A new report on SME business owners reveals a few monsters under the bed — but also gives insights into how you can make life easier for your SME clients.

For many accountants, SME business owners are one of their most important client groups. But do your SME clients see you as a strategic resource who can actually help them run their businesses better?

A recent study by Bstar research house takes the pulse of the Australia’s SME sector, with input from over 500 small business owners about their current position and aspirations for the future. The research report also uncovers the key challenges that are worrying SME owners at the moment. Here are the six scariest ones.

Monster 1: Business planning

Bstar’s research shows that business planning is the number one challenge for SME owners. But although most know they really need to step up in this area, very few have. In fact, 72% still haven’t put together a proper business plan. Usually, this is can be traced back to the constraints of day-to-day business management; SME owners clearly struggle to find the time and energy to focus on the bigger picture.

Monster 2: Succession management

According to Bstar, 90% of businesses don’t have a succession plan in place. Of the business owners surveyed, around half see succession planning as something that can be put off for another year or more. Many SMEs are still family-run businesses — but even if the current owner assumes their kids will eventually take their reins, often they haven’t actually started this all-important discussion.

Monster 3: Stress

Because the success of a SME business rests heavily on its owner, the majority of your SME clients probably don’t take regular breaks or holidays. This can send their stress levels into overdrive, putting them at risk of burnout and a whole range of health issues. In fact, only 57% of SME owners say they spend as much time with their family as they’d like, whereas those who are in business with family members can actually find this to be a source of conflict and tension.

Monster 4: Cash flow

In a SME business, sound cash flow management is vital. But as operational costs continue to rise, many SME owners find it particularly challenge to manage their cash flow — especially if their business reporting isn’t as regular and detailed as it could be. Only two in three SMEs are producing accurate and timely business reports, which suggests that the other third of small business owners are probably struggling to keep track of their incomings and outgoings.

Monster 5: Asset protection

With all their energies focused on the daily demands of work, many SME owners aren’t setting up measures to protect their business and personal assets for the future. Surprisingly few understand the importance of estate planning — only one in five have made comprehensive estate plans and fewer than half even have a Will. Consistent with the research findings around succession planning, SME owners have also put off thinking seriously around their retirement. Around 9 in 10 don’t know how much money they’ll need to retire on, while only 2 in 10 except to fund their retirement by selling their business.

Monster 6: Declining sales and profits

Many SME business owners are feeling the squeeze on their margins, are they strive to stay viable in a competitive marketplace. In terms of profitability, 27% think their business isn’t in great shape, but it’s interesting to note that 31% don’t actually know how they compare to their competitors. It’s a similar story with sales growth: 27% simply don’t know how their business measures up against the competition.

Ready to slay some monsters?

It’s clear to see how your SME clients could benefit from specialised advice and support from their trusted accountant or financial adviser.

For instance, you could train your SME clients in how to use accounting software so they can streamline their internal processes and systemise their business reporting. You could also offer to undertake industry benchmarking research or help them identify lending solutions to smooth our any short-term cash flow issues.

And of course, there are plenty of ways to help small business owners prepare for the future: from strategic planning and succession management advice to guidance around saving for retirement or estate planning.

Of course, every business client’s needs are different, and so are their expectations around what they want from their accountant or adviser. The most important thing is take the time to truly understand the challenges each client is facing so you can position yourself as part of the solution.

Download Bstar’s SME Research Report 2016/17

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