Exponential small business growth creates new advisory market

Exponential small business growth creates new advisory market

Exponential small business growth creates new advisory market

A new accountancy advisory market has arisen as more businesses hit steeper growth trajectories in tighter timeframes, according to Smith and Williamson’s head of professional practices and head of business interests, Giles Murphy.

“If you look at the underlying growth in the in the wider economy, there’s clearly a lot of growth coming from fast-growth businesses,” he said.

“There is a growing demand for businesses who want to grow, grow fast, grow quickly, both in terms of business, but also in terms of the owner’s aspirations. There’s a greater market out there looking for the types of advisory services that can help businesses really achieve their scale-up objectives.”

UK fintechs received £37.4bn in investment in 2019, nearly double the investment seen in 2018 according to a KPMG report. Another report by Deloitte found that global investments in fintechs rose to £53.3bn ($69bn) in 2019, up 17% on 2018.

Murphy believes that as businesses grow rapidly, they often lack the time and expertise to scale-up effectively, leaving accountants to play a crucial advisory role.

“If you take a more traditional business that would grow, it would grow at perhaps a slower, steadier rate. Therefore, the challenge of getting in new financing, the professionalization of management, etc. you’ve just got a longer period of time over which to do that.

“But given the fast growth of some of these companies, they have far less time to take on board all of these challenges that they’ve got, therefore, I think they’re more likely to turn to advice, particularly people who have seen this done in other organisations.”

This was a key added-value offering that accountants can bring to their clients looking to scale-up their business, Murphy adds.

“One of the great benefits we can bring to bear is that we’ve been there and done that with other similar businesses, and therefore we can share those experiences,” he says.

Sancho Simmonds, assurance and business services partner at Smith and Williamson says scale-up businesses face a number of key challenges where they look to accountants as advisors to help.

Access to finance was seen as the key issue, but then firms had to ensure they had the infrastructure in place to prepare for upwards of 25 percent year-on-year growth. They also had to ensure they had the right talent in place to scale, alongside the right leadership on the board.

Simmonds believes Smith and Williamson, winners of Large Firm Innovation of the Year at the British Accountancy Awards in 2019, has thrived in the scale-up space because they embraced the more advisory role of an accountant.

“What’s really helped us to talk with our scale-up businesses is understanding what their issues are, therefore taking it one challenge at a time. Rather than have a relationship where we come and do your audit, we come and do your tax compliance or whatever it might be, we have a far more engaging discussion around what their objectives are and how we can help,” he says.

This was critical to the success of an accountancy practice as clients are becoming increasingly demanding, while the competition is getting tougher.

“Clients are looking for more. How do you differentiate yourself from the competition? Some people say: ‘You can do a tax comp just as well as BDO as well as Grant Thornton, but why would I choose you over the competition?’ Well actually, we can help you grow, we can help you develop your board, whatever it might be. It’s really important from a differentiation perspective to offer some value-adding services,” Simmonds says.

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