Call yourself a business adviser?

Are you ‘just’ an accountant, or are you a business adviser as well asks Mark Lee.

Many accountancy practices claim to be “accountants and business advisers”. Is this borne out by the way they operate? And do they take their own advice?

I suppose the answer to the first question depends on whether you approach ‘business advice’ as:

  • something you provide automatically; or
  • an extra service that business clients only get if they ask for it and pay for it over and above the fee for recurring accounting and tax work.

The Insolvency Practitioner’s view

I have also been made aware of a surprising statistic. Apparently a senior Insolvency Practitioner attributes 80% of corporate insolvencies are caused by poor financial management.

What does that say about the advice being provided by accountants?  Are they just missing out on opportunities or are they failing their clients? 

What do business clients want and need?
Let me offer a theory I have developed by reference to my conversations with many business owners and accountants over the years.  It’s not a universal truth, but it may explain the 80% figure above.

Most business owners go to an accountant because they want to pay less tax, not because they want a set of accounts. To the extent that the business owner wants the accountant to do accountancy work it’s largely because they need their accounts for the bank, for their funders and for the taxman. And many accountants are happy to focus on providing these backwards-looking tax and accounting services.

The challenge is for the accountant to help their business clients appreciate the need for effective financial management before it’s too late.

Let me pose a series of questions for accountants who claim to also be business advisers:

  • Do you promote your ability to provide business advice distinct from your accountancy services or as part of them?
  • Do you take the initiative or wait for clients to specifically ask you for your business advice? Will you provide these services within your standard annual fee?
  • What will clients be prepared to pay extra for? 
  • Can you get in first and make clear that additional services are available for an additional fee?
  • Can you highlight the benefits of engaging you to provide those additional services - and sooner rather than later?
  • Do you walk the talk? Have you considered the application of your own advice to your own business? 
  • How accurate is your firm’s claim to be “accountants and business advisers”? Are you really a business adviser or just an accountant who records, reports and focuses on what’s already happened?

Mark Lee is Consultant Practice Editor of AccountingWeb and Chairman of the Tax Advice Network. His personal website and blog are at: www.BookMarkLee.co.uk.

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Comments
bookmarklee's picture

David Lewis

bookmarklee | | Permalink

Reading this back now I'm reminded of an article I posted here a couple of years back following a conversation with David Lewis of Camrose Consulting. I made a similar point there that:

"some accountants also badge themselves as business advisers and that the current climate demands evidence of this. Equally, it seems (rightly or wrongly) that the business community generally expects accountants to provide advice."

In that piece I shared some of David's observations as to how accountants can help their clients even if they do not themselves have the time, experience or inclination to provide ongoing business advice.

Mark

 

cymraeg_draig's picture

poor financial management ? or just poor management ?

cymraeg_draig | | Permalink


"I have also been made aware of a surprising statistic. Apparently a senior insolvency practitioner attributes 80% of corporate insolvencies are caused by
poor financial management."What does that say about the advice being provided by accountants? Are they just missing out on opportunities or are they failing their clients?"

 

In 99% of these cases it's probably the business owner wgho has ignored the accountants advice.

You would be surprised how many pompous self opinionated buffoons try to run their own businesses and ignore all advice - until of course it all goes wrong - then it's anyone and everyone's fault except theirs.

It's human nature I'm afraid and there are some people who you simply can't help, I'm sure we've all encountered them.

PUREaccountants's picture

Great article

PUREaccountants | | Permalink

 It must be tough to read that and realise that one might not be actually delviering what was suggested. As I'm sure many on this site are becoming to realise is that I personally start from the other side of the fence. Having come to Accountancy late (as advised by one practice at the age of 26!) I had previously set-up and run two succesful businesses and turned around 3 others. In an attempt to "legitimise" or "professionalise" my image I elected to study for my ACCA exams.

I found it frustrating to see that many accountants claim to be able to do all sorts of things and yet only ever really provided one service - past performance calculations for tax purposes. 

