Helping small businesses get ready for today’s economic challenges

By Emma Crawford-Falekaono, Head of EMEA at Ignition

Recently, the rate of inflation in the UK’s Consumer Price Index reached a new 40 year high of 9.4% amidst the cost-of-living crisis, with the Office for National Statistics saying the most significant contributors came from increased motor fuels and food prices. In turn, the costs of doing business are rising and many companies are under immense pressure to pass these costs on to their customers. To navigate this, alongside other global workforce market challenges such as talent shortages, small business owners are having to think about the need to increase prices for customers while lowering expenses to protect their bottom line.

The professional services and accountancy sectors have a critical role to play in helping organisations understand how they can absorb these increased prices and keep some of their other costs down to ensure business success. Professionals should grasp the opportunity to help their clients at a time of need and build trust in the process, through sharing advice on changing pricing models and wider business strategy, thereby streamlining processes to ensure customers are on top of these changes.

Empowering SME leaders to have those awkward conversations with customers

Money is a difficult subject in our personal lives and in business, but for accountants, having healthy conversations around financial matters can foster trust between them and their clients, and improve working relationships. Whether this is through communicating the impact of changing pricing models or how inflationary pressures such as increasing energy costs will affect the bottom line of their clients, accountants and professional services advisors need to empower themselves to have the discussions that matter – not avoid them.

This can transform working relationships from being underpinned by tension to instead being built on transparency and open communication. In the coming months, businesses may well need to make difficult decisions regarding the continuity of their operations and advisors should proactively open channels of communication to help their SME clients feel reassured.

It is useful for accountants and advisors to identify any challenging and ‘awkward’ conversations before they happen by assessing what the client might want an opinion on – for example, support on tax planning could be on the upper end of the ‘awkward’ scale. Sometimes, they may not have the exact answer that a client needs at a particular time, and it can often be best to have that honest conversation and relay that reality – and then do the work into getting them an answer that will help. Deadlines, for example around payment processes, can also lead to awkward conversations with clients and being honest about meeting them is vital to relieve any potential tension.

When going through difficult times, clients may be less open and as a result, they don’t always provide all the information that is needed. Identifying and challenging this is crucial. Accountants need to make it clear that issues such as tax changes and inflation changing costs for customers cannot be brushed under the carpet. They need to be tackled, and accountants have a job here to deliver this message with empathy and drive proactivity across the business.

Helping SMEs during their hour of need

In every challenge lives a greater opportunity. There is no denying that things are currently difficult for accountants, professional services, clients, and society more broadly. The cost-of-living crisis, political uncertainty and supply chain issues have created a tense environment for businesses to operate in – but they want to be reassured by their advisors that they can weather the storm. Here, accountants can work with clients to ensure they have the right processes and procedures in place to keep their finances in check. For example, using centralised data and dashboards so they have a consolidated overview of their operations, to clearly forecast and navigate the road that lies ahead.

Current political uncertainty should also be factored into conversations with clients. In the UK, the election of a new Prime Minister has the potential to create additional implications for SMEs when it comes to tax. This is a key theme of the current leadership campaign, and the tax strategy differs depending on the stance of the person elected.

For example, Rishi Sunak is planning to stick with rises in corporation tax next year, whereas Liz Truss is looking to freeze it. If the UK tax regime changes, then SMEs will need advice on how to remain compliant and move lockstep with regulation. These potential political outcomes will have an impact on the way businesses operate and any potential increases in tax will need to be communicated to clients, to make that process as smooth as possible.

Help is at hand

In the coming months, accountants and professional services advisors have an opportunity that they should not fail to make the most of. With SMEs facing significant economic challenges, accountants have a chance to demonstrate that they are truly trusted advisors who understand the needs of clients and can provide tangible solutions, such as strategic advice around potential tax changes and how inflation might affect their clients’ bottom line. Accountants need to make sure these conversations are effective and empathetic, to continue building trust with their clients and guiding them through these constantly evolving times.