An alarming amount of SMEs turn to family and friends for advice, rather than experts, leading to potentially expensive mistakes.
SMEs are failing to make use of expert advice when setting up their business, according to new research from Aviva, leaving them vulnerable to costly mistakes. Two in five (38%) rely on advice from family or friends, while just 13% consult financial advisers, 9% use legal advisers and 6% turn to insurance providers.
SMEs found that the top three hurdles when setting up their business were financial administration (32%), marketing and sales (31%), and understanding and fulfilling legal obligations as an employer or business owner (30%).
All were areas that they had little or no knowledge of when setting up – three quarters of SMEs knew little or nothing about bookkeeping or marketing and sales. An even greater proportion (85%) said they knew very little about their legal obligations as an employer.
Having established their businesses SMEs say the top three hurdles that they have still not been able to overcome are marketing and sales (26%), getting financial help (18%) and understanding legal obligations as an employer (also 18%).
Employer obligations, for many businesses, will include overcoming hurdles like pension auto-enrolment for the first time. While Aviva’s research shows a third have done so already, one in five (21%) say they haven’t yet set up a workplace pension but know they need to at some point, and over a third (36%) of micro employers (those with 1-5 employees) don’t think they need to.
Angus Eaton, managing director of commercial lines at Aviva, said, “Making the time to balance the management of day to day customer, employee and supplier demands with protection against nasty surprises is a perpetual challenge for any business. Great advice helps.”
“It’s only natural to want to consult with your family and friends but advice from professional experts can save time and money, helping small business owners with practical solutions, learnt from similar experiences in other businesses.”
“Whether it’s getting hands-on help with bookkeeping, or getting to grips with the legal obligations associated with being an employer, there is a wealth of advice and material designed to support SMEs along every step of the way. Government resources such as those on the Great Business website – particularly for fledgling SMEs – are a great place to start.”