In a business world of innovation and inexperienced directors, a sagacious lawyer or accountant can provide a much-needed steadying hand. The relationship between advisers and their small business clients is close, meaning that each must choose the other with care to avoid clashes of outlook and temperament.

Accountants say one potential risk associated with the rise of internet companies is that their young directors fail to appreciate the importance of sound technical counsel. One auditor draws a parallel with the 1980s boom in high-technology companies founded on the ideas of computer whizz-kids. "I don't see why it shouldn't be a rerun of what happened ten or 15 years ago," says Roger Housechild, head of the audit faculty at the Institute of Chartered Accountants in England & Wales, the main professional body.

"There you had young enthusiastic entrepreneurs who didn't have much understanding or maybe even respect for laws and regulations. They saw them as getting in the way." The ignorance can extend to a general lack of savvy about the essential housekeeping needed to make a business work.

Auditors say some of the latest generation of young directors have little idea about crucial tasks such as budgeting, internal financial controls or presenting strategy in a way that is digestible to outsiders. "Typically the kind of directors we are talking about rarely know what the job entails," says one accountant. "The first thing they have got to find out is what the job is." A professional adviser can help by explaining in simple terms what needs to be done and for what to watch out. Some common pitfalls for new directors of technology companies include a desire to spend more heavily on marketing than is justified by revenues.

This urge for self-promotion can be accompanied by neglect of mundane but important tasks such as keeping historical accounts of products going in and out of the company. "A typical issue we come across is a lack of proper stock control records," says Alan Kinnear, a partner at PwC, the professional services firm, who specialises in working with high-growth early-stage companies."If they have to go back in time and know what their stock was, that's not always an easy thing to do," he says.

Auditors can help companies avoid other elephant traps, such as the urge to issue huge numbers of share options in an attempt to recruit and retain staff. This is an issue because the government introduced changes in the March 1999 Budget to make employers pay National Insurance at 12.2 per cent on some share options. The levy, which covers awards made outside government-approved schemes, kicks in when staff exercise their options.

Last year, the government announced amendments to allow responsibility for payment to be shifted to the employee, but only with their agreement. This means companies that enjoy dramatic increases in their share prices could still be left with large bills when employees cash in their options. "That really is very, very early-stage stuff that they do need to be aware of," says Mr Kinnear. "It's one of the big banana skins for these companies where value grows very quickly." Another potentially unpleasant surprise for companies is the cost of audits. This might run at £10,000 a year for a start-up, which is more than many businesses expect. Accountants argue this is another reflection of the inexperience of directors who have little concept of the amount of work required to do an audit.

Some auditors complain their small company clients are too influenced by hearsay, setting exaggerated store by conversations in the pub or on the golf course that suggest they could be getting more for their money. This can lead directors to spend time shopping around that ultimately proves futile. "A lot of that is their ignorance," says one accountant. "They try to do everything themselves." If it is clear there are frustrations for auditors, it is equally apparent that they are not about to stop book-keeping for small companies.

The flip side of any arrogance and over-exuberance among young directors is high ability and the capacity to produce winning ideas. This is why Arthur Andersen typically looks at 20 start-ups a week as possible clients in the north-west alone. "If the product is exciting enough we will do the lot" from book-keeping to hand-holding and adding up," says Mr Loftus. "If you don't do that you are not going to get some of the big ones that are coming through."