SMEs are changing - are you?
The UK’s small business community is thriving. There are now more businesses starting up than ever, which means there are many opportunities for accountants to grow their practices. But the SME landscape is evolving fast, and practices that do not evolve the way they deliver their services to SMEs will be left behind.
Driven by new and disruptive business profiles as well as shifts in technology, fundamental changes are taking place and those who cannot adapt quickly may have an uncertain future. We spend a huge amount of time speaking with SMEs and here are three trends based on what they’re telling us…
Do you really recognise your client base? And are you changing to meet what it really looks like?
Today, the profile of the average SME owner is not what you might expect. The majority of people starting a business or becoming self-employed are over 50 and many of these are far from ‘lifestyle’ businesses. In fact, the most surprising statistic is that that this older group of entrepreneurs is focused on long term success: over 70 percent last more than five years, compared with just 28 percent of younger entrepreneurs.
This is just one example of how business profiles are changing and accountancy practices need to think about what kind of client base they want. Do you want to be serving the same types of clients you’re serving now in the next five years and are the ones you’re working with today the ones that will even still be in business?
One thing that ties almost all entrepreneurs together is the lack of time. Small business owners have never worked harder. It’s tough out there, and there are a million and one things they would rather be doing than doing the books or, I hate to say it, meeting with their accountant. The onus is on accountants to adapt and work with clients when they want to work with you… In fact the single most important question for accountants to ask clients is: How can I make your business life easier?
The second trend is the impact of technology on how SMEs work, and how they interact with their accountants. We’re living in an always-on world and the flexibility to get work done at any time of day and from any location has become an essential part of modern working life. Think about how often you check your mobile – for the average smartphone user, it’s over 220 times a day!
We expect constant updates and to have a whole host of services at our fingertips. We don’t call up the local cab firm to book a cab for the following day – we open the Uber app and find one for ourselves. We don’t stick files on a CD and post them anymore, we just put them in a Dropbox folder.
The accountancy firms that are doing well are the ones who work with their clients flexibly, exploiting the cloud and mobile to transform their working practices. Whether this broadening their client base across the country or beyond, remotely accessing client data anywhere or at any time or providing real time information on accounts at the drop of a hat, it all comes together to enable accounts to become more indispensable than ever to their clients. SMEs want to partner with businesses who work like them – they’re using technology that makes their lives easier, and they want their business partners to do so too.
New ways to access finance
Now let’s look at finance. Cash flow remains a major concern for many small businesses, but there is a concerning trend where small businesses are increasingly being paid late. Accountants have to be able to advise on all the possible ways for clients to get paid immediately, or at least more promptly. This could be through providing better real-time insight into their cash flow situation, support in negotiating with their suppliers or on using the right technology such as email invoicing or mobile payments to ensure their customers have no excuse not to pay on time.
In addition to this, access to funding is far more complex than it was. There are a lot of different options out there beyond the banks, but they can be confusing especially if, like most small businesses, you have no experience whatsoever in approaching these types of organisations. Accountants simply have to understand the different types of financing and their specific nuances and acceptance criteria to help SMEs navigate these new processes to access money – when starting up and beyond. There’s a major opportunity to provide value-add services here.
Three action points
If accountants can’t support their client the way they want, they will find someone who can. So, there are three things accountants need to do. Firstly, make the effort to understand your clients more… and how you can make their lives easier; secondly get up to speed with the technology and finally help them access cash… faster. Focus on these three things and you have every chance of retaining and growing your business over the coming years. Ignore them, and you could well be left behind as the world continues around you.
Rich Preece is the UK VP and Managing Director of Intuit UK, an online accounting software company that aims to make the accounting process invisible to its clients.