I want to talk about why SMEs absolutely eat big corporates when it comes to business growth. It’s a little strange when you think about it. A major corporate has an enormous amount of money. It can afford to employ very talented people and invest in all the systems, consultants and technology it needs. People work massive hours trying to move the organisation forward. And at the end of the financial year, all that money, talent and effort might produce a 3% improvement. That can be considered a very good result.

Honestly, if you produced 3% growth in some SMEs, you’d probably be sacked. If you’re considering advisory after corporate, this is one of the biggest opportunities.You can take skills you already have and apply them in businesses where they can produce a much more visible result.

SMEs can move incredibly quickly

Here’s what a lot of corporate people don’t understand about the SME community. These businesses can grow 50%, 100% or more in a year. That isn’t because SME owners are smarter than corporate executives or have access to better resources. It’s because their businesses have far more room to move. There are fewer layers between the problem, the decision and the result. If the pricing is wrong, the owner can change it. If a particular type of work isn’t making money, they can stop doing it. If the team isn’t productive enough, they can put a measure around it and start managing it. They don’t need six months of meetings and a project team to make something happen. Once the owner sees the issue clearly, they can act.

How are these businesses not massive?

I remember looking at some of the businesses in my local community and wondering how they weren’t much bigger. They had a genuine point of difference. The owners worked just as hard as any senior corporate person I knew. Often harder. They understood their customers and knew the operation of the business back to front. But they made terrible money. It took me a while to figure out why. The reality was that a lot of them just sucked at their financials. They couldn’t work out the real cost of a completed job.They were permanently worried about keeping prices down while wages, materials and overheads were going through the roof. They had virtually no cost controls and no useful way of measuring whether the team was becoming more productive. They knew the work. They just didn’t know what the work was producing.

Its not a lack of intelligence…

I want to be clear about this. SME owners don’t struggle with financials because they’re dumb. They struggle because nobody has ever bothered to make the numbers relatable. A good set of annual accounts is very useful for working out what happened and how much tax needs to be paid. But that’s not the question keeping most owners awake at night. They want to know: Once the wages, rent, vehicles, suppliers and everything else have been paid, how much money did we actually make? And they want to know that more than once a year. Frankly, I think the accounting profession needs to take some responsibility for this. Too much financial information is built for compliance rather than helping the owner run a better business.

Make the numbers mean something

The minute you make the numbers relatable, the conversation changes. Don’t just give the owner a break-even figure. Show them how many days of each month the business has to work before every cost has been covered. Don’t just show them a gross margin percentage. Show them what is actually left from the average transaction after the costs of producing it have gone out. Take a completed job and back-cost it properly. Include the actual hours, materials, rework and all the little extras that disappeared into the job. Then compare what the owner thought they made with what was really left. That’s usually when you get: “Holy crap. We need to fix this.”

Better money creates confidence

Once the owner can see what is happening, they start making better decisions. They fix their prices. They pay attention to costs. They stop accepting work that keeps everyone busy but produces very little money. They measure the team properly. Then something else happens. They become more confident. They employ another person. They buy better equipment. They start advertising for the work they actually want rather than taking whatever happens to arrive. Businesses that have been sitting in hibernation for years can suddenly start growing like crazy. It’s great fun to watch, and the owners are incredibly appreciative because the result is personal to them.

This is what advisory looks like

If you’ve spent your career in corporate, much of this will sound fairly basic. You’ve worked with budgets, forecasts, pricing, productivity measures, cost controls and management reporting for years. That’s the point. The skills you take for granted are often the exact skills these owners are missing. You don’t need to turn their business into a smaller version of a corporate. You need to take what you know and make it useful in their world. That might mean a few focused hours each month helping the owner understand the numbers, make a decision and follow through on it. The business gets access to experience it could never justify employing full-time. You get to apply what you know across a portfolio of businesses where it can make an enormous difference. So if you’re done putting in mega hours, carrying all the stress and pressure and finishing the year with a tiny gain, it’s worth taking a closer look at advisory. The businesses might be smaller. The opportunity to make a difference certainly isn’t.