SMEs boosted by fast decisions, customer feedback

CIMA Member in Practice Fiona Bevan, ACMA, CGMA, describes recent trends in the UK SME sector and how her company, Bevan Financial Management Ltd, adapted to the COVID-19 crisis. She offers advice for SMEs — and larger businesses — on effective customer feedback and how businesses can improve and speed up their decision-making without losing control.

Bevan is speaking at AICPA’s & CIMA’s ENGAGE EUROPE conference on 19 May on the topic of “How to Rethink Your Organisations’ Business Models and Revenue Streams”.

What you’ll learn from this episode:

• The trends in the UK SME sector, including online and “niching”.
• How the pandemic has changed SME business models.
• Effective ways to obtain customer feedback.
• What larger companies can learn from SME decision-making.
• How business information needs to evolve over time.

Play the episode below or read the edited transcript:

Oliver Rowe is an FM magazine senior editor. To comment on this episode or to suggest an idea for another episode, contact him at Oliver.Rowe@aicpa-cima.com.

Transcript:

Oliver Rowe: Joining the FM podcast is small business expert Fiona Bevan. Fiona will be speaking at the upcoming ENGAGE EUROPE conference on the topic of, “How to rethink your business model and revenue streams”. Welcome, Fiona.

Fiona Bevan: Hi, Oliver.

Rowe: In 2020 SMEs made up more than 99% of UK businesses and micro businesses employing up to nine employees accounted for 96% of businesses. Fiona, in your finance advisory role what trends have you seen over the past year or two in the SME space?

Bevan: So 2020’s obviously been a particularly challenging year for all businesses, but even before the pandemic businesses were having to adapt to a fast-changing business environment, often led by digital technologies. In retail, for example, two recent trends have been really affecting the way that businesses operate.

Firstly, high street shops have been finding that if they didn't offer at least some online web-based buying opportunities, their market share was restricted. Although web technology can be a fairly expensive investment initially it's more than paid back by increased revenue. Certainly, companies who've made the move to online shopping solutions for customers have found the pandemic much easier to survive.

Secondly, with people becoming more and more conscious of “local” because of environmental concerns. And in the West Country we've certainly seen this — there's a large number of community-based businesses that have sprung up either as community shops and cafes or businesses selling and distributing local produce.

Another area that I think is becoming a trend is niching, so this is where you really specialise in offering something special, either because you are specifically expert in a particular area if you are a professional or you're offering to a very particular part of the business community, the service or the product. And certainly I found that the Members in Practice, and you'll know that we've got quite a Members in Practice community within CIMA, so those small business owners who are the most successful are the ones that either have niched on the service that they specialise in or the business sector that they serve.

So, as far as the work that we do for clients as management accountants, there are also a couple of trends that have impacted on the way that we work. The move towards some great cloud-based solutions for providing management reporting and financial control has made a big difference to anyone who's working within the SME sector. And it’s meant that we can be more proactive, even if we're working from our home or from our offices. I will say, though, that doesn't mean to say that that in the long term that's any sort of way round building relationships with clients; we still need to have that face-to-face contact, but at least it means we've been able to carry on working productively during the time when we haven't been able to get out and about and meet our clients.

Also, for clients looking for funding, there are lots of different types of funding that have come up over the last, probably the last ten years. The funding market has really opened up, and whereas before your first port of call would be your bank. And now that's not necessarily the case, and one of the things that we can make sure we offer our clients and particularly if you're working as a finance controller or finance director within an SME, you really need to be looking at what those other opportunities are because they're quite often much quicker at getting funding into your business, but also they're much easier than going through the rigmarole of the processes of a high street bank. So they're the main ones I would pick out as trends that I've identified.

Rowe: You've touched on some of the changes businesses have made during the pandemic. Is that something you've done with your own business, and what are the further steps that businesses could take to put that into effect?

Bevan: Yes, I've certainly had to change the way in which I work within my business. Within my management accounting support business, as we've discussed, I've not been able to visit clients at their premises, but I do know very clearly what my clients want and need. So because of the move to online accounting that I talked about earlier and also the Zoom technology that we're using today — it's meant that I can have still have face-to-face virtual meetings with clients and I can share documents with them, for us to be able to talk about. So it's like we're in the room together, even if we're not able to meet face to face.

The other thing I’ve found is that and certainly the last couple of clients that I've engaged with actually are not local to me. They're actually based in the London area. And one of the benefits of the pandemic, if I could put it like that, is that clients are less hung up on where their advisers are actually based. And that enables us, where we are specialists in particular markets, to be much broader in the type of clients that we're able to engage, which is great for us.

As far as my training business is concerned, where I would previously recently have run workshops around the country and, and they were face to face, I've now had to adapt everything that I do so that I can do it online and still provide the service that I was offering before. For my point of view it's cheaper and it's easier to run these from my office. I will say they're not so much fun, and you don't get as much engagement from the people that you're working with.

