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SMEs

By Mark Gold, chairman of ACCA’s Global Forum for SMEs

I gave a keynote speech at the SME/SMP forum held by ACCA Uganda, in Kampala, recently.

As the chair of ACCA’s global forum for SMEs, I know that small businesses are critical about global growth because they feel there are many obstacles in their paths, such as lack of finances; absence of trusted advice in overseas markets; and scepticism of the unknown.

My speech was about these key issues and how this business sector is much more likely to use an accountant, because the advice they get from their accountants is the most trustworthy of sources.

ACCA has launched two campaigns in the past year to try and allay some of these concerns – public value and the complete finance professional. Both aim to show the wider public, including businesses, just how dependable the accountancy profession, specifically ACCA qualified accountants, is.

Due to the continuing global economic crisis, it has been hard for small businesses to find the funds to aid global growth during its time of need.

Banks are also being cautious with their money and so are not lending as much to SMEs, which fuels financial hardship for small businesses.

Accountants need to be on hand to advise those who seek it, before any “crisis” arises, not just when a problem has occurred. Problems need to be stopped in their paths before they develop into bigger problems.

Charles Ocici, executive director of Enterprise Uganda, came up with solutions for accountants and SMEs alike:

  • Cultivate the culture of taking professional advice FIRST, not only when there is a problem, or when they need a loan!
  • Offer solutions in a phased manner – if you gave a baby ten injections all in the same spot on the same day you kill it!
  • Use a language easily understood by your client
  • Take time to get into the guarded space of the entrepreneur to secure their trust.
  • Keep professional distance to be respected
  • Systems run the business – but people run the systems, so check how professional are your OWN internal and external team.
  • Price is not the main reason customers leave
  • An increase of 2% of sales equals a drop of 10% in costs.

We also had a panel discussion about why small business will not use small and medium practices (SMPs)

  • Taxes – they don’t want to register and risk having to back and regulate and pay for previous years.
  • Costs
  • Non-disclosure – cutting corners and don’t want transparency
  • So many fake accountants

There is concern over finding legitimate accountants, but the best way to check their credentials is to search for them on the internet and ensure they are ACCA approved, or contact the ACCA national office in the country you live in and they’ll be able to help you.

SMEs must include in their investment strategies good financial advice. It is key to investments and without it, decisions will not be made properly without the necessary guidance.

There should also be government support for SMEs to help them become competitive.

There is a need to educate small businesses that accountants are needed throughout their business lives, not just to get things going or to resolve any issues that may occur along the way.

SMEs are at the heart of our global economy, they have helped greatly in restarting the economy where national, and even global organisations, couldn’t.

Accountants and small businesses need to work together to keep things going. They are vital assets to the economy.

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By Mark Gold, chair of the Global Forum for SMEs, ACCA

Despite representing more than 90 per cent of global businesses, and accounting on average for 50 per cent of gross domestic product and 63 per cent of employment, SMEs have by and large been marginalised in the debate about sustainable business – both in terms of policy and practice. ACCA Global Forum for SMEs  has published a new policy paper  that looks at why this is the case and how we can change that. We know that SMEs have been slow to adopt environment-related improvements with only 29 per cent of SMEs in the EU thought have introduced measures to save energy or raw materials, compared with 46 per cent of large enterprises (see here).

The picture is likely to vary across Europe but as an average, the potential for improvements are certainly there, as well as the resulting benefits. So why are SMEs still thought to be slow in terms of recognising the importance and benefits of sustainable business practice?

One aspect is certainly that all too often we end up talking about SMEs as one homogeneous group, which is usually unhelpful. If you consider that this includes businesses with zero employees (only the owner manager) and those that have up to 250 employees, it becomes clear how vastly different these entities are. Their levels of formability, internal capacity and specialisms, not to mention motivations can mean that they end up in fact having very little in common when it comes to sustainability. But all too often we have sought to engage them without appropriately recognising how diverse and disparate this segment or the business population is.

The second question is: are we able to capture all the activities that SMEs do in this area appropriately? Are we asking the right questions? If we ask a business owner what their CSR strategy or sustainability practice is they may draw a blank face. They won’t think to tell us about the local charity they are supporting, about providing young people with work experience nor will they think about the cost savings they are seeking to make in their energy consumption as relevant answers. So are we capturing all the ‘business as usual’ activities that they are already doing?

Finally, are we giving them the right tools to communicate these and to engage? We talk about sustainability reporting, assurance, environmental management systems not to mention all the ‘jargon’ that has developed over time in the sustainability field. It is no secret that much of this has been developed with large businesses in mind so it is therefore no wonder that we are not seeing many enough SMEs engaging.

What I know from my own practice that specialises in creative industries and deals with thousands of SMEs each year is that these are responsible businesses, with a positive impact on society and a careful approach to environment. We ought to be able to capture this better.