Having start my own small practice 3yrs ago I fell in to the trap of doing the same. So late last year I took the decision that I would work 100% differently. I ow approach all business as if I was the owner. That means I'm interested in making sure that my accounts are up to date on a dialy/weekly/monthly basis. It means that i can have meaningful meetings each month/quarter with clients about performance and where they are heading. It means that actually several clients who couldn't afford to apy for my services have replaced that with an equity stake which is now worth many times that of the fees I coulc of charged for the work completed. 

But actually what this really means is that I'm a business advisor who also happens to provide accountancy compliance services. 

bookmarklee's picture

Thanks guys

bookmarklee | | Permalink

@cymraeg_draig 

99%? I'd be surprised.

But I take the point and it's a fair one. Not all clients listen or are willing to pay for business advice over and above the basic complicance services

@PUREaccountants

Good on you. I like the sound of your approach. The key, as I guess you've realised, is whether you can convince prospective clients that what you do really is different to what they've experienced elsewhere.   I suspect you can.

Mark

 

 

Paul Scholes's picture

leopards & spots

Paul Scholes | | Permalink

Mark - will be interested to see if you get the same response to this as Steve Pipe did to his "Why 73% of partners believe accounts are fundamentally flawed" article from last week.  Unlike you he picks a headline that doesn't represent what he wants to talk about.

From memory this topic began life in the 90s when we were all scared stiff at the prospect of losing audit work following the introduction of audit exemption, in other words, if we don't audit what will we do?  At the time most accounting & auditing courses I attended included sections on "how to become a managment consultant (overnight)".

Given the inertia (business as usual, I don't do change) of many accountants and their clients it's not surprising that the topic still needs airing in 2011 but to my mind, in the SME sector, it's indicative of a general ignorance/denial by owner/managers of the need to stop doing business every now and then and take stock, look ahead, do some planning, forecasting, budgeting, risk analysis (really scary stuff). And until they get the message and see it in practice, there's no point us banging on about how we can help them with it. 

As I mentioned in a recent post in Any Answers, what's ironic is that the charity/voluntary sector is being told all the time to learn good business management from the private sector whereas, in many cases, the learning should go in the other direction. 

This general approach to business life by clients (and some accountants) mimics their personal lives and so, just as doctors have stopped telling them that they are likely to face problems if they don't lose weight or cut down on the drinking, we have to find a different way to get the message across to them that this sort of stuff is part & parcel of running a business.

In my experience this can only come about if you are prepared to spend time with a client in general chatting (without the clock ticking) getting to know them and their business, only then will you spot ways in, approaching the area in small, easy to understand and do steps, in a way that the client doesn't even realise you have your "I'm a management consultant" badge on.

Finally, if we really are, eventually, to become business advisors, it's worth killing 2 birds and getting up to speed with the next area of expertise that will be expected of us, ie how to run a Sustainable business, it's an opportunity not a threat, honest.

A slight shift in the market?

eddybee | | Permalink

Mark

Thanks very much for the mention –it is much appreciated.  It’s frightening that it’s already 2 years since our conversation!  

Your article seems to suggest that not much has changed over the period.  Interestingly, page 26 of this month’s Accountancy magazine says “accountants who are entrepreneurial and self starters are proving the most popular targets....of small and medium sized practices keen to win new business.  So they're instinctively looking out for opportunities to add value to their clients..”   Based on conversations I've had, I do sense a shift in emphasis but it's far from universal!

In my view there are many SME owners who don’t want/take advice (as cymraegdraig suggested) or they don’t want to pay for it.  So in this situation, accountants can get drawn in to a sausage machine of accounts and tax return production – and perhaps in some cases this can lead to a mindset of “that’s all that all my clients want” (and perhaps for some a narrow comfort zone).   However requirements differ!

In order to see if clients are open to added value services it can be helpful to understand their aspirations - where would they like to be in 3 years time?   If the client is not ambitious, then in my view they are less likely to see the benefit of added value services than someone who has a growth strategy (although there clearly are exceptions!).   The “how are you going to get there?” question can open up a multitude of opportunities for someone that wants to provide added value services.

