New research reveals SMEs may be waiting too long before calling in experts to help their business.
A quarter of SMEs have left it until they hit a crisis before hiring a professional adviser to help them, either because they were already experiencing issues, were in the midst of a crisis that could not be remedied internally or because the business was actually losing money.
Over a fifth of SMEs have not hired any professional adviser to help their business, whether that be a lawyer, accountant or IT expert. The main reason for not hiring advisers is cost, cited by two fifths of SMEs, although for others it is because they learnt how to do that particular skill themselves or because they believed they had enough skills and knowledge to not require any external guidance.
Of those who have brought in external help, just a quarter did so before commencing trading. The average time taken to seek advice for a SME is one year and six months, although it varies depending on type of adviser. SMEs wait around one year, eight months to hire a management consultant but just one year five months to hire a lawyer, accountant or IT expert.
Karneet Chowdhury, Business Manager Office and Professionals, Direct Line for Business, said: “SMEs are often expected to be a ‘jack of all trades’ but it’s very difficult for a small or micro business to have enough knowledge and experience of law, accountancy, IT and/or HR to be able to manage these aspects of their business themselves. While cost control is vital for SMEs, sometimes the DIY approach may be a false economy and in fact cause more problems. Business owners should work out what they can realistically do themselves and what they need expert help with and budget accordingly. Fines for non-compliance with regulation or law could be substantially higher than the cost of an adviser.”
Those SMEs who have not hired experts may wish to do so as the overwhelming majority of those who have said doing so had had a positive impact on their business. External professional advisers have helped SMEs
increase revenue, improve business infrastructure and look more professional to their customers and peers.
The advisers most commonly hired by SMEs are accountants and IT or web experts. Two thirds of SMEs have hired accountants and over half hired IT or web experts, followed by lawyers, designers and HR experts. The least common professionals employed are project managers and management consultants.
The number of consultancy related roles has risen rapidly over the past decade, usually reflecting the above average salary increases. Separate analysis2 reveals that around one in 11 people are currently employed in a specialist consultancy-related profession, which accounts for around two million workers. This is a significant 83 per cent increase since 2009, when there were around 1.1 million in the industry, accounting for just six per cent of workers.
The sales and marketing industry in particular has experienced a meteoric rise, with nearly 550,000 more professionals working in this space since 2009 and a 34 per cent increase in median salary over the decade. Other sectors which have seen a rise in median salary since 2009 are media-based professionals, IT and telecommunications-based professionals, design-based consultants and legal professionals.
Emma Jones, founder Enterprise Nation said: “We have seen for ourselves that businesses who access advice often grow faster than firms that don’t, and from talking to business owners we know it can often be a result of not knowing which advisers to trust and how much to pay for the advice. Our suggestion would be to use business forums to get recommendations or find a support group like Enterprise Nation who can open up a network of trusted advisers.”