SMEs shunning strategic and risk-management advice

voucher, financial services. legal issues

Despite the unprecedented challenges small businesses have faced in the past year, a new survey suggests that many of them are to handling the issues alone rather than seeking out expert assistance. The latest edition of ScotPac’s SME Growth Index reveals that only 18 per cent of small-business owners seek out strategic planning assistance, 14 per cent seek Mergers & Acquisitions advice and just 10 per cent seek help with risk management.

“Accountants, brokers, bookkeepers and other trusted business advisors should be front and centre for SMEs to help them navigate these complex times,” ScotPac CEO Jon Sutton suggested. “Yet, the research shows business owners have so much uncertainty about the right way forward. Around two-thirds are looking at restructuring either their business set up or the way they fund the business in 2021, yet so few are seeking expert advice to help them restructure. Any restructuring and transformation should be supported by advice from experts and also by adequate investment in the business.”

On the other hand, the research noted that 93 per cent of SME owners look for support for tax and compliance advice, followed by asset acquisition and disposals (31 per cent) and succession planning (27 per cent).

Sutton was reassured by the fact that more than one in six businesses were looking to invoice finance to manage their cashflow, stressing that financial solutions such as invoice finance, trade finance and asset finance will be key to the recovery of the small-businjess sector post-pandemic.

“We would like to see more small business undertake cashflow forecasts because our research found that only a quarter of SMEs do so – this is fundamental to success, and this is something accountants and brokers can be reinforcing to their clients,” Sutton said. He noted that the fact that so many businesses are looking to restructure and seek ways to manage their working capital provides a perfect opportunity for accountants and brokers to initiate discussions with their SME clients.

“Australia’s small-business sector relies heavily on brokers and accountants, who understand the importance of cashflow and have a good understanding of strategies and solutions to enable business success,” Sutton said. “It’s the perfect time for accountants and brokers to ask their small-business clients what changes they are looking to make, whether they have a clear view of how much working capital this will require, and if there are shortfalls help them find new ways to fund the business.”

The Index highlighted the specific areas in which small businesses should be calling on experts for advice, with failure to seek such counsel resulting in:

  • One in four business owners being unsure about what measures to put in place for recovery.
  • One in four being turned down for a lending product, leading to cashflow issues.
  • One in three having to turn to trusted external advisors for help separating their personal and business assets (a significant issue due to the over-reliance of SME owners on funding their business by putting their own residential home up as collateral).