KPMG’s announcement that it has decided to close its Small Business Accounting service and withdraw from the SME market (small and medium-sized enterprises) just five years after launching its cloud-based platform is probably not a great surprise. It offered accounting, book keeping, tax, payroll and compliance services to small businesses. In 2018 Geniac co-owned by Grant Thornton was abruptly closed down. Geniac was founded in 2014 by ex-Accenture consultants, Michael Galvin and Eduardo Martinez. Geniac promised to be a one-stop-shop for SMEs that integrated payroll, accounting, legal and HR services into a single platform, in what it dubbed ‘office as a service’.

The business premise of the global firms was to use cloud-based platforms and technology to provide low cost services. The support staff could be based in lower wage areas and there would not be high interaction with the client.

So what went wrong?

This was initially attractive to many clients who thought they could both cut costs and have one of the largest accounting firms to support them. But some such clients found that the one-size-fits-all technology strategy did not give them the personal relationship-driven approach they wanted.

One small practice accountant said that his firm had picked up a number of clients from the KPMG service. The gripes were “mainly related to the clients being unhappy about their level of knowledge of their business, mistakes being made and the churn of client account managers who seem to change every six months.”

Another accountant said that several clients had signed up to the KPMG service expecting a proactive, almost virtual FD service, but ended up with a basic compliance service at a price higher than their business could justify.

An industry expert said “Servicing the small business market has always been about building a good relationship with the client to provide sound advice alongside the compliance piece. Attempting to deliver that service remotely presents a number of challenges which technology won’t always solve alone. Clients want, and rely on, that relationship. The high street accountant has adapted to deliver a best of both worlds approach with local relationships on the ground. This is alongside smart digital solutions to help people run their business.”

But surely bigger is better?

Not necessarily. Whilst the bigger practices can have huge resources at their disposal, the small accounting practice is more easily able to build genuine trusting relationships over time with their clients. The small practice can be more flexible than its bigger counterparts and it can often offer a better work environment to attract top talent. For most small businesses, success is found in the small things and the detail matters, the nuances are important and relationships within the business are absolutely critical to its success. Small businesses will thrive on competition and can feast richly in a large pond where they have a tiny market share. This is not the case for large multinationals.

Big is clearly not always best. The Competition and Markets Authority (CMA) and the Treasury Select Committee are currently looking at the work of the big firms in the light of the collapse of Carillion, Valerie Patisserie and other high profile names. The CMA wants to separate audit from consulting services. Even the work of the accountancy regulator, the Finance Reporting Council (FRC) is subject to scrutiny. The recent Kingman report, headed by Sir John Kingman, recommends that the FRC is replaced by a new Audit, Reporting and Governance Authority. As a semi-serious point, the smaller colleagues to the big boys may be able to offer some useful perspectives.

Horses for courses

The big accounting firms can and do in general provide a world class service to their multinational clients. It would be daft for small practices to think they can do the accounts of the likes of BP and Tesco! However by the same token it has proved just as daft for the big firms to think they can provide a better service to the small and micro client than the small local practice. Having said that we can all learn from each other. Strategic thinking and the inter-disciplinary approach that is embedded in large firms has much to offer the small business, just as the small business understands that ‘cash is king’ and the ‘devil is in the detail’. Humility in the accounting profession all round is needed if all our clients are to have their needs met professionally and with the skill and care they reasonably expect.

So what do the smaller firms offer the SME market?

Often small business owners need a swathe of advice on a plethora of issues – from filing the Confirmation Statement to VAT on entertaining, from business planning to contracts of employment, from cash flow forecasts to help with shareholder family feuds.

A particular feature of small businesses is that very often they are run by members of the same family which brings its own special challenges. A big contributor to the success of businesses is the right balance of self-belief and realism in the business owner. Running a small business is poles apart from running a large business and it is foolhardy to pretend otherwise. I remember being told by a business owner that he knew his business was no longer a small family business the day he had to put a lock on the stationery cupboard!

The role of the trusted business adviser

Whilst the dashboards (metrics) created by the technology can give important information on a timely basis, having an experienced outside business person to discuss those numbers with is invaluable. With the best will in the world a near newly qualified accountant from a big firm is unlikely to have been around the block enough to fulfil that need properly. The smaller practice partner can be that sought after trusted business adviser who identifies the key questions and if they don’t know s/he answer will know someone who does.

The rise of technology and the growth of start-ups mean that many young people are running businesses today. There are great cloud-based accounting systems (such as Xero) which can record the basic book keeping but the input of an experienced local professionally qualified business adviser who can turn the raw numbers into information that is used by the business owners to make good decisions can be key. An outside business expert can help make sense of the numbers, the people and the opportunities and also be a sounding board to the business.

Mentoring support

One aspect of the close relationship with business advisers that business owners often greatly appreciate is mentoring/coaching support (but they are different from each other). This is an area of specialism for some practices where owner managers are helped to identify and then work through their key issues. Often business owners actually know the answer deep down but need help either to find it or the courage to implement it. At other times, proven tips and tools are shared to get the business owner to the right solution.

What do we offer at SME Strategies?

Most successful businesses have a niche. At SME Strategies our niche is to work exclusively with small businesses. We have been owner managers of business ourselves and have learnt much from the experiences and challenges that has brought us. We operate in London, the Thames Corridor, East Anglia and the Midlands.

We work with a variety of small and micro owner managed businesses in a number of sectors such as retail, manufacturing, construction, property, healthcare and not for profit and especially with family businesses. We give hands-on support to our clients to help them achieve their plans for growth with accounting, tax, marketing, business planning and practical business advice. We help owner managers with their personal tax issues. We offer a complementary initial meeting to new clients.

WealthBeing is a dedicated mentoring CiC company that partners with SME Strategies to offer in-depth mentoring to business owners.

We are also delighted to be members of Central Working who offer shared office space to growing firms in the South East and Manchester. This not only gives us great places from which to run our business but we also work with several businesses based at Central Working.

For further information email or call:
David Eaton (London and East Anglia) david.eaton@smestrategies.co.uk 07841 215182 or
Sean Hackemann (London and Thames Corridor) sean.hackemann@smestrategies.co.uk 0118 911 3777 or
John Eaton (West Midlands) john.eaton@smestrategies.co.uk 07831 434330

Accounting Web – KPMG shutters small business accounting unit