With gut instincts behind many an entrepreneur’s interesting business idea, it’s no surprise that they then trust these instincts to lead them in running their businesses.
However, as many as 70 percent of small business owners in Australia are trusting their gut instincts over professional advice, according to a new survey conducted by CCH.
“It’s not surprising a small business owner will micromanage, especially in the early stages of their business life, but this should not be at the expense of being open to advice from trusted professionals,” says Russell Evans, CEO of Wolters Kluwer Asia Pacific.
The survey, which looked at reasons why businesses fail, found that a quarter of owners believe failure to seek professional advice is a key factor.
Over 60 percent of owners also highlighted an inability to manage costs, or anticipate rising costs, as the leading cause for failure.
Owners open up to advice as their businesses grow, with businesses seeing a yearly turnover of $1 million or more increasingly likely to seek advice.
So who are business owners looking to when they do seek advice?
According to the survey, accountants are the most trusted advisors for SMEs seeking financial and business management advice, while financial advisors are ranked second.
Owners are least likely to trust their family and friends, with 79 percent listing their accountant as more trustworthy than family or friends.
With recent data from the ABS showing that more than half of small businesses don’t survive beyond their first four years, Evans has urged small business owners to seek advice to ensure success.
“SMEs are often cited as the engine room of the Australian economy, but this should more accurately be described as ‘successful’ SMEs,” says Evans.
“By being open to advice in the critical early stages, SME owners are better placed to adjust their plans and model so as to avoid the considerable financial and emotional cost of business failure,” he says.
“When a small business fails there are knock-on financial and emotional effects far beyond the owner’s direct financial loss. And what is often recognised is the strain borne by thousands of business owners who struggle to make underperforming businesses profitable.”
However, with two thirds of small business owners believing that business failure is a stepping stone to future success, perhaps trusting your gut instincts can help you on your way.
