Around half of Australian SMEs are being forced to rely on multiple external advisers to manage business operations and compliance, according to a new poll, potentially adding thousands to their operating costs.
A straw poll conducted on the My Business website for the month to 18 March 2019 asked business leaders the question, “How many external advisers does your business use (covering things such as accounting, HR, legal etc.)?”
Of the 155 respondents, just 20 per cent of SME leaders said they do not currently engage the services of an external adviser — suggesting that four in five businesses are paying for advice on how to help them manage their day-to-day operations.
The biggest response came from those who are using between three and five advisers, with 38.7 per cent. That was closely followed by businesses engaging the services of one to two advisers (35.5 per cent).
However, some businesses are seeking out the expertise of an even greater number of consultants and specialists. According to the poll, 3.9 per cent have between six and 10 advisers on their books, while 1.9 per cent admitted they are paying for more than 10.
Types of advisers
Modern businesses often require the expertise of a range of advisers and consultants, to help them navigate complex markets, regulatory frameworks and digital systems. These include:
- IT and technology
- Accounting and tax
- Digital/social media
- Web development, management and maintenance
- Marketing and advertising
- Business growth and strategy
- Management, leadership and mentoring
- HR and recruitment
- Workforce education, training and development
- Property, facilities and design
Costs add up
The costs to business of these multiple advisers can quickly add up.
While the ATO told My Business that it does not hold data on the volume of advisory costs claimed by businesses, simple wage data highlights the potential cost to SMEs of having to bring in these various advisory services.
According to PayScale, the average business consultant in Australia earns $76,500 per year, or a fraction under $50 per hour. Yet that is not what a consultant is charged out at to clients, but rather what the adviser themselves takes home.
The rate at which these advisers charge is likely to be several times this figure, to cover a range of business costs — employee entitlements and expenses, business costs and its profit margin. That may mean a 200 per cent mark-up on the adviser’s hourly rate, taking the cost to businesses to $150 per hour.
And if, as the My Business poll suggests, many businesses are engaging the services of between three and five different advisers, that cost increases to between $450 and $750 for just one hour of each adviser’s time. Multiple hours, over multiple occasions throughout a financial year, and that cost increases exponentially.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.