According to research undertaken by Bibby Financial Services, 23 per cent of SMEs in the UK trust friends and family the most when seeking guidance. This was followed by financial advisers (18 per cent), the internet (14 per cent), accountants (14 per cent) and solicitors (nine per cent).
In terms of the key areas in which SMEs need advice, the issue of tax payments is the topic that businesses most frequently seek advice on, followed by sales and marketing, and funding.
Some would argue that this is a wake-up call for those advisers supporting businesses. Given this, more needs to be done to ensure that SMEs are linked in directly into the high quality advice that the professional services businesses, both large and small, can provide to the business community.
During the recent review of access to finance that I undertook for the Welsh Government, this was a theme that was reinforced by many of the accountants I interviewed over the last twelve months.
Whilst the availability of funding was seen as an important issue for many of their clients, what was equally important was the provision of advice as to how to best access that funding and, more importantly, how to utilise it within the business for maximum benefit.
In fact, research undertaken for the review clearly demonstrated that many of the organisations that are involved in supplying financial support to SMEs also provide various types of business support to their clients. And there are numerous examples of excellence in combining finance with business advice across the globe.
In the USA, the Small Business Administration provides grants and loans alongside its counselling and training programmes for small business. The Swedish funding agency Almi supplies advisory services to customers at all stages of development - from the idea generation stage to successful companies – and this is done through its own internal advisers and external sub-consultants.
Another best practice example of how finance and business support can lead to benefits for business can be found in Canada.
The BDC is Canada’s business development bank and promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs. A recent review of its services showed that whilst sales growth among BDC clients was up to 14 per cent higher than that of non-clients, those firms that used both the financing and consulting services performed better with sales growth of up to 25 per cent greater than that of non-clients.
This concept is actually not new to Wales as, in its original business plan, Finance Wales stated that “money with management” was an important element in improving investment opportunities for Welsh businesses.
However, this approach was quietly discontinued several years ago despite clear evidence that the provision of advice and support for entrepreneurs who may have little business and financial expertise is critical for the continuing success of the firm.
That is why one of the key principles behind the proposal to establish a new Development Bank for Wales is that business and financial support should be offered alongside funding for businesses.
In fact, as the Federation of Small Businesses noted in its response to my review, there is an inherent benefit in government-supported finance schemes that couples business support to Welsh businesses with finance rather than as separate elements.
Therefore, if Wales is to succeed in developing a positive environment for businesses, then it is clear that any provision of government funding must go work in tandem with specific business, financial and legal advice for SMEs to help them grow and develop.
Most importantly, it is vital that this service is provided mainly by external intermediaries and consultants, as happens in countries such as Sweden, the USA and Canada.
Indeed, the accountancy, advisory and legal professions in Wales should be working hand in hand with a new Development Bank so as to draw in the relevant private sector expertise and experience to add value to the finance provided by the public sector.
In doing so, not only will the SME sector in Wales get the money it requires to grow, but also the most appropriate expert advice required to make the most of the funding received.