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Do accountants want to be business advisors?

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24th Nov 2009
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Consultant practice editor Mark Lee challenges the perceived wisdom that accountants need to be business advisors.

Although many accountants describe themselves as ‘accountants and business advisers’, I have a suspicion that general practice accountants typically fall into one of four camps when it comes to the provision of business advice to clients:

  • It’s a no go area: The accountant’s business experience is limited and perhaps they don’t feel that confident with the idea of providing business advice.
  • Personal experience: The accountant is willing and able to share their own experiences of business over the years, perhaps drawn in part from working with other clients.
  • What others say: The accountant offers advice based on what they have read in books, magazines and websites and possibly what they recall from their studies and from attending seminars and conferences. However, their level of interest in developing this area of skill is much lower than their desire to keep up to date with technical knowledge.
  • A systemised approach: The accountant has bought into a programme that assists them in adopting a structured approach to the provision of business advice and either they actively promote the service to their clients or they shy away from doing so and quit the programme.

If I were still in practice I’d like to think that I would probably move up the scale into the fourth category above. Others are happier lower down the scale, and that’s fine as long as their clients are not expecting anything more. Time and again I hear business owners complaining that their accountants fail to provide business and tax advice; they simply do the books, produce tax returns and tell the client how much tax to pay.

Only a relatively small number of accountants seem to be willing to experiment with the systemised approach, so there is plenty of pressure on the others to do this or to beef up their approach and provide business advice, as well as to learn how they can get paid for doing so.

‘It’s not worth investing in’
There are a number of business focused coaches for accountants and also a small number of providers of ‘business and strategy focused’ software and training for accountants in the UK. They are all competing to work with pretty much the same (relatively) few accountants who are interested in developing their skills as strategic business advisers and making more money than is possible as a conventional accountant.

However, the number of firms that have invested in doing this is thought to be less than 2,000 across the UK. That’s significantly less than 10% of those in practice. Indeed, the true number is probably even lower as many of those who join up with one or other of the key players are pretty inactive and just move around each year, looking for the ‘holy grail’.

The majority of accountants may attend taster sessions but don’t seem willing to invest in such services; they don’t see the need. Perhaps they are already making enough money (or do not have the cash to invest), or it could be the upfront time commitment to find out more, to be trained or to research the opportunity - or perhaps there are other reasons.

Reticence
It seems somewhat counter-intuitive that relatively few accountants are willing to buy into this idea, however attractive it might be in theory. I suspect that this reluctance is partly due to a belief that clients expect business advice for free and that it’s not something that an accountant can charge for separately.

Another possibility is a concern that if one were to charge for business advice, the accountant would need to ensure he/she provides value for money, and perhaps there is a lack of confidence here. Some might ask ‘are my experiences and knowledge really worth anything? It’s all just common sense isn’t it?’ This may be so, but common sense isn’t the same thing as ‘common practice’.

In my experience there is a general feeling among many accountants that they should be providing business advisory skills but they’re notoriously reluctant to pay to develop such skills and to learn how to get paid well for providing related advice.

What’s your approach to providing business advice and getting paid for doing so? Share your views below.

Mark Lee is chairman of the Tax Advice Network and consultant practice editor for AccountingWEB.co.uk.

 

Replies (11)

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By tomfitzgerald
24th Nov 2009 11:18

Do accountants want to be business advisors?

Mark

How would you define business advisory services and what steps would you recommend we accountants take to acquire the relevant knowledge/skills? In fact, what are the relevant knowledge/skills?

Regards

 

Tom Fitzgerald

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By David Winch
24th Nov 2009 11:52

Accountants As Business Advisors

I find it highly interesting to hear the Accountants’ view of this issue.

 

As a Business Advisor who is not an Accountant, my perception when I first started out was that many businesses believed their Accountants capable of providing business advice of the highest quality, and therefore they didn’t need to look elsewhere.  Indeed, one of the questions I still usually ask on a first meeting is “Who do you instinctively turn to for business advice?” and “My Accountant” is not an unfamiliar response. Interestingly “My Bank Manager” is not very common!

