A growing number of small business owners have sought advice from family, colleagues and professional advisors over the past year, as challenging conditions brought on by the pandemic encouraged them to access support.
A study by SME lender ScotPac reveals 90% of small and medium business owners now have a trusted advisor, up from 60% four years ago. But the study also found business owners are most likely to turn to their colleagues and suppliers for advice, rather than professional advisors.
Craig Michie, senior executive at ScotPac, said it is positive to see more SME owners have a trusted advisor to lean on during such challenging business conditions.
“In our 2017 research, four out of 10 business owners had no trusted advisor — this is now down to less than one in 10,” Michie said.
“However, key small business consultants including accountants, bookkeepers and brokers still have a lot of work to do in order to top the ‘trusted advisor’ list for SMEs,” he said.
ScotPac’s SME Growth Index polled a representative sample of 1255 small businesses to find out who they sought business advice from this year.
The research found small business operators are almost twice as likely to have a family member as a trusted advisor compared to a professional broker. And businesses with under $5 million in annual revenue are even more likely to rely on family and friends for their advice.
More than 38% of business owners named their colleagues as their most trusted advisors, and 22.2% said their suppliers or trading partners were their go-to contacts for advice.
“SMEs are only slightly more likely to name their accountant as their trusted advisor (11.2%) as they are to turn to their friends (8.5%),” Michie said.
According to Michie, the reason business owners are more likely to turn to colleagues and suppliers over specialist advisors is the cost of advice.
“The pandemic put a spotlight on cost containment, and it’s possible that SMEs may be seeking advice from those they trust but where costs aren’t incurred, as opposed to sourcing paid professional advice,” he said
Despite the tendency of SMEs to seek advice from colleagues and suppliers, the number of business owners who say their accountants are their most trusted advisor is trending upwards.
This year, more than 11% of SMEs said accountants were their trusted advisors, up from 9% in 2015.
The release of ScotPac’s SME Growth Index follows the launch of the non-bank lender’s new $100 million fund to help businesses recover from the COVID-19 crisis.
The SME Bounce Back Fund will offer up to 2000 new and existing customers debtor or trade finance facilities of between $50,000 and $1 million, for a minimum 12 months, with no interest to be paid on the loan amount for the first three months.
