Experts reveal SME check list for business growth

A new survey has revealed that the key threats to growth for small and medium sized businesses included failure to make a financial plan, misunderstanding cash flow and not setting aside capital to pay tax.

The research from an expert panel of Association of Accounting Technicians (AAT) accountants also found that worryingly, four in five SMEs have someone who is not in a qualified financial role managing their financial processes.

This in turn has resulted in potential average losses of around £15,000 a year.

AAT have created a check list for the UK’s smaller sized businesses that aims to encourage better planning and support growth:

• Set up a reserve bank account for a ‘rainy day’.
• Ringfence a percentage of regular income to pay for tax and VAT later in the financial year.
• Spend strategically on investments that will deliver growth (e.g. marketing).
• Find your business’ ‘hidden accountant’ – e.g. upskill a member of your staff in accountancy skills. However, it is best to have an external accountant to provide vital support.

Adam Harper, Director of Strategy and Professional Standards at AAT, commented, “Effective financial planning is critical for SMEs as they often lack the funds to manage an unexpected crisis. There are a number of simple things every business can do to avoid some of the most common financial pitfalls, and free resources, such as the business advice website Informi, can prove invaluable in helping companies recognise areas in which they can improve their management of finances.”

He added, “We are advising SMEs to make use of finance skills as early as possible to help deliver sustainable growth. Businesses can engage an external accountant to provide vital support but should also consider looking for their own ‘hidden accountant’ – that colleague who is best placed to upskill and keep your business in good financial shape on a day-to-day basis.”

To find out more about contracting please contact James on 01442 795 100 or email james.trowell@dolanaccountancy.com.