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Too few businesses seek strategic or risk management advice according to a leading survey of Australian SMEs. The SME Growth Index, produced by market analysts East & Partners, is Australia’s longest-running in-depth research on small business growth prospects. Despite the unprecedented challenges small businesses faced in the past year, many small businesses still go it alone rather than call on expert assistance.
ScotPac CEO Jon Sutton said the latest SME Growth Index research shows fewer than one in five small businesses (18%) seek out strategic planning assistance, only 14% get M&A advice, and just one in 10 turn to the experts for help with risk management. “Small business owners are going it alone despite the unprecedented challenge of the pandemic last year and recovery this year,” Mr Sutton said. “Accountants, brokers, bookkeepers, and other trusted business advisors should be front and centre for small businesses to help them navigate these complex times.”
The Importance of Strategic Planning for SMEs
Strategic planning is crucial for the growth and sustainability of small businesses. However, the SME Growth Index reveals that fewer than one in five small businesses seek out strategic planning assistance. This lack of strategic planning can lead to missed opportunities and potential pitfalls that could have been avoided with expert guidance. Small businesses that engage in strategic planning are better equipped to set clear goals, allocate resources effectively, and anticipate market changes.
Despite the benefits, many SMEs hesitate to seek strategic planning advice due to cost concerns or a belief that they can manage on their own. However, the long-term benefits of strategic planning far outweigh the initial investment. By working with experts, small businesses can develop comprehensive plans that address their unique challenges and leverage their strengths. This proactive approach can lead to increased efficiency, profitability, and growth.
Risk Management: A Critical Need for SMEs
Risk management is another area where SMEs often fall short. The SME Growth Index shows that only one in 10 small businesses turn to experts for help with risk management. This is concerning, as effective risk management is essential for identifying, assessing, and mitigating potential threats to the business. Without proper risk management, SMEs are vulnerable to financial losses, legal issues, and operational disruptions.
SMEs that invest in risk management can better protect their assets, ensure compliance with regulations, and maintain business continuity. Expert advisors can help SMEs develop risk management strategies tailored to their specific needs, including identifying potential risks, implementing controls, and monitoring ongoing risks. By prioritizing risk management, SMEs can safeguard their business and build resilience against future challenges.
The Role of Trusted Advisors in SME Success
Trusted advisors, such as accountants, brokers, and bookkeepers, play a vital role in the success of SMEs. The SME Growth Index highlights that tax and compliance advice are the main reasons small businesses seek support from their advisors, with 93% of respondents nominating this as a key area. However, advisors can offer much more than just tax and compliance support. They can provide valuable insights into asset acquisition and disposals, succession planning, and overall business strategy.
Despite the availability of expert advice, many SMEs still go it alone. This reluctance to seek help can be attributed to a lack of awareness of the benefits or a desire to maintain control over business decisions. However, engaging with trusted advisors can provide small businesses with the knowledge and support they need to navigate complex business environments. Advisors can help small businesses make informed decisions, optimize their operations, and achieve their long-term goals.
The Consequences of Avoiding Expert Advice
The SME Growth Index data pinpoints key areas where small businesses should be calling on experts for advice. One in four business owners are unsure about what measures to put in place for recovery, and one in four were declined from a lending product, causing cash flow issues. Additionally, one in three turn to trusted external advisors for help separating their personal and business assets, highlighting the importance of expert guidance in financial management.
Avoiding expert advice can lead to significant challenges for small businesses. Without proper guidance, business owners may struggle to navigate regulatory requirements, secure financing, or manage their finances effectively. This can result in missed opportunities, financial losses, and increased stress for business owners. By seeking expert advice, small businesses can overcome these challenges and position themselves for long-term success.
Investing in the Future of SMEs
Any restructuring and transformation should be supported by advice from experts and adequate investment in the business. The SME Growth Index research found that around two-thirds of small businesses are looking at restructuring either their business setup or the way they fund the business in 2021. However, so few are seeking expert advice to help them restructure. This highlights the need for small businesses to recognize the value of expert guidance in navigating complex business changes.
Investing in expert advice can provide SMEs with the tools and knowledge they need to adapt to changing market conditions, optimize their operations, and achieve sustainable growth. By working with advisors, small businesses can develop strategies that align with their business goals and address their unique challenges. This proactive approach can lead to increased efficiency, profitability, and resilience in the face of future challenges.
Conclusion
Small businesses play a crucial role in the economy, and their success is vital for overall economic growth. However, the SME Growth Index reveals that many small businesses are going it alone instead of seeking expert advice. This reluctance to engage with advisors can hinder their growth and expose them to unnecessary risks. By recognizing the value of expert guidance and investing in strategic planning, risk management, and overall business strategy, small businesses can position themselves for long-term success.
Engaging with trusted advisors can provide small businesses with the knowledge and support they need to navigate complex business environments, make informed decisions, and achieve their long-term goals. By prioritizing expert advice, small businesses can overcome challenges, optimize their operations, and build resilience against future uncertainties. The future of small businesses depends on their ability to adapt, innovate, and seek the guidance they need to thrive in an ever-changing business landscape.
You can read more about the Growth Index at ScotPac.
