Is it a coincidence that in the year where we saw record numbers of businesses going bust we also saw a marked drop in the numbers of businesses taking professional advice? Are businesses not taking advice because it’s a luxury they can’t afford? Or do they simply not trust the advice system or the advisors who operate within it?
Small businesses tend to turn to their accountant as a first port of call when they need advice. Yet, according to a survey commissioned by the FSB the proportion of businesses seeking advice from their accountant has fallen from 74% of businesses to 53.7% between 2004 and 2006.
They are not turning instead to their banks or solicitors (also traditionally high on the shopping list). Numbers of businesses seeking advice from banks has fallen from 33.8% to 8.7% and from solicitors from 30.4% to 28.4% over the same period.
They are also avoiding confiding in their peers (a percentage drop of 11.4) or suppliers (a drop of 9.6). They don’t even appear to be seeking guidance from their customers (down by 6.5 percentage points).
Government funded support has also been given a wide berth (down 12.3 percentage points) with just 4.4% of businesses taking up this option. This is perhaps the most alarming of all because it is professional advice generally given free.
The picture becomes more intriguing when you look closely at how the different sources of advice actually performed. Accountants, the most used source of professional advice, is also the sector that gives the highest rates of customers satisfaction. About 77% of people that sought advice from solicitors were satisfied or very satisfied with the results compared with only 50% of people who used Government funded support.
Businesses were 68% satisfied or very satisfied with advice from their solicitors and just under 50% with advice from their banks.
Of the people who consulted their peers, suppliers, friends, family or customers none was dissatisfied or very dissatisfied. One might argue that the people who took advice from these sources would not have paid and so that would explain why they were satisfied.
Interestingly those who took advice from commercial consultants were also neither dissatisfied nor very dissatisfied with 50% being satisfied or very satisfied and the rest being neutral.
It would appear from the results of this FSB survey that businesses go to their accountants and solicitors most often for advice. They use commercial consultants very rarely (only 2.9% compared with 53.7% and 28.4% who use accountants and solicitors respectively) but when they do they are generally satisfied with the results.
Some commentators have suggested that there is a case for a complete revolution in the way Government funded support is delivered with businesses being given business support credits to spend with the commercial businesses advisers, accountants and solicitors that they know and trust rather than going through the Business Link system.
The Brighton & Hove Economic Partnership (BHEP) will be giving evidence to the SEERA select committee on publicly funded business support services. If you would like to comment on the above survey by the FSB please send an email to firstname.lastname@example.org
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Brighton & Hove Economic Partnership
Federation of Small Businesses