Space to Grow: Business support for start-ups, growing and recovering SMEs

The COVID-19 pandemic has put unprecedented pressure on business: not merely to survive, but to adapt and grow in extreme conditions and compressed timescales. One might almost say that COVID-19 has acted as “an accelerator” for trends that have been developing for some time: some businesses have lived years over the course of several months. Now more than ever, we all have to think like start-ups and consider the need to reinvent our businesses and ourselves.

This constantly changing business environment requires Directors to have a sharp focus on the tools and resources that are available to support both fledgling and growing businesses. In this article we are reflecting on the role of accelerators, incubators and accountants supporting start-ups and small businesses in this challenging moment.

Accountants as trusted advisors to start-ups and small businesses have an important role in the wider start-ups and small business support ecosystem.

Accelerators and incubators are continuing to change the business support landscape

Starting and growing a business is an inherently risky and difficult pursuit requiring access to a vast array of resources, from physical space and finance to professional services and learning opportunities. The idea of bundling these resources together is not new: business incubators have existed in various forms since the 1950s, helping start-ups and early stage businesses get through the initial hurdles that all new businesses face.

Incubators support business creation and development. They are typically physical spaces that provide additional services such as training and mentoring for entrepreneurs, access to networks, and sometimes specialist equipment or facilities such as laboratories.

They can be non-profit institutions set up by universities, governments, agencies or donors, or commercial enterprises and investor groups.

Accelerators are the more recent development, differing from incubators in focusing on the growth of established companies and start-ups, with an emphasis on mentoring and networking, they usually offer highly selective and time limited programmes. Figure 1 below graphically presents key distinctive features of accelerators and incubators as well as overlapping areas of support provided by both models. Increasingly acceleration and incubation programmes are seen not as existing in isolation, but as part of a wider business support ecosystem.

Those programmes can play a vital role in encouraging the formation of start-ups and also helping businesses grow and become both known and attractive to investors, offer the breadth of advice and access to communities of peers willing to share their knowledge and lessons learnt. In addition to practical advice from people who have faced or who share similar challenges, there is an emotional element of support and validation that is invaluable to entrepreneurs and their teams. Because these networks are also matching businesses with suitable connections, they create further opportunities: to trade and to partner, enter new markets, to innovate and adopt new technology. The key point is that these resources are blended: for example, start-ups select investors not just for their willingness to invest but also to add value from their experience, contacts, market access etc.

Accountants augmenting small business support ecosystem

Accountants as trusted advisors to start-ups and small businesses have an important role in the wider start-ups and small business support ecosystem. They are instrumental in the incubator and accelerator programmes: from a compliance viewpoint they help set up companies on a sound legal and financial footing and provide valuable support by preparing data and forecasts for investors.

Start-up and growing small businesses often do not have the resources or scale to hire dedicated financial staff and they are often entirely dependent on their accountant or small and medium sized practices (SMPs) for financial support and advice on good governance. SMPs can provide much more than mere compliance – they can become growth partners for their clients. A highly diverse and innovative group, they have embraced new business models using Cloud based accounting and digital technology and offer increasingly sophisticated, value adding advice and support to their clients.

CFOs (Chief Financial Officers) within small businesses or SMPs acting as portfolio CFOs for a group of small businesses adopt some of the techniques and approaches used by accelerators and incubators and become “enterprise growth hubs” themselves for groups of clients facilitating networking and encouraging their clients to partner; advising on and linking clients to sources of finance; acting as a business coach or mentor. Furthermore, they are navigating startups and small businesses through COVID-19 support and recovery packages and are connecting them to acceleration and incubation programmes to ensure their clients grow, adapt or simply sustain their business.

Accelerators, incubators and accountants:
synergies

Incubators and accelerators can take start-ups a long way on their growth path, but accountants will play a crucial role in their longer term sustainability and success. Growth can come at any stage in a company's life cycle and accountants will play a crucial role in the developing ecosystem that supports companies as they mature.

Summarises some key points of synergy between the accountants, accelerators and incubators, pinpointing the support they can provide to start-ups and growing businesses.

COVID-19 had been a challenging time for all businesses, but some start-ups and SMEs have seen extraordinary growth as their solutions have come to the fore during the crisis. They have demonstrated not just the value of innovation but also of mutually supportive business ecosystems – staying connected through the networks of incubation and acceleration programmes or their accountants supporting clusters of businesses. Many support networks have found their members and alumni looking to them for support, not to grow but to survive.

In this crisis, the tool sets developed by the incubators, accelerators and innovative SMPs have proved very adaptable: existing businesses may have been forced into start-up, or rather 'start a new' mode, looking for new business models that will enable them to find new markets or serve existing customers in different ways, while coping with pressures on supply chains, logistics and finance.

This challenging period has also demonstrated the need to develop and strengthen partnerships between various small business support ecosystem stakeholders and there are clear synergies between incubators, accelerators and accountant all actively supporting the recovery of start-ups and SME sector. Having a clear sight of the support that can be provided by small business support ecosystem is critical for Directors driving organizational success.

The above article is based on ACCA's report 'Space to grow: new models of business support', which examines how accelerators and incubators, are being used to allow more small to medium sized enterprises (SMEs) and start-ups to achieve rapid growth and support their recovery post COVID-19. It also highlights the growing importance of small business support ecosystems and accountants as trusted advisers and brings case studies from around the world. For the complete report, please scan the QR code below: