Email a collegue.| Headline: | Are small businesses planning to fail? |
| Description: | Fans of BBC2’s 'The Apprentice' will recall the infamous venison soup episode when nice but miserable looking Ben was fired for failing to set a budget for his team’s task.
From the back seat of his taxi ride to the station, he admitted glumly that he had failed to keep a track on expenditure, largely because the margins in his business are so high that he doesn’t need to. Ben owns his own headhunting firm. Apart from reinforcing some bitter prejudices about the recruitment industry, Ben’s attitude to budgeting is typical of what I’ve observed of the small business owner-manager. Their only goal is to maintain profits and drawings levels without worrying the bank manager. Why bother to put that in a written plan? A much quoted research project by Yale University found that only 3% of people had written goals. I suspect that statistic is not much better for small businesses. Without defined targets or KPIs and armed at best with basic management accounts lacking cash flow statements or commentaries, small businesses face a challenge similar to reaching the North Pole without a map or compass. It seems to me that we practitioners are in danger of missing a golden opportunity here. Instead of tacitly colluding with our clients' head in the sand approach to business planning, we could be proactive in our service delivery. We could journey alongside them through the financial year; helping them to plan, record and control their business performance instead of turning up after the year end to carry out a largely valueless audit. It isn’t even as if we’ve much in the way of competition for business planning services. As Malcolm Palmer of A4G Software says, "Very few small businesses have any advisor other than their accountants, so we’re in the perfect position to provide guidance.� So what’s stopping us from changing the focus of our client service delivery from backward looking reporting to forward thinking proactivity? It can’t be that our clients don’t want the change; ask a cross-section of your client base whether they’d like more regular contact and strategic advice and you’re sure to get a large majority in favour. It can’t be lack of skill or ability, especially when there are products like A4G’s One-Hour Business Troubleshooter to help us. Perhaps it’s our fear of change that’s holding us back. It can be strangely comforting to grumble about the continuing restrictions on small company audit work and the increasing burdens of regulation. Our challenge – and I believe our responsibility – is to see the positives and opportunities in the changing business landscape and to allow our own businesses to evolve accordingly. Unless we recognise that our clients need proactive business planning and budgeting advice – and make them want it from us– we may find that we outlive our usefulness to them. And I can’t imagine it’s very much fun to be told, “You’re fired!� |
| Date: | 12.05.2005 |
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