And I've developed webinars and all sorts of things that enables me to do that all from home, and I suspect that, in the long term, the way that we work going forward will be a mixture of these different technologies and different ways of working so that we’re getting the best out of ourselves, which is a positive thing to come out of this. One thing that was very interesting was that I was involved in the CIMA Member in Practice conference in 2020, and that was really interesting to see how this conferencing software works and how it brings people together to discuss and network, but in this very virtual environment. I'm hoping we get back to face to face, but I think it's proven that we can do it, even if we're not able to do that.

So the pandemic has forced me, along with everybody else, to change my business model and think differently about the type of business that I run. I think the key to being successful at this is to really know our customers well and to ensure that whatever barriers we may find ourselves pushing against, we focus really clearly on meeting their needs — even if that means changing our business model and our way of working.

Rowe: Thank you, Fiona. And you touched there on customers. What are the other practical ways that you can listen to your customers, which is obviously critical for any business?

Bevan: Yes. Unfortunately, there has been a bit of a recent trend for companies to sort of spam their customers with feedback forms as soon as they purchase anything. To my mind that's not a very effective way to find out what your customers want and need from your business, and in fact it often just irritates them. So in my mind it's much better to have proper meaningful conversations with your clients in circumstances that are conducive to getting good feedback from them. I mean, I make sure to ask at key points in my working relationship with clients, particularly if we're doing a project there'll be key points when I ask are they happy with how it's going, if there are changes that need to be made. With my retainer clients I sit down, at least on an annual basis, to discuss the service that I'm providing, Checking they're happy with the work I'm doing, asking whether there's anything I need to change or if there's more that I can offer them.

In this day and age it's not good enough just to assume that because your clients aren’t complaining that everything is as it should be from their point of view. Even if the current job is going well, it's important to understand how customers’ worlds are changing and where your business might best fit into their ever-changing world. I think, for CIMA accountants, we're very used to getting under the bonnet of a business and spending time with clients because we're naturally curious. And so, actually, I think, for us it's less of an issue, because we want to speak to our clients, we want to find out what they're up to and what their businesses are doing. But if you haven't spoken to your clients in a little while, you need to start thinking about: OK, what's my strategy for making sure that I pick up their views and what's important in their world that I need to know.

Rowe: Thank you, Fiona. SMEs are well known for their ability to be agile. What can larger businesses learn from SMEs in this context?

Bevan: Yes, as you say, small business can be very agile and respond quickly to changing environments. This is because they have a small management tree and could quickly and easily get the relevant decision-makers to get together to decide what changes might need to be made. And then they can just go ahead and act on those. Clients of mine at the beginning of the pandemic were very quick to take advantage of loans and grants available, which meant that cash flow could be protected. They were able to move quickly to online ways of working and models, because once the decisions were made their smaller workforce could just swing into action.

And during this pandemic, I think this agility has meant that SMEs, as the COVID measures came in, they could respond quickly. I think larger businesses can often be weighed down by their own decision-making processes. And if local offices are dependent on decisions filtering down from a central HQ, they find it very difficult to respond to changing local situations. And I think this is particularly a problem when we had different tiers of lockdown throughout the country because somebody making a decision in London, for example, wouldn't necessarily know what was going on in Newcastle. And so I think large businesses need to properly think about how they can improve this without losing control, because obviously that's one of the reasons why you have the systems and processes in place, so you're in control. Where we have fast-changing environments, and it's only going to get faster, I think larger business really do need to think about how they can build in a quicker and better reaction time.

Rowe: Thank you, Fiona. And finally, what would be your top three takeaways for management accountants either operating in SMEs or working for larger companies.

Bevan: As management accountants, we get involved in all aspects of the SME businesses that we work for because often were the only professional that they have working in their business on a day-to-day basis. And this means we're uniquely placed to help their businesses respond to the changing environment, whether we are there as a consultant, or whether we're there as an FD or FC working within an SME.

However, accountants are often seen as inflexible and constrained, a part of that is because our training is based on rules of convention, and we do need to move away from that image and be somebody who doesn't stop things from happening, but somebody who facilitates things happening. So I think, firstly, we need to ensure that management information is constantly developing as the business needs change, and this involves reviewing results and KPIs to spot shifting trends so timely action can be taken.

As we know, projecting the impact of change is a key part of helping business owners to make robust and confident decisions. And we are vital contributors to that decision-making process.

Secondly, we should be at the forefront of business strategy, identifying how the business can respond to changing customer needs, because our understanding of different business models should enable us to give insights not necessarily obvious to business owners, who are focused on their very their own very narrow business model.

And thirdly, I think we do need to move out of our own management accounting comfort zone and be innovative in the way that we present information to our clients. As their business develops, we need to be able to adapt what we provide to ensure that business owners have the most appropriate information at the most appropriate time. Often within SMEs, the business owners don't always know what they need so often it's up to us to be on our toes and be on the lookout for changes that we can make that will make their lives easier. And keep the value that we are providing them really maximised, because I think CIMA Members in Practice and CIMA SME supporters are, as I say, fantastically placed to offer such massive value and, in some cases, make all the difference to the growth of these SME businesses so you know, we need to, we need to be on our toes.

Rowe: Thank you, thank you for sharing your insights. it's been a great conversation, thank you.

Bevan: Thank you, Oliver.