Another day, another story about SMEs’ losing out on money.
Whether it’s because they’re getting paid late by their own customers, or because they are losing out on cash by not integrating the latest payments technologies, small businesses have a cash flow problem. The latest report to explore the issue suggests another culprit to poor financial management is wasted funds on services that would theoretically help the business succeed, yet ultimately were ineffective.
Reports this week said new research from knowledge marketplace Zeqr found small businesses are, indeed, spending money on financial services. Analysts calculated U.K. SMEs spend $11.8 billion on accounting services and billions more on services like insurance advisory, IT, payroll and other money management tools.
But for all of this money invested in external help to get finances on the right path, small businesses seem to be spending in vain.
According to Zeqr, small businesses have owned up to wasting a collective $16.3 billion on these third-party professional services. Two-fifths of SMEs said they found these services to be riddled with fixed fees, causing dissatisfaction with the offering, with many arguing that these services didn’t help the company in the way they were supposed to.
A common complaint, Zeqr found, was that small businesses had to only ask and expect one or two questions, but wound up being forced to pay either a fixed or ongoing fee to obtain advice or guidance.
“The report suggests this belief is damaging SMEs’ trust in accessing external talent when it comes to areas they are unskilled in,” reports in Consultancy.uk concluded.
The report’s co-author, a freelance management consultation expert, Dr. David Fraser, said the data suggests SMEs are in a bind when it comes to finding affordable professional services.
“Smaller organizations should not be attempting to source all the expertise they need internally,” he stated. “That’s not affordable — but nor is the kind of exorbitant fee larger consultancies typically want to charge, often for recycled material not really tailored to the true needs of the client.”
“There’s definitely a need for an efficient way for businesses to access diverse external expertise in an only-buy-what-you-need fashion, and, of course, the best external experts will always put the client’s needs ahead of their own business goals,” he continued. “Buyers should look for quality and experts who truly understand their issue.”
The data could signal broader issues of SMEs’ access to third-party services of all kinds, and to digital skills that can help ease cash flow and finance pressures.
Half of companies surveyed are lacking digital skills that researchers dubbed were “essential” for the success of their companies. That includes website creation, SEO, social media and SME software development.
Zeqr launched operations earlier this year to facilitate SMEs’ access to consultants and experts, allowing them to book time with these professionals. Reports and Zeqr both pointed out the U.K. government’s warning on small businesses’ lack of technical skills, which forces small business owners to seek third-party support, services and guidance.
A report from the U.K. House of Commons Science and Technology Committee uncovered what it dubbed a “digital skills crisis.” The analysis found 90 percent of jobs require some kind of digital skill, and that there is a massive gap between supply and demand of professionals who have these skills.
“As digital skills increasingly become the foundation of a competitive economy, businesses need to invest in digital training to increase productivity and stimulate innovation, or we risk the U.K. being left behind,” the report concluded. “The rapid pace of digital transformation is changing the nature of the U.K. workplace.”
According to Zeqr, though, those investments are both costly and, often, inefficient, with SMEs reluctant to pursue third-party services like financial advice or web site creation thanks to fees linked to these offerings.