Three things have small business owners worried, but their advisors can help

A recent survey of Canadian small and medium-sized business owners from KPMG found that despite — or even because of — recession worries, most Canadian small and medium sized business owners feel confident that their companies will grow in the next three years. The KPMG Private Enterprise Business Survey interviewed stakeholders from 700 companies and found surprising confidence among business owners, in part because they have already taken steps to prepare for a recession.

Nevertheless, the findings weren’t all rosy. As small business owners look to the future, three core areas of concern are weighing on their minds: cybersecurity, technology & talent, and climate change. According to Dino Infanti, KPMG partner and national leader, private enterprise tax, financial advisors can use their skills and insights to help business owner clients navigate each of these issues.

“In this environment an advisor needs to help their client be as proactive as possible,” Infanti says. “That means thinking about the costs and efficiencies of whatever the client needs to deploy for their business. That means being laser focused on cashflow and margin, helping them look at headcount, and making sure they pay attention to the costs they can and can’t pass along.”

Infanti believes advisors need to practice this vigilance with their entrepreneur clients, because those entrepreneurs need to make investments to overcome their looming challenges. The survey found that more than 60% of small business owners had been subjected to a cyber-attack. They feel an acute need now to invest in cybersecurity to protect their corporate data and infrastructure.

This is an area where advisors can help from a number of perspectives. Given the whole financial services industry’s focus on cybersecurity, advisors may have insights and familiarities that their entrepreneur clients don’t. Having a conversation about how client data is protected can help show and drive value. While cybersecurity consulting is likely outside an advisor’s remit, those conversations can be more of a holistic relationship with the client and take into consideration the cost and tax implications of a cybersecurity upgrade.

Addressing cybersecurity concerns is one subset of the digital transformation trend that entrepreneurs are struggling with. On that broader level, though, Infanti says that the primary concern is around talent seeking. Attracting and retaining people with the skills to manage a digital transformation in a business is challenging, he notes. At the same time, entrepreneurs may be attracted by AI tools that can help their digital transformation without necessarily adding to headcount. He believes that this is another area where objective financial analysis from an advisor can help entrepreneur clients make crucial decisions.

The final concern is climate change, a worry made all the more acute by a summer of wildfires and extreme weather events. Many business owners are directly exposed to these risks, and could be facing higher insurance premiums simply because of where their business is located. At the same time, the government has built in decarbonization incentives that could enable key capital investments to be made that might allow a business to better navigate extreme climate events. This is another area where entrepreneurs may come to their advisors looking for context around what could be a significant capital outlay.

While advisors can help in each of these three areas of concern, they are also well positioned to manage the emotional weight of their clients’ businesses. Building and running a small business is very often more than just a rational set of calculations. Entrepreneurs pour their hearts and souls into their enterprises, and understanding that weight is key for any advisor who wants to help small business owners in today’s climate. 

“It’s about understanding the client in the context of a family business, with family dynamics and everything that comes with it,” Infanti says. “You need to be able to overlay that and understand how you as an advisor can make their business better.”