Accountants urged to pick business winners

Responsibility for spotting the company success stories of the future lies with all accountants, argued a leading venture capitalist.

Mike Pacitti, a director of the UK’s largest venture capital company 3i, called on accountants to use their financial nous to distinguish the potential winners from the future failures.

Pacitti told the Scots ICA conference: ‘It’s the responsibility of all of us to identify those companies with this potential, to separate those that will never grow from those that can make the quantum leap to success.

We must ensure they are financed for rapid growth.’

Delegates also heard Pacitti’s views on how to achieve and finance growth in the independent sector.

He revealed that a recent Manchester Business School study of 160 companies financed through 3i had isolated a number of key factors essential for a fledgling company’s success.

Vital ingredients, according to Pacitti, include developing a strongly-focused business strategy, ensuring product differentiation, selling to other businesses rather than consumers, investing in plant and machinery, and establishing and maintaining good relationships with suppliers and customers.

He added: ‘If you are not doing something different from the competition, why should your potential customer come to you? Those companies revolving around a totally different product tend to be the winners.’

Pacitti stressed that 3i’s main investment criteria was good ‘management, management and management’.

‘All the key business functions of a company need to be there,’ he continued.

‘But they need to be covered by appropriate and motivated individuals who have a financial stake in the company.’