UK SMEs spend £60 billion on professional services, yet much is wasted
Small businesses in the UK collectively spend around £60 billion per year on professional services, yet, according to research, more than £12 billion of that figure is wasted on unnecessary or bad advice.
According to the research by Zeqr, a freelance and knowledge sharing platform, financial services are the most sought after area for advice, with businesses spending a reported £9.1 billion for assistance in accounting, and a further £5.3 billion for insurance advisory. Staple business fields of more established IT (£4.1 billion) and payroll and pensions (£3.3 billion) followed, while professional services focused on the implementation of new technologies were deemed lower priorities – with website building being the most sought after of these at £3.1 billion.
Against the spending backdrop, small and medium enterprises (SMEs) in the UK admitted to wasting a grand total £12.6 billion on external assistance in professional services, which they felt failed to improve the performance of their companies. As many as two in five respondents said they found “inefficient” fixed fees to be the main reason for dissatisfaction at the service they received. In particular they cited only needing to ask an HR specialist one or two questions, but being forced to pay an expensive fixed or ongoing fee, as contributing to this lack of value for money. The report suggests this belief is damaging SME’s trust in accessing external talent when it comes to areas they are unskilled in.
Dr David Fraser, a freelance management consultation expert and co-author of the report said, “Smaller organisation 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 added, “There’s definitely a need for an efficient way for businesses to access diverse external expertise in an only-buy-what-you-need fashion and, of course, the best external experts will always put the client’s needs ahead of their own business goals. Buyers should look for quality and experts who truly understanding their issue.”
Lacking digital skills
Zeqr’s findings further revealed that 50% of businesses are lacking essential digital skills required to grow their companies. Beyond website creation experts, this includes professionals capable of utilising expertise in Search Engine Optimisation, social media technologies, or software development to the advantage of SMEs.
Last year the Parliamentary Committee for Science and Technology issued a report warning of a digital skills crisis amongst the UK’s workforce. MPs claimed that the skills gap already costs the national economy as much as £63 billion per year in lost income, as UK business was failing to meet digital demand. 90% of jobs require digital skills to some degree – dramatically contextualising the study from Zeqr, which further demonstrates a continued need for SMEs to seek external expertise to harness their digital potential. However, with professional service fees already making enterprises feel left wanting when it comes to value for money, the paper also suggests it is help small businesses are reluctant to seek.
