The British Business Bank’s recent Small Business Finance Markets 2018/19 Report found that only seven percent of UK businesses turn to their accountant or financial adviser when in need for finance. In comparison, 37 per cent reach out to their bank directly for help, while 19 per cent conduct their own online research. Even more striking, 20 per cent of UK businesses don’t act at all if in need of additional funds.
These numbers clearly illustrate that there remains a significant untapped opportunity for accountants and business finance advisers when it comes to helping their clients raise finance.
Working with a range of partners, we often hear it can be difficult to initiate conversations with clients about sourcing funding and knowing when it is required. Recognise the predicament? If so, the following tips will help you get started:
Identify your clients’ needs
How do you know whether one of your clients might need additional funding? Planning ahead is crucial. Luckily, a growing number of businesses are getting in the habit of cash flow forecasting. Accountants and financial advisers are therefore in the perfect position to help their clients develop a proactive attitude towards business planning.
That said, it is not always easy to anticipate clients’ needs months in advance. We see an increasing number of partners investing time in building stronger relationships with clients in order to better understand their exact business needs. Not only can they then start offering the right support and advice when it comes to funding and business planning, but crucially, they are in a better position to deliver it at the precise time required.
Find out how much funding your client needs
Once you have identified the requirements of a client, how do you know how much additional funding a business needs? For George Wright, MSIF Finance Hub Facilitator, this is a daily task when supporting the growth of businesses: “One of my first questions when dealing with a business looking for funding is ‘How much do you believe you need?’ If it’s an amount that they know, I will always ask how they have arrived at that figure. My reasoning for this is that irrespective of the amount that the business might ask for, they shouldn’t be applying for funding without having undertaken some kind of forecasting, whether this is a simple cash flow or an integrated set of forecasts.”
Gregg Harding, Business Finance Specialist at Oxford Innovation, a business advisory organisation, believes that intermediaries can add value by sometimes asking the more uncomfortable questions: “Helping clients with a ‘sanity check’ and determining why the funding is necessary is where accountants and financial advisers can really make a difference. New funding might increase a business’ turnover, but is it having a considerable impact on their profit? And if the client is taking quite a risk, does it, ultimately, make business sense?”
Stay on top of a changing industry
In order to be able to advise clients about the different funding options available to them, it is crucial to stay up-to-date with current trends and developments, but also to make the relevant industry contacts. Regularly attending trade shows, networking events and reading relevant news and publications all help to provide a solid understanding of the funding landscape.
With the advisory landscape constantly changing, knowledgeable and dynamic accountancy and business advisory practices are set to be the real winners. Ultimately, they will be in a better position to attract and retain clients than their competitors, and by extension, grow their own business.
Ben Bradnam is Spotcap’s Business Operations Manager and will be speaking at Accountex on Wednesday, 1 May, on Business Funding Beyond Banks. Find out more about Spotcap here: