Understanding small- and medium-sized firms' financial skill needs

Small- and medium-sized businesses make a significant contribution to the economies of Western countries. Government, industry, and educators commonly train business managers to improve their skills and knowledge in order to improve the performance of these firms. Owner-manager financial skill competencies have been identified in the literature as one area needing investigation and improvement. In this exploratory research, initial interviews with industry identified 37 financial skills and 12 channels for delivering these skills. A survey of chamber of commerce members then provided 399 usable responses (16% response rate) that were analyzed through t-tests and correlations. Findings identified 10 financial skills that are important to the respondents (benchmarking business performance, analyzing cash flows, doing business online, self managed superannuation funds, business exit strategies, setting-up contracts, forecasting cash flows, pricing of goods and services, alternative investments, and legal structures in business) and seven preferred channels (accountants or financial advisors, colleagues and associates, industry associations and events, government departments, short courses, internet, and consultants). In addition, demographic criteria (age and size of business) were shown to correlate with specific financial skills and preferred channels. Educators should concentrate on the identified financial skills and adopt the preferred channels to meet the requirements of SME owner-managers. University, TAFE (community college) and distance educators may have to modify their mode of delivery to suit the needs of SMEs or face being seen as irrelevant to the needs of SME owner managers.