By Nick Longden, Vice President – Accountants’ Division, Sage UKI
With over 5.2 million small and medium-sized enterprises (SMEs) in the UK, we are certainly a nation of creative and driven entrepreneurs, but as they grow and evolve, there are a number of barriers (for example bureaucratic or creative) which can obstruct businesses from reaching their potential. Within the business community, it is universally acknowledged that a solid network of support is the best way to absorb learnings from outside your company and grow in a way that allows you to have the benefit of hindsight and keep pace with industry standards.
Whether it’s financial advice, independent expert business guidance from a mentor, or a friend who can act as a sympathetic ear when you’re burning the candle at both ends, it can make a big difference between making mistakes and inspired decisions. Getting the right support is crucial.
Accountants are not traditionally a mainstay within a small business as the majority of SMEs turn to their accountant on a more ad hoc basis for sound independent business advice, but they can be a vital extension of their business. In fact, as the historically strong links between business owners and their bank managers have deteriorated since the economic crash, business owners have grown closer to their accountants. Sage research shows that over a fifth of business owners say they are more open and honest with their accountants than they are with their bank managers. This is surprising, given the perceived hegemony that the established banks still retain in the business landscape, but not as surprising as the fact that 15% are more honest with accountants than they are with friends, family and even their spouse.
Your accountant’s expertise is accumulated from years of helping businesses do their best financially. This gives them considerable know-how which will help ensure their clients always know where they are in terms of the health of the business. As part of this, they are able to offer nuggets of wisdom on the right business software which can help make business management a stress-free zone, a good accountant is worth their weight in gold and can help any small business effectively navigate a path to growth through a challenging economic environment.
An entrepreneur’s passion for business can often supersede the necessary paperwork which ensures that the business is compliant and conducive to potential future growth - devoting time and energy to making their business successful, not necessarily getting all the processes in place to hold it together. Here are five crucial areas of business management where your accountant will be able to support you and help you achieve your business goals.
Set your goals
Once your business plan is in place, establish your short, medium and long-term goals. Your accountant will be able to let you know if these are realistic, as forecasts will be able to evaluate your goals as you move your business forward based on real world numbers. It’s worth remembering that your accountant can add value to your company, after all, at least 40% of your fee should be for business advice.
Get the money lined up
It may not be Dragon’s Den, but if you need to approach potential investors or lenders, your accounting partner can help you find them – traditional or otherwise. In the current climate banks may not be open to new ideas and don't like businesses without proven track records. You’ll be able to create a financial fall-back plan with a qualified professional.
Remember that cash is king!A business - big or small - is only as good as its cash flow and an accountant can help you from the start. Fully expect that people may not pay on time. Your accountant can help you create terms and conditions, plan your business expenditure, create debt plans or look at additional revenue streams. If you’re starting a new business and need financial help, accountants can review loan packages, monthly charges - and suggest better rates - and investigate investment grants and help you decide what’s best for you.
Keep the paperwork in check
Getting organised and staying on top of the paperwork is vital – storing receipts in a shoe box won’t help your business. Organised paperwork and tax returns will help you stay focused and can help your accountant or business advisor assist you with planning or accelerating the growth potential of the business. Moreover, your accountant can help and support you with any legislative changes that will impact your business. For example, recent changes in pension law have come into place, known as Automatic Enrolment, where business owners now have a legal obligation and responsibility to help employees save for retirement. Your accountant will not only make you aware of such legislative changes, but can help you create an action plan including finding your Auto Enrolment staging date, forecast your costs and provide you with invaluable advice along the way.
Have the right software
Your laptop is the most flexible business tool you’ll own. Look at off-the-shelf software, either on disk or online, to help you keep track of your business assets. At first you won’t need complex tools so make sure whatever you choose has just the features you need. If you’re a solo operation, consider online systems that keep records in a remote location like a cloud server. As your business grows your accountant can guide you on the best business software and smart phone apps suited to your company.
So, achieve more as a small business by tapping into the relationship you already hold with your accountant – their advice will never seem so crucial to business growth!