In crisis, small businesses need small accounting firms
As COVID-19 has spread throughout the world, our ways of living and working have changed drastically — often in a matter of days or even hours. In this kind of environment, a month can feel like an eternity. But for small and midsized enterprises, a month goes by in a flash. The average company with fewer than 500 employees has less than a month’s worth of cash reserves. In hard times, each passing day can feel like a sprint toward a finish line none of them wants to cross. Because of this, SMEs — which represent over 90 percent of the world’s businesses — have been disproportionately impacted by COVID-19.
These business owners are making very hard decisions about their employees and payroll. They are struggling to maintain ongoing expenses with less or no revenue coming in. And right now, they are deciphering confusing information about which government stimulus interventions might be able to help them.
They need the support of accountants whom they know and trust. Small and midsized accounting practices should be their preferred partners. Why? Because the unfortunate reality is that many SMPs know firsthand what SMEs are going through. With candid and empathetic discussions and a flexible approach, SMPs can enable SMEs with the right tools to bridge the gap between crisis mode and action mode. Each business must make difficult decisions unique to their circumstance, but SMPs should focus on three guiding principles as they help clients navigate disruption.
The first is building on trusted relationships. SMPs are vital because they’re accessible advisors whom businesses have come to rely on, not just for the transactional services like tax audits, but also to help clients solve long-term business problems. Right now, empathy is in high demand. As much of the workforce has migrated to remote work and digital systems are running on overdrive, connecting with clients can be as simple as a phone call or an email. A clear, concise message that says, “These are the mechanisms involved for you to apply for government loans,” will go a long way. Recognizing that people are under extreme stress, both personally and in business, should open the door for authentic and candid conversations that will engender even more trust with clients over the long-term.
The second is acting with speed. Many accountants are perfectionists; it’s part of what enables financial reporting to be done well. But in this environment where information is fluid and everything is changing on a daily basis, SMPs must stay out in front of clients’ needs. In the U.S., for instance, a survey by Goldman Sachs of SME owners revealed that 67 percent did not know how to access or apply for emergency funding. SMEs in that position need proactive guidance. Sometimes that will mean SMPs communicating what they know although it might be subject to fluid change. Professional accountants must offer perspective on the financial information that is available in clear, plain language so that business owners understand the critical nature of their decisions.
The third principle is embracing adaptability. Starting now, firms need to think about how to evolve their operating model. As SMEs themselves, agility during this time will be key. Technology that keeps members of the firm connected with each other and clients is indispensable. Evolved ways of working that might include more flexible hours and more opportunities for reskilling and upskilling are also important. And SMPs should consider providing more business advisory consulting services that are tailored to each individual client.
Accountants have to be translators right now in order to help businesses decode the resources available to them and to help those SMEs adapt their models as well. Restaurants moving to takeaway services likely need advice on online payments. Retail shops might need guidance on minimizing brick-and-mortar costs while fortifying e-commerce operations. Well beyond just collecting information, SMPs can provide tailored, practical advice relative to an individual business and its industry. This creates opportunities for professional accountants to be seen as true business partners.
This is an incredibly difficult time for all businesses, but for those in the SME category, it’s especially uncertain. Looking at China, major enterprises are seeing resumption of work rates hit 98.6 percent, while SMEs report only 76.8 percent, according to the country’s Ministry of Industry and Information Technology. Around the world, small and midsized businesses need the counsel of trusted accountants who can offer real-time updates now, while also helping them map out a completely different course for the next year and beyond. For SMPs and for their SME clients, fostering authentic relationships, making fast but smart decisions, and embracing new operating models at this point in time will say a lot about how businesses are perceived well into the future.