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Small business shuns financial advice

Australian small business owners are reluctant to enlist professional advice services and would trust an accountant over a financial planner for external advice, a survey of 1,000 SMEs has found.

The research, conducted by software provider CCH, indicated that only 26 per cent of respondents viewed a lack of professional financial advice a factor in the failure of small to medium enterprises, and a further 70 per cent trusted “gut instinct” over professional advice.

Notwithstanding this “lone wolf” approach to business decision-making among SMEs, when pressed, respondents nominated their accountant above their financial planner, lawyer or business partner as their most trusted external adviser.

Russell Evans, chief executive of CCH parent company Wolters Kluwer Asia-Pacific, said the results indicate small business owners are too willing to back their own instincts, particularly given Australian Bureau of Statistics data that show half of Australian SME start-ups do not survive their first four years.

“It’s not surprising a small business owner will micro-manage, especially in the early stages of their business life, but this should not be at the expense of being open to advice from trusted professionals,” he said.

Twenty one per cent of respondents said “poor professional advice” was the main reason SMEs fail at this rate, with 50 per cent blaming inexperienced management and 61 per cent citing failure to manage costs.