Nobody likes to feel like they’ve wasted money. When you’ve only got modest budgets, that feeling of having nothing to show for your expenditure can really sting. All you can do is learn from the experience and set out to spend your money more wisely in the future.
That’s what many small business owners will be telling themselves after new research suggested that, collectively, they are wasting more than £12 billion every year on unnecessary or bad advice from professional services.
Small and medium-sized enterprises (SMEs) are spending huge amounts of money to improve the performance of their business – around £60 billion is spent each year on external assistance in professional services, according to the findings by Zeqr, a freelance and knowledge sharing platform.
The majority of that sum is going on financial advice, with businesses spending a reported £9.1 billion for assistance in accounting and a further £5.3 billion for insurance advisory. The other most sought after areas for advice are IT (£4.1 billion), payroll & pensions (£3.3 billion) and website building (£3.1 billion).
However, an estimated one million (1,099,660) SMEs say external consultants weren’t value for money – potentially wasting a total of £12.6 billion on advice that doesn’t positively impact the business.
As a result, nearly half (49%) of small business owners avoid hiring external consultants because of over inflated costs, while more than a third (36%) said they were sceptical about the level of expertise on offer.
Nearly a quarter (22%) said advice is too complicated and out of line with their needs as a small business. The example given was that a small business owner may only need to ask an HR specialist one or two questions, but will be forced to pay “inefficient” fixed fees, making the advice poor value for money.
Commenting on the findings, the report’s co-author Dr David Fraser said: “Smaller organisations should not be attempting to source all the expertise they need internally. That’s not affordable – but nor is the kind of exorbitant fee larger consultancies typically want to charge, often for recycled material not really tailored to the true needs of the client.”
He advises small business owners to “look for quality and experts who truly understand their issue”. That can be easier said than done, though, with limited access to experienced heads who cannot only get to know the individual business, but the individual behind the business, and tailor advice accordingly.
Here at Agnentis Partners, what we do and the way we work is unique. We provide flexible resourcing and support to help develop you and your business – there are no fixed fees here.