 

My challenge was to change the view of business owners, to help them see that there are specialists in the field of Accountancy, and there are specialists in other forms of advice and services for businesses who are not Accountants.  And there was also the challenge of helping them see that just as they were willing to delegate accountancy to their Accountant and pay for the privilege, their businesses might also be better served by collaborating with other external, paid experts in other aspects of business.

 

The ability to provide good business advice requires many abilities, not least the willingness to say to a client, “I am not the right person to work with you on this issue, but I can put you in contact with someone who is.”<br><br>Having a large, and ever-growing, network of colleagues and strategic alliance partners whom I know I can trust to work with my clients, has been a vital part of growing my own business.  The knowledge that I am extremely unlikely to encounter a problem for which I cannot find an expert when my own expertise is not a good match, is a huge comfort.

 

Of course Accountants can add business advice to their offering, but I totally agree with Mark that it is something that requires investment and adaptation in order to do it well.  He makes the vital point that you need to “pay to develop such skills and to learn how to get paid well for providing related advice.”

 

The business advice given must be seen by the Client as highly valuable but, in achieving this, the Advisor creates the situation where being paid for the advice is highly reasonable, so long as the fee represents a modest investment for an enormous return for the Client, and is highly profitable for the Advisor.

 

Thank you Mark for the view from ‘the other side of the fence’.

 

David

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By chrisdxuk
24th Nov 2009 12:30

What of clients who ignore your suggestions

Its all very well suggesting Accountants should become business advisors but how many of us have found ourselves in the position of giving valuable time and advice to clients only for them to ignore it and then come back crying when it has all gone wrong!

Also in these days of No win, No fee lawyers I for one would be loath to put myself up on offer. Look at the increasing case of surveyors being sued by NWNF lawyers on behalf of mortgage companies due to a fall in the prices of the mortgagees property portfolio. Sorry but, I don't have the funds to fight that nor the time!

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David Winch
By David Winch
24th Nov 2009 15:20

Accountants as business advisers

I agree up to a point with my 'twin brother' (the other David Winch) here, in that I think accountants have a natural 'in' with businessmen and women because they are in regular (if infrequent!) contact with them to discuss their business and its profitability.

One might also assume that an accountant's training would make him good at running a successful business.

Personally I know I am in fact hopeless at running a business (although I believe I am strong technically in the services I provide).  Perhaps I am living proof that accountants are not necessarily good businessmen!  (Fortunately I work with people who have the necessary strengths to help my businesses.)

Am I the only accountant who focusses too much on technical strength and not enough on 'business'?  Somehow I doubt that.

David

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Mark Lee 2017
By Mark Lee
24th Nov 2009 15:27

Reply for Tom

perhaps the best answer to your excellent question is to refer you to Finola McManus recent article

How to become a 'business advisor': Part one

especially as it's the first in a series on exactly this subject!

Mark

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By chatman
24th Nov 2009 15:30

'Interestingly, "My Bank Manager" is not very common'

Why would anyone ask a bank manager for business advice?

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By Accounting Controls
24th Nov 2009 16:09

Do Accountants Want to be Business Advisors

-- Jane Harper Accounting Controls [email protected]

Having worked as a Company Accountant in industry for many years I am now transferring my knowledge and skills across to my own practice offering book keeping with business consultancy.  It is a really difficult message to give to potential new clients.  It is the clients perception that an accountant keeps their books and records, recording historical data to ensure that the Crown is reported to in a timely and accurate manner.  However, a "working accountant" will have years of knowledge and differing experiences across the board of different business types and different business scenarios which can give a potential new client an ideas platform to bounce off.  Trying to market and offer such perceptions is difficult and comes down to building up trust with your clients.  The best way to do this is to attend their offices and prepare their books and records on site, you get a great feel of how a business is managed and run rather than just pitching up once a year to complete the audit!!  Yes by all means be a business advisor but understand the intricacies of the business you're advising about before launching into the advice.  It's an eye opener.

