When Napoleon first called Britain a nation of shopkeepers, he almost certainly didn’t mean it as a compliment. Nevertheless, in typically British fashion, we took that insult and turned it into something to be proud of. It’s a mark of our enduring entrepreneurial spirit in business.
These days, the love of the enterprising small business owner is still very much alive and well in British culture. As our economy has moved ever more online, so the traditional shopkeeper has been joined by more and more individuals from a wide cross-section of professions who have all taken the brave decision to strike out alone.
CHALLENGES OF BEING SMALL
We now have more small businesses operating in Britain than ever before. According to the FSB, small firms account for 99.3 per cent of all private sector businesses in the UK, 47.8 per cent of private sector employment, and 33.2 per cent of private sector turnover. Small and medium-sized businesses employ 15.2m people and have a combined turnover of £1.6 trillion.
Impressive statistics, especially when we face up to the fact that, in business, being the little guy isn’t always easy. The sheer reach, budgets, and resources available to larger competitors mean SMEs have their work cut out if they want to compete, and nowhere is this more acute than in the financial services sector.
That is why it is so important that smaller businesses in the finance sector understand the advantages that their size can bring, and look to exploit these plus points to the maximum. They may be small, but with that diminutive size comes one particular strength that anyone running a big business would give their right arm for – namely, agility.
ADAPT TO SURVIVE
Agility has never been more important in business than it is now. The economic landscape is constantly shifting beneath our feet, and the wants and needs of the world’s consumers are changing just as quickly. At the turn of the twenty-first century, it would have been a brave person to have predicted that Uber, the world’s largest taxi company, would own no vehicles, that Facebook, the world’s most popular media owner, would create no content, that Alibaba, the world’s most valuable retailer, would have no inventory, and that Airbnb, the world’s largest accommodation provider, would own no real estate. When we apply that pace of change to the next 15 years, the ability of your business to stay ahead of the curve could prove to be the difference between life and death.
A new report ACCA released just last week shows how important being agile is to small and medium-sized practices (SMPs) in the financial sector. For the report, we asked 500 SMP owners from the UK, Ireland, Singapore, Hong Kong, China, Romania, Iran, Malaysia and Vietnam about their growth prospects and where they saw the areas of real value in their business.
At a global level, the offering from SMPs is currently highly focused, with core services typically based on assurance, tax and compliance. However, there is a growing recognition among business owners that this technical skillset is highly adaptable, with over 70 per cent of the SMP owners we spoke to now planning to introduce a new service over the next two years.
IMPACT OF RED TAPE
There is clearly a healthy appetite among smaller businesses to use their inbuilt agility to diversify into new areas of business, which is hugely encouraging. We also discovered that countries where the impact of deregulation has been greatest, such as reduced reporting requirements and rising audit thresholds, were also where the most evidence exists of SMPs radically expanding service offerings. In the UK and Ireland, for example, the SMP service offering was twice as broad when compared to practices in the Asia Pacific, with the typical practice offering more than 20 distinct services.
There is much evidence to show that smaller businesses are among the most affected by the introduction of red tape, so it follows that they will also see the greatest change from its removal. SMPs in the financial sector, and SMEs more generally, are often the “canary in the mine” of business. They are more sensitive to changes in the atmosphere and they therefore have to act more quickly if they want to survive.
There has been much good work done by the UK government to clear the way for business through the Red Tape Challenge initiative but, as always, there is more to be done. The tax system in the UK is in dire need of reform and, with the changes to what a business actually looks like in the modern world, much of our business law is designed around business models that simply don’t exist anymore.
Businesses clearly want to be agile – indeed need to be agile to survive – and as well as cutting red tape and ensuring legislation keeps pace with change, we need to provide the tools our smallest businesses need to innovate. Things that were once considered a luxury, such as superfast broadband, are now an absolute necessity to businesses up and down the country who are looking to innovate and expand into new sectors and new markets.
The findings of our report are welcome, but they should not come as a surprise. After all, the core technical skills of an accountant are highly adaptable across all types of business. Finance professionals in big businesses are relied upon to deliver strategic advice, plan for the future, manage risk, and oversee business change. It follows, therefore, that these very same finance professionals who choose to run a small business are perfectly placed to succeed.
It is this inherent adaptability which will allow smaller businesses to stay competitive in an ever-changing global marketplace and an increasingly competitive financial sector. Let’s make sure we give them what they need to keep on punching above their weight.