I do however struggle with the term “business advisor”.   How many accountants are able to give quality sales, marketing or HR advice?   If someone badges themselves as a business advisor, I suggest at the very least that they should identify the client’s need for help (across the spectrum of business disciplines) and ideally if they can’t provide the advice at least facilitate it!      

Furthermore, if a client has shortcomings in its financial management and control then what does the business advisor accountant do?    Here there seem to be three options:

  • Provide support, probably by flexing the normal charging structure.  (However the question of appropriate skills and experience may arise.)
  • Bring in someone else, with the appropriate skills/charging structure.
  • Do nothing 

The “do nothing” option is clearly not in the client’s best interests, however it can also adversely affect the accountant’s business.   I recall asking a partner in a firm whether he had seen Mark’s original article.  The conversation went something like this:

Partner:       “Yes I did, we are rather wary of part time FDs”

David:           “Why’s that?”

Partner:       “We lost our biggest client through one”

David:           “How did that happen?”

Partner:       “The client hired him and he moved them to Larger Firm”

David:           “Did you know the part time FD before?”

Partner;       “No”

Well it's human nature to not bite the hand that feeds you!  Bringing in help could have cemented the relationship with the client!   It is also human nature to return a favour which, I surmise, is why Larger Firm gained a client! 

The Accountancy article suggests that some firms have recognised the need to widen their offering and that the ones that aren’t doing so are suffering.    Clearly not all firms have the resources or need to recruit people with the right skills and experience, however I suspect that for some those the thought of collaborating with another accountant will remain an anathema!   

 

David Lewis

www.camroseconsulting.co.uk

Financial management and project support for ambitious businesses

Financial due diligence services

Right on Paul.

Paul Dunn | | Permalink

Paul, your comment gets right to the point, particularly at the end when you ever-so-briefly touch on the issue of Sustainability.

To me it's whether we view Accountants and what they do rather like a Leading or Lagging indicator. I'm firmly in the camp of believing Accountants must be 'leading'.

Sure, much of what some Accountants do is after the fact. But if the Profession really steps up and grabs the opportunity you allude to, we're in for a much better world in every sense.

But it's not just Sustainability that's the issue. It's even bigger than that. It's the emergence of coming from a Shared Value perspective; it's what Trendwatchers.com refers to as the rise of Generation G — where the G stands for Generosity and not greed. 

As authors John Gerzema and Michael D'Antonio put it in their new 'SPENDSHIFT' book:  'We believe that the future face of capitalism will be defined by delivering value and values. Those that embrace this reality and adapt will find extraordinary opportunities. Those that ignore it will do so at their peril'.

I'm with them — value AND values. And that means stepping up and taking the lead.

-- Paul Dunn Chairman, B1G1 Come join me at www.b1g1.com Giving your business the power to change our lives. Follow me on Twitter at http://twitter.com/pauldunn Email me at: paul@b1g1.com

Make sure your own business is sorted first

johnhaylock | | Permalink

One of the key reasons many business owners struggle with the idea of paying for business advice from their accountant is they don't respect the way the accountant runs his or her own business.

There are still too many accountants who provide poor service - accountants who are slow to turn work around, who don't repond to emails or phone calls, and who send out bills for unexpectedly large amounts.

These accountants may be technically excellent at what they do but being technically excellent is not enough.

If an accountant is going to successfully provide business advice to clients he or she had better run an accounting business that provides outstanding service to clients. Do that and clients will not just be happy to pay and pay well for business advice.  They will also provide the referrals needed to grow the business.

John Haylock

Author of "Absolute Certainty - how to give your clients exactly what they want"

www.absolute-certainty.com

Paul Scholes's picture

Do what I say not what I do

Paul Scholes | | Permalink

John has made a good point.  In addition to the client's perception of whether the accountant's business is being run well there is also the accountant's angle that if s/he has not had the experience of running an efficient and well managed business (or at the least spent time thinking about what needs to be done to get there) s/he won't have the confidence needed to go out there and do it for others.

