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.
Can we simplify this please. All self employed people need (many cant afford)but they need a team of professionals around them- TAX – LEGAL – ADMIN – HR – PLANNING. Just like with accountants many wont have the skills or experience to assist or provide benefit to a self employed person. As a Financial Planner i have many self employed clients. I work with there accountants (all of various skill sets and experience) and we certainly proviode value to the business owner. Consider succession planning- HOW WILL THE BUSINESS PERSON GET OUT OF BUISNESS? Most accountants never address this. This is one of the very first questions i ask self employed clients. So please- Business peopls do need the services of an experienced planner with the appropriate skills and experience. Obviously a PS 146 Bank adviser wont cut the mustard.
Fiona & CAF
Correct—MOST—FPs don’t have the experience or qualifications to offer advice. BUT a lot of us do–the question should be what sort of advice were the SMEs seeking. Not all horses run on the same track and at the end of the day-jack of all trades or specialists-each to their own profession and speciality. Some of us wear 2 hats but the dealer group dictates where the boundaries exist wrt advice.
Why would any business person choose a Financial Planner for professional business advice – they have no qualifications to provide sound business advice and many lack any experience – a diploma in financial services does not carry anywhere near the weight of a business degree and the many years of experience an accountant may have working with businesses
Jay…you need to take a bex and a good lie down, mate.
It’s clear that Financial Planners have a long way to go before they can convince most people that they have a meaningful role to play as an adviser to SME’s. Accountants have long held a position of trusted adviser and, from this study they appear to continue to enjoy that privileged position.
It will take many decades before these roles are seen as equal but continuing to “professionalise” financial planners is a must.
I would think that in the first 4 years of a small business setup, most are far to busy to even think about Super. All their $ are going into the business – IMO
For those that do create a successful business, then they would need a planner who can talk to them at their level. Most small business owners will have a good ear on the BS meter, and would need convincing that there is significant value in a situation where the tax implications are especially important.
Despite the marketing claims of many FP, finding an experienced planner that fully understands the tax implications in small business may be somewhat more difficult.
It is understandable that first port of call would be the accountant.
I would be nurturing the contacts with accountants, as a conduit to this segment of the market.
The real reason is Small Business has been hammered from Pillar to Post by markets the last 5 years and really this Government is Pro Large Business as they cannot sink their teeth into small business to send shorten’s Union army out to sign them up for large Union Fees/ large numbers of Industry Super Funds so they can have their donations at each election to fund their scare campaigns, fund their lifestyle. Small Business was the backbone of this country, you drive around the streets of major cities and town, look at the for lease signs now. What a absolute load of rubbish they dont shun financial advice. Small Business just does not have the money if they have managed to survive through this communist party that is running this country. IFA come up with some better stories or you will end up like choice magazine, a puppet to the union funds.