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New research shows a marked increase among small and medium-sized businesses looking to restructure, though only 18 per cent of them plan on seeking out strategic planning assistance to help them navigate doing so.
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SMEs reluctant to secure advice beyond tax and compliance: ScotPac
03 June 2021
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ScotPac on Wednesday released the results of its latest SME Growth Index which shows only 18 per cent of small business leaders take on strategic planning assistance, despite plans to restructure, while just 14 per cent currently take on advice related to mergers and acquisitions, and 10 per cent turn to experts for risk management advice.
Tax and compliance remains the leading cause for small business leaders to turn to advisers, with 93 per cent of respondents reported as doing so. Of those surveyed, 31 per cent turn to their advisers for asset acquisition and disposal advice, while 27 per cent seek advice related to succession planning.
ScotPac CEO Jon Sutton said small business owners are “going it alone” despite the unprecedented business challenges imposed upon them by the pandemic and the economic conditions that ensued.
“Accountants, brokers, bookkeepers and other trusted business advisers should be front and centre for SMEs to help them navigate these complex times,” Mr Sutton said.
“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.”
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The survey’s results, however, highlight significant uncertainty. One in four business owners reported feeling unsure of the measures to enact to secure their post-pandemic recovery, while the same number of businesses said they’d suffered cash flow issues as a result of being declined from a lending product.
Leveraging personal assets to fund a business remains a prominent trend, as a third of small business leaders said they had turned to advisers for help separating their personal and business assets.
The most popular cash flow management strategies adopted by small business leaders centred around undertaking cash flow forecasts. Of those surveyed, 28 per cent said they had nominated it as their key strategy. It was adopted by more than 50 per cent of SMEs with revenues of between $5 million and $20 million.
Others said they would focus on existing and new customers — at 27.5 per cent and 22 per cent, respectively — to manage working capital. While 17 per cent said they would make arrangements with the ATO to do so, 16 per cent would use invoice financing and 12 per cent would up their overdraft limits.
Mr Sutton said he expects trade finance and asset finance to “come into their own” as businesses look to alternative credit options to bolster their COVID-19 recovery.
“We would like to see more small business undertake cash flow forecasts because our research found that only a quarter of SMEs do so,” Mr Sutton said. “This is fundamental to success, and this is something accountants and brokers can be reinforcing to their clients.”
He said that, because businesses are looking to restructure at an increased rate, advisers should approach the trend as an opportunity to initiate discussions with their SME clients and steer them through the options available to them.
“Australia’s small business sector relies heavily on brokers and accountants, who understand the importance of cash flow and have a good understanding of strategies and solutions to enable business success,” he 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 to help them find new ways to fund the business.”
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