This is even more stark in the area of sustainability where it's a difficult enough concept to sell at the moment anyway but if the accountant turns up in 4X4 there is little chance of the message meaning much.

cymraeg_draig's picture

It depends what you mean by "sustainability".

cymraeg_draig | | Permalink

This is even more stark in the area of sustainability where it's a difficult enough concept to sell at the moment anyway but if the accountant turns up in 4X4 there is little chance of the message meaning much.

 

Posted by Paul Scholes on Thu, 21/04/2011 - 08:08

 

The plain fact is that most business owners don't give a flying fig about being "green" for the sake of being green.  Very few committed eco-loons actually run businesses.

To the average business, "sustainability" is all about being able to afford to pay the ever increasing costs of fuel & power, and being able to cope with the cost of threatened "green" taxes and additional red tape that goes with it.

And no - I dont turn up at clients in a 4X4 - my car uses far more petrol that they do :)  Clients really don't want to know about hybrid cars that run on recycled yoghurt - they want to know how they too can afford a full on gas guzzling sports car and be able to afford to run it.  

What it all boils down to, whether you package it as compliance work, or, as business advice, sustainability advice, or anything else, is that the client wants to know how to make the maximum profit from his business, and, having made it, wants to know how to keep the tax man's thieving fingers off it.   

Professional Hustlers?

I'msorryIhaven'... | | Permalink

I believe many businesspeople see accountants as mugs: weak negotiators with no business heads.

Here are 3 traps that IMHO all too many small practices fall into:

1. Free unlimited access: which is actually quite a sound idea if properly executed. The theory is that you quote an all-in annual figure, monitor the client's take-up, and then quote an all-in fee for the following year based on that prior-year's take-up. A greedy client might accept an increased year 2 quote, and then try to get his moneys-worth by availing himself of the "unlimited access" facility to an even greater extent (which he will eventually pay for in his Year 3 all-in quote). It's very much the way in which banks work out how much to charge their business customers.

Flaw: all too many accountants set themselves up as a free unlimited-access service, and end up working for nothing because they don't know enough to charge for their services somewhere along the line!

2. Money-back guarantees: designed to remove the burden of risk for the client and act as a USP ("If you're not satisfied, you needn't pay us a penny"). But if you read Ronald J. Baker's value-pricing bible "Professionals' Guide to Value Pricing" or similar works such as "The Firm of the Future", it is made abundantly clear that should any of your clients avail themselves of such an offer, they should be sacked immediately. That's all down to the Pareto principle (the 80% - 20% rule).

Flaw: all too many accountants cave-in when asked to justify their bills, reducing them too easily or even failing to bill certain work so as to avoid argument. Their clients perceive them as weak , and learn to disrespect them!

3. Unanticipated Work: charging extra for anything extra. Value-pricing theory tells us to concentrate on both sides of the bargain: not only should you agree a price for a piece of work, you should also document in detail everything that you will do for that price (and perhaps even everything you won't do). Only then are you in a position to charge for anything unforseen or for any extra work thrust upon you. That's very much the way a builder works, and the reason he is able to charge you extra when he hits clay or when your wife decides to change the plans and move a door to a different wall. 

Flaw: all too many accountants agree a price without agreeing and documenting what exactly they will do for that price. As a result, clients expect them to do anything and everything thrown at them, all at no extra cost!

 

By and large, anyone running a business is hardly likely to take seriously the business opinions of a weak negotiator whose business model is to not charge for his work, and who lacks the basic acumen to negotiate and action a profitable deal. Rather, such accountants are asking to have their input confined to technical matters; IMHO their holding themselves out as business advisors must appear to their business clients as laughable a prospect as any wannabe Britain's Got Talent contestant.

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

 "But if you read Ronald J. Baker's value-pricing bible "Professionals' Guide to Value Pricing" or similar works such as "The Firm of the Future", it is made abundantly clear that should any of your clients avail themselves of such an offer, they should be sacked immediately. "

 

If you read such rubbish and actually act on it then you really shouldnt be in business. The fact you read it tells me that you are a soft touch for any passing salesman wanting to line his pockets in return for nothing of value.