How accountants are helping small businesses with growth plans

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New research reveals nearly three-quarters of UK businesses are starting to make long-term growth plans. Here’s how accountants are helping them.

Many UK businesses have been focused on staying afloat through the pandemic and cost-of-living crisis, but some are now taking a medium-to-long-term view.

According to Novuna Business Finance, 71% of SMEs are working on ‘specific growth strategies’ for the future, compared with 65% in the first three months of 2021. Finance and accounting, along with construction, agriculture, manufacturing and IT/telecoms are among the sectors experiencing a rise in the number of firms making future plans.

Although there appears to be less optimism around short-term growth, there is an overall increase in businesses looking ahead to the next twelve months and beyond, the research found.

In general, growth plans set out clear goals, targets and KPIs for the future of a business, along with specific strategies and plans on how to reach these goals. As the name suggests, these plans focus primarily on growth opportunities such as increasing sales and/or adding new product or service lines, recruitment drives, opportunities to diversify or expanding overseas.

A growth plan generally includes:

  • Growth opportunities (overseas expansion, opening new sites, targeting new markets, mergers & acquisitions).
  • Identification of KPIs (sales growth rate, net profit margin, market share)
  • Staff/expertise (recruitment strategies, training and development, upskilling)
  • Marketing strategies (allocating budget and resources, identifying potential advertisement opportunities and tapping into new markets)
  • Financial condition (looking at company performance including cashflow review, assets and liabilities).
  • Timeframe (agreeing on a specific timeframe for growth plans for the next one to two years).

We asked accountants how they’re helping their clients with growth plans, and whether they’re noticing cautious optimism among small business owners.

We support client growth from forecasting to data analysis to marketing support

Zahid Mustafa, Erdingsworth Business and Tax Advisors

We help clients formulate a growth strategy by producing cash flow forecasts as well as profit & loss and balance sheet forecasts. This helps identify opportunities and threats in the future. These documents can also help to back up the client’s application for finance to fund the growth.

Financial information is vital for a business looking to grow and we can prepare management accounts to monitor progress. We also help with analysing financial information to identify any inefficiencies that need to be eliminated.

We have a network of professional connections that may be able to offer funding for growth. Also, some of our connections can help with marketing the business to bring in more customers and retain them.

The process of growth obviously would take a lot of the business owners’ time and effort. However, the business will still have deadlines to keep to (such as getting the tax returns filed). As accountants, we can step in and take this over entirely to ensure the business does not miss such deadlines leaving the owners to concentrate on the importance of growing.

Verdict: We help clients formulate growth plans by producing forecasting, analysising financial information and providing access to sales and marketing specialists.

Cash flow forecasts and regular management accounting ensures clients stay within budget and KPIs are met

Nicola Mason MAAT, MD, Contractor Unlimited

I disagree with these findings which have revealed that nearly three-quarters of small businesses are starting to make growth plans. I’ve found that in the northwest- the area where we are based – business owners are actually more cautious than before and are scaling back. I’ve seen many more closures than ever before in recent years. Many small business owners have also returned to employment due to IR35, and other restrictive rules.

For the clients who do have growth plans, we always run through a cash flow forecast, with regular management accounts to ensure the client stays within budget and their KPIS are met. Growth plans can only come to fruition if the business ensures they have the resources and capability to meet the service requirements when they are needed.

Verdict: We support clients’ growth plans by reviewing cash flow forecasts with regular management accounts to ensure clients stay within budget and KPIs are met. However, there’s little sign of optimism here.

Growth plans help keep stakeholders onside as clients take advantage of growth opportunities

Vipul Sheth, chartered accountant and MD, AdvanceTrack Outsourcing

As accountancy outsourcing specialists, we work with many accounting firms with a growth mindset. None of our clients are slowing down, which reflects the fact that their clients (typically SMEs) are growing revenues and profits.

The main things holding many businesses back are the lack of skilled staff and Brexit-related challenges. Additional administration needed to access EU markets for example is making it difficult for smaller businesses, many of whom have decided it’s no longer worth serving these markets. If these were solved, the growth would be higher.

Accountants play a key role in helping clients with growth plans. Clients typically encounter problems at the stage when they’re coming out of growth and have a lack of capital to support the growth.

Post-Covid, many businesses have stretched finances with Bounce Back Loans, deferred taxes, etc and now need to finance additional working capital to deliver growth in their business plans. The role of the accountant in helping them navigate these challenges is incredibly important in keeping lenders and stakeholders, including staff and customers, onside as they take advantage of the opportunities presented in the marketplace.

Verdict: Our clients have a growth mindset and rely on us to support them with growth plans to help increase working capital.

Would you like to contribute to future articles like this one? If so, please get in touch with Annie Makoff-Clark at [email protected]. Upcoming topics include: leveraging professional membership, whether technology is improving workload and the impact declining bank services are having on accountants and their clients.

Annie Makoff is a freelance journalist and editor.

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