Having worked with many Small to Medium Enterprise (SME) owners, I have come to understand that they are persevering and hardworking people.

The Australian Small Business and Family Enterprise Ombudsman claim that the vast majority (over 90%) of Australian businesses are small businesses.

They account for 33% of Australia’s GDP, employ over 40% of Australia’s workforce, and pay around 12% of total company tax revenue. Small businesses with less than 19 employees, make up 97% of the 2.1 million businesses currently trading in Australia.

I like to think of a SME business owner as a gladiator, irrespective of what happens the previous day, they need to show up and be prepared for fresh challenges.

Yet 38% of Australian SMEs did not survive between the years 2011-2015. Interestingly, the Australian Financial Services Authority reported that in the 2017/2018 financial year there were 31,859 individuals that entered into some type of insolvency activity, 18% related to business.

According to the Australian Small Business and Family Enterprise Ombudsman the sole operators with no employees are the most short-lived with a survival rate of only 56%. Survival rates increase with firm size: micro businesses with one to four employees have a survival rate of 68%. Those with 5-19 employees have a survival rate of 77%, medium-sized firms have a survival rate of 82%. The largest firms with over 200 employees have the highest survival rate of 83%. I beg the question, ‘do the owners and boards that direct larger businesses have better governance as they have the right resources to guide and direct their organisation as well as a larger capacity to increase their strategic business effort?’

Research shows that the time and effort an SME commits to innovation, operational, organisational processes and marketing methods are 40% for businesses with zero to four employees, 60% for businesses with a team of 5-19 and up to 80% for those with 200+ team members.

The challenge small business entrepreneurs have is the inability to separate their mindset between ‘thinking, rainmaking, delivery and operations’. Most need to sit across business development and commitment to delivery. Whereas in a business with structure, including defined roles, responsibilities and delegation, KPIs and outcomes are the focus.

According to score.org in the US, the top four reasons businesses fail are poor cash flow (82%), little to no working capital (79%), lack of a business plan (78%) and lastly, incorrect pricing (77%). Today, in our evolving share economy, we can manage and support the needs of the SME by sharing critical management roles and outsourcing. The business plan can still be delivered through virtual roles with accountabilities that deliver less of a financial burden on the entrepreneur. The first step is getting the business plan right by engaging a professional with a business background.

I would suggest any entrepreneur to first engage an accountant and get the business plan completed with the financials supported by a cash flow statement. Then develop the monthly, weekly and daily KPI’s. By having an Accountant, it’s possible to take care of all 4 key issues listed by score.org. If it means getting out of the survival mode to focus and growth by having an accountant as your advisor, then having an accountant does not look like a cost anymore does it?

According to the employment opportunities in the website www.seek.com.au should you decide to employ a full-time accountant for your business, expect to budget approximately $70,000 (minimum), or should you decide to go with an experienced accountant expect to pay anywhere between $120,000 to $140,000 per annum. However, if your business’ current cash flow won’t allow for this level of investment, consider engaging an accountant on a part-time basis. Investing in an accountant, CRM and the right accounting system will be the best decisions you make for your business.

So, what key things must you find out before hiring an Accountant?

My top 5 are;

  1. Are they experienced in working with similarly sized businesses to yours?
  2. What personal experiences do they bring to the table?
  3. Do they have any experience in the market your business operates in?
  4. Do they understand where you want to go as a person and a business? Ask how they see the relationship working.
  5. How will they help to manage the accountabilities for the business plan they will develop with you for your business?

If you have any questions regarding the benefits of employing a virtual accountant, I’d love to hear from you. Please contact me through our contact us page, found here.

By Shamal Tennakoon, Hill Rogers