In today’s complex economy, new risks are constantly emerging for small and medium sized business owners.

There are many buzzwords keeping them awake at night – economic downturn, recession, exchange rate movements, supply chain disruptions, compliance…

Getting a headache just thinking about it? We don’t blame you.

Research has shown many business owners are facing these challenges alone – and it’s creating enormous stress and worry.

Amidst the COVID19 panic, Bstar released their 2020/21 SME Research Report. Guess what the key finding was?

‘SMEs need a sounding board they can turn to and trust to reduce Non-financial Risks, improve business performance and owners’ quality of life.’

The report broke down the top business risks, including non-financial – internal and external – as well as looking at risk and value drivers and the Steps to Success.

In this insight, we go through the findings and summarise important points – and highlight how we at DFK Everalls can be that sounding board for you.

You can also download the full report here.

Top Business Risks

As we all know – business owners are having to plan for and manage an increasing range of risks.

Some have the potential to affect their day-to-day operations – others have the potential to have a global impact.

As the range of risks extends and becomes more complicated, they require new and varied methods of management.
The report identified a series of ‘Non-financial Risks’ – as they are not purely financial, and generally do not emerge from the financial accounts of an SME.

External Non-financial Risks include:

• Economic downturn
• Recession
• Cyber-attack
• Exchange rate movements
• Inflation
• Natural disasters
• Epidemics
• Pandemics
• Supply chain disruptions

Internal Non-financial Risks include:

• Operational
• Key person
• Succession
• Compliance
• Privacy breaches
• Staff
• Technology
• Competition

When Non-financial Risks are not well managed, they can quickly affect the profitability and impact the survival of an SME.

How are business owners handling risk?

The report found business owners want to reduce these risks and improve business performance – but they are struggling with planning.

Only one in four regularly plan and only 6% have up-to-date, actively managed plans.

Many SMEs are being overwhelmed with the challenges and increasing pressures facing their business and 61% of SMEs report a high (29%) or very high (32%) degree of owner reliance.

Succession risk was the highest risk identified by the Bstar Business Risks Survey. Further detailed analysis showed only 18% of business owners have documented management and ownership succession plans in place, with more than half of those plans (11%) needing to be reviewed and updated.

Do you have a succession plan in place? If you need help with this – get in touch. We can ease you through this process, as an impartial ally – who just happens to be an expert!

Three Steps to Success

The report encourage business owners to take action to get support and recommend the following steps:

Understand the risk and value drivers in your business

The report recommends business owners complete a Risk and Value Driver Assessment on their business (or update their existing RAVDA.).

Collaborate to improve business performance

Teamwork makes the dream work! Share your thoughts and insights with your staff and key stakeholders.

We also hold free Boardroom Briefings (held online at the moment.) Get your team together and attend to learn different aspects of business planning and management.

Select a partner to support success

Whether this be a business mentor or a CFO – there is power in bringing together key stakeholders with a common purpose and plan.

Sounding Board Support

The report found business owners are increasingly aware that the pressures of running an SME are having a direct impact not just on profitability – but on their quality of life.

In addition to financial matters, there is a wide range of risks that need to be managed on a daily basis. They are looking for ways to not just manage those risks – but also proactively adapt to changes.

But reliance on business owners is already very high, and the level of planning is low. Many are already stretched, and it is easy to see risk management as an additional responsibility, increasing the burden on owners.

So – SMEs need solutions. They need ways to lighten their load, but they can’t do it alone.

The report’s key finding was that business owners need the support of a sounding board.

The primary support needed is with planning, but the advice and support provided by a trusted adviser goes well beyond looking at the numbers.

We can help

The Bstar report found a professional sounding board will provide advice and support where owners need it most, allowing them to:

• Build confidence with independent and objective professional advice
• Identify, manage and reduce key qualitative and financial business risks
• Step away from their business to focus on planning
• Be held accountable for implementing the changes necessary to improve performance
• Achieve a more balanced personal, business and family lifestyle

Straight from the report’s mouth! We would be honoured to be on this journey with you.

We provide expert business advisory services, designed to help you manage each step of the risk analysis and mitigation process.

Contact us if you need a sounding board.