SME owners are much more likely to turn to someone for business advice in 2021 than they were four years ago, according to ScotPac’s latest SME Growth Index, which recorded a significant decline in the number of business owners who have to “go it alone”.
“Running a business can be lonely at any time let alone in challenging conditions, so it’s great to see many more SME owners having a trusted advisor to lean on,” ScotPac senior executive, Craig Michie, said. “In our 2017 research, four out of 10 business owners had no trusted advisor – this is now down to less than one in 10. More than 90 per cent of respondents now having a trusted someone they turn to for business advice is a promising trend.
“However, key small-business consultants including accountants, bookkeepers and brokers still have a lot of work to do in order to top the ‘trusted advisor’ list for SMEs,” Michie added.
Michie noted that despite the decline in business owners who feel they have to go it alone, one issue that remains is where their trusted advice is coming from.
“It’s possible that SMEs may be seeking advice from those they trust but where costs aren’t incurred, as opposed to sourcing paid professional advice,” Michie said. “While SMEs have indicated that accountants and bookkeepers have been invaluable in providing advice to navigate pandemic grants and support, and brokers have played a key role in securing funding, the fact is that SMEs continue to put more trust elsewhere.”
Business colleagues were named as the most trusted advisors by 38.6 per cent of respondents, with suppliers or trading partners being the go-to for 22.2 per cent of small businesses.
“SMEs are only slightly more likely to name their accountant as their trusted advisors (11.2 per cent) as they are to turn to their friends (8.5 per cent),” Michie said. “However, accountants are moving up the list, with a 22 per cent increase since 2015 in SMEs naming their accountant as their most trusted source of business advice.”
The research also found small-business operators are almost twice as likely to have a family member as trusted advisors (6 per cent) as to have their broker in that role (3.3 per cent). Only 1.3 per cent have their bank manager as key trusted advisor.
When asked how they deal with cashflow issues, 18.6 per cent of SMEs said they managed to deal with such issues thanks to applying their accountant’s pandemic recovery advice. And 5.3 per cent of respondents have also put in place pandemic recovery recommendations from their broker to ease cashflow constraints.
“External professional advice has no doubt been crucial to the four out of 10 SMEs who say they have restructured in the past 12 months,” Michie said. “Key SME pain points this round were new taxation imposts and supply chain disruption – problems that may be successfully navigated with external professional advice.”
Businesses identifying as being in “growth mode” are almost twice as likely to have an accountant as their main trusted advisor, compared to no-growth SMEs (14 per cent compared to 8.3 per cent). The report also highlighted that no-growth SMEs (7.7 per cent) were almost twice as likely to rely on a family member for advice than their growth counterparts (4.3 per cent), or to have no trusted advisor (9.7 per cent against 5.7 per cent).