Importance of robust business planning

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Welcome to The Star/Barber Harrison & Platt 2011 Top 100 Companies Survey. Here are the headlines:

Aggregate turnover for the Top 100 falls by £2billion to £12.6 billion – a decline of around 13 per cent.

Employee numbers fall by a similar percentage - our region’s largest businesses employ 11,000 people less than a year ago.

Profitability plummets – well actually...

In fact, compared to last year the aggregate profitability of the Top 100 companies has improved. True, the Top 100 still record a combined pre-tax loss of £273 million but this compares to a loss of £278 million in the 2010 survey.

The survey is based on accounts filed at Companies House so naturally the results reflect trading periods that in general ended in the last quarter of 2009 or the first quarter of 2010.

Notwithstanding this, the relative bottom line performance of the Top 100 highlights the importance of robust business planning.

In my article last year I referred to the fact that whilst on a macro level turnover had remained relatively stable, the impact of exceptional restructuring costs and asset impairment provisions had significantly reduced profitability i.e. businesses were anticipating future difficulties.

Reorganisation and restructuring may often be unwelcome on an individual level.

However, without such pre-emptive action, many of our leading businesses would not have been as well placed to deal with such a marked reduction in top line performance and would therefore be in a significantly worse position.