Microsoft. Apple. Amazon. Three behemoths of the business world, and there is one characteristic that unites them all.
In fact, what is true for that mighty trio is also true for every giant corporation on the planet. They all started as small businesses - in garages, spare rooms or college dorms.
We do well to remember that when we examine the health of Wales’ SME sector. Because before we can build the mighty powerhouses that drive our economy, we have to look after the tiny outfits and give them a chance to grow. At the recent Fast Growth 50 Awards, we saw fantastic examples of the dynamism across Welsh businesses. The firms on the list provide inspiration to other businesses through their entrepreneurial spirit, and contribution to prosperity, employment and innovation in sectors from medical technology, to construction to fintech and recruitment.
According to research from the OECD, the UK ranks third for numbers of start up businesses but only 13th for businesses that successfully scale up. A recent event hosted by the British Business Bank and Scale Up Institute highlighted the factors that can help businesses to scale up. These include access to finance, access to support networks such as mentors and non-executive directors and access to new markets. Accountants have a key role to play in supporting businesses with their growth ambitions, through their expert advice on all matters relating to their business.
The challenges facing SMEs have never been more pressing than they are now, when Wales’ small and medium sized businesses are buffeted by headwinds.
Recovery from pandemic is slower than we would like and supply chains remain under strain. Costs of everything - from raw materials, to energy, to labour are all rising. Customer spending is under pressure.
In our latest Tracker survey with the Corporate Finance Network (CFN), accountants across the UK reported that their clients are struggling to secure working capital due to a number of factors including a rise in interest rates, with 57% reporting that borrowing to manage cash flow has been more difficult in the last quarter than in the previous 12 months.
Almost half (47%) say that supplier credit is harder to access. Underlining the serious business challenges facing Wales, accountancy firms in Wales which participated in the survey reported that some clients were considering reducing opening hours or reducing recruitment and training to make further cost savings, with some business owners saying they were even contemplating considering retirement.
But as I travel around Wales talking to people in business, the same issue crops up again and again. Most SMEs have ambitions to expand but many are held back by staffing difficulties. It’s all about finding, recruiting and keeping the talented people who can add value and fuel growth. That applies just as much to small and medium sized accountancy practices (SMPs) as to other sectors. These practices form the backbone of local economies, supporting businesses of all sizes and across all sectors of the Welsh economy, providing advice and guidance to their clients.
They know their clients, and understand their business and the challenges that they face, and are a trusted advisor, there to support them. They often also serve clients outside their region, as they can offer a level of personal service to clients that larger firms can struggle to provide.
As that skills gap continues to hamper SME growth, and small and medium-sized accountancy firms face a shortage of talent, ACCA has extended its support through a new employer toolkit.
To help ease the hiring headache ACCA has published an SMP Talent Management Toolkit which provides a wealth of advice and resources for SMPs on identifying, attracting, developing and retaining talent. Much of the guidance can be applied to small and medium sized businesses across sectors beyond accountancy.
It reflects the fact that getting the right talent is key to the success of businesses in all sectors. It also recognises a growing trend in how potential employees view their work and careers. New recruits are increasingly looking for purpose and meaning in their careers and employers need to be strategic and targeted in their efforts.
There’s a strong opportunity here for SMEs to attract the best people by demonstrating how they make a tangible contribution to wider society.
This is partly a generational issue. When I entered the world of work (quite a while ago…) I didn’t lose much sleep worrying about what motivated my bosses or about a company’s relationship with the world at large. The job was enough, and I suspect the same was true for most employees of my vintage.
It’s different now. The so-called ‘Generation Z’ of 18-25-year-olds entering the workforce and beginning careers now are much more likely to take a view on what a potential employer contributes - in a broader sense - than simply a monthly salary.
Frankly, they don’t want to work for a business which doesn’t largely share their values.
The toolkit helps employers develop a strong recruitment brand by providing new insights into what candidates are looking for in potential employers. It identifies messages accountants and their clients can build on to demonstrate the unique opportunities they are able to provide.
When it comes to retaining talent, employers must find multiple ways of rewarding attainment and development, as well as ensuring that the physical and mental wellbeing of their people is a top priority.
Not every small business owner is ambitious for growth. Some prefer to stay as they are and don’t want to scale up. But most do harbour grand dreams of expansion and of conquering new markets in business. Without that dedication to building a winning team that’s equipped to make a mark in the marketplace, those dreams are destined to remain just that - dreams.
Lloyd Powell is Head of ACCA Cymru
