Why SMEs have lost faith in their traditional advisers

SMEs are relying less on traditional trusted business advisers like accountants, lawyers and bank managers.

Research published last month by East & Partners for debtor financier Scottish Pacific reveals some startling findings on who SMEs turn to for trusted business advice:

• Over 38% of SMEs don’t have anyone they regard as a trusted adviser. When asked who their most trusted business adviser was, 38.6% rejected six separate response options and selected “none really”. This is a huge wake-up call for the traditional SME advisers.
• More than 25% regard their trading partners as their most trusted adviser. That a quarter of SMEs seek advice from their suppliers and customers ahead of anyone else says as much about the close relationships they build with key trading stakeholders as it does about the less than close relationships with parties normally expected to be the trusted adviser.
• Less than 10% nominated their accountant. Accountants have historically been regarded as the logical trusted adviser of SMEs but SMEs do no not see it this way. This is both a threat and an opportunity for accountants. As compliance work is increasingly outsourced and offshored, forward-thinking accountants are shifting their focus towards proactive business advice. Accountants whose practices centre on compliance will struggle to remain relevant.
• Bank managers rate even lower than accountants. Only 4.2% of SMEs regard their bank manager as their most trusted business adviser. Whilst banks offer a range of useful online tools to help SMEs manage their businesses, the standing of the bank manager as trusted adviser has suffered due to high turnover, heavy workloads, removal of decision making authority and general lack of business experience.

Clearly many SMEs have lost faith and trust in the traditional advisers who have not invested in developing relationships SMES want. These SMEs feel they are unimportant, so it’s easy for them to draw the conclusion that advisers are only interested in themselves and don’t deliver value for money.

Because everyone is time poor these days advice is usually sought or offered reactively rather than proactively. Whilst expert advice is often required for past events, SMEs don’t place a high value on compliance work but they do value advice and support on the big challenges of the day as well as those that lie ahead

The internet has changed where SMEs go to get advice

Arguably the biggest reason for the demise of the traditional trusted business adviser is the internet. SMEs are eschewing traditional advisers in favour of peer learnings readily accessible via a range of free online outlets and forums. SMEs engage, often daily, with peers via chat forums and discussion groups. Non-mainstream online media outlets have attracted loyal followers who like the ability to selectively access free, relevant and succinct insights into business issues. For instance, SmartCompany sends this newsletter to the inboxes of around 50,000 subscribers.

And if an SME cannot find the answer to a query via their online network there is always Google.

Cost and accessibility on their own cannot sustain an online venture or forum. Content remains critical and one of the major reasons for the popularity of such groups is the willingness of SMEs to provide relevant content by sharing their knowledge and experiences with other SMEs at no cost and with no expectation of a return. This is one of the most endearing and rewarding aspects of the SME sector and is something larger organisations perhaps do not fully comprehend.

If traditional trusted advisers want to re-establish their standing with SMEs they need to not only address how they engage with clients but also how they counter the ever expanding sources of online business advice.

Neil Slonim is a banking adviser and founder of theBankDoctor, the world’s only specialist source of totally independent and free banking advice for SMEs.

Neil Slonim is an independent business banking advisor and commentator and the founder theBankDoctor.com.au.