a plan to remain focused on goals while 23 per cent said a business plan helped them maintain growth.

New Zealand and United States lead overseas revenue sources

Of those private businesses that generated revenue from overseas sources, nearly half (45 per cent) did so from New Zealand and one-third (30 per cent) did so from the United States. The share of private businesses that generated revenue from South East Asia fell six percentage points (Southeast Asia includes the Philippines, South Korea, Taiwan, Thailand and Vietnam). This suggests some businesses have shifted their focus away from regional markets and towards culturally similar countries.

Pricing the primary driver of competition

PwC Private Business Barometer respondents ranked pricing as the main driver of competition for new business. More than one-fifth (22 per cent) of businesses mentioned this issue, well ahead of increasing demand (17 per cent) and customer expectations and demand (14 per cent). However, the percentage of businesses that mentioned pricing is well down from the peak of 35 per cent in the March 2010 PwC Private Business Barometer. This would indicate that pressure on pricing has eased somewhat after the period of soft demand during the global financial crisis.

Businesses in transport, storage and communications ranked customer expectations and demand – and increasing demand – as their sector’s greatest drivers of competition. Finance and insurance companies recorded a similar result – possibly reflecting the rising demand for these services as Australian businesses look to grow following the economic downturn and global financial crisis.