LACK of proper grassroots business planning may be to blame for the fact half of small businesses close within three years of trading, according to Barclays Bank.

Less than two thirds of businesses (57 per cent) prepare business plans prior to starting up, the bank said.

"Business planning is not just about preparing for growth and expansion or making a case to borrow money," said Mike Rogers, managing director of small business and start-ups at Barclays. "It is an essential management tool and should act as a blueprint for your business.

"If properly constructed, the plan will establish business objectives and, through regular reviews, allow you to assess the current state of the business and provide an early warning of potential problems."

Mr Rogers said the start of a new year was an ideal time for all business owners or potential owners to produce a plan for the coming 12 months.