 

 

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By Peter Gill
24th Nov 2009 20:07

Business Adviser

Research has shown that many clients want their accountant/business advisers to be more pro-active. This has not always been clearly defined and I'm sure is open to interpretation.

As an adviser who deals with both accountancy practices and SME businesses, I always find it interesting listening to the arguments from both side of the fence.  My SME clients tend to want to develop their businesses and some (stress some) would be willing to pay for business advice from their accountant as they see this as being more pro-active than simply providing standard accounting, audit and tax services.  The accountancy practice clients generally engage us because they want to develop some of the skills needed to become better business advisers (and yes they invest money in developing those skills!).

We have to accept that not every accountant wants to develop the business and soft-skills.  Mark is quite right with the numbers and when I was employed at one of the major publishing/software/fee protection companies we undertook research ahead of launching a new service designed to support accountants in monetising business development time.  This research revealled that there around 2,000 firms we would put into the 'potential adopter' category.

We also must accept that there are a significant number of SME businesses that would not want this kind of advice from their accountant, or would not want to pay for it.  The trick is to demonstrate your ability as an accountant/business adviser that you are capable of providing it, have done so to other firms and helped them achieve their goals in a shorter space of time or more cost effectively than without your help hence stimulating their interest so that they ask for your help. At this point you can provide it or outsource to one of the business development consultancies out there. 

Boreas Partnership (UK) Ltd offers this kind of out-sourced service to accountants who would like to extend their service offering though can't/won't deal with the extra work.  We also provide a development programme to the accountants themselves in order to develop this aspect of the service in-house.  Whichever route you choose to take, when your clients come knocking, you can advise or outsource to meet their needs.

Peter

[email protected]

www.boreaspartnership.co.uk

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By alan.kennedy.smithkennedy
25th Nov 2009 07:10

Accountants as business advisers

From my experience it is extremely rare for accountants to be business advisers.  I have visited over 300 firms of accountants over the past five years and to my knowledge only one was successfully making a living out of being a consultant.  Conversely I know of some non accountants who make income out of business consultancy that most general practice accountants can only dream off.  If you are interested in building a consulting model one of the best ways to do it is by having a successful practitioner teach you.  John Niland (www.success121.com) and Paul Shrimpling www.remarkablepractice.co.uk are two that spring to mind (excluding Mark Lee of course).  The other key ingredients are having the right skill set - being good at sales, marketing and managing staff are prerequisites.   Alan Kennedy - outscouring for accountants on www.smithkennedy.co.uk/outsourcing.asp  

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By Trevor Scott
02nd Dec 2009 12:37

QED

I worked at a practice where the sign simply described the firm as “Chartered Accountants”.

 

It was taken over by a larger firm who put up a "new improved sign", missing out the title “Chartered Accountants” and replacing it with varied descriptions but the main one being “Business Advisors” … this coincided with a virtual collapse in numbers of “walk in new clients”.

 

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By David_Lewis
02nd Dec 2009 18:56

When is it appropriate to provide these services?

Mark

The term "business advisor" is extremely broad. 

Advising on the financial aspects of business may be within the skills set of some accountants in practice.   However extending this to areas such as sales, marketing, HR or IT* is encroaching on areas that may be best dealt with by other specialists and for sales and marketing it may also require a good understanding the industry. * however some firms do employ specialists in HR and/or IT

The danger of relying on a systemised approach is that it will not cater for all circumstances and if you don't have the experience then where do you go?  Nevertheless a systemised approach will provide a means for accountants to add value by providing some generic advice or acting as a facilitator to help the client arrive at their own decisions (or identify where specialist advice may be needed).

Clients often look to their accountant as the fountain of all business knowledge.  I see no reason why accountants shouldn't give business advice that is appropriate to their experience and ability.  However I would suggest it is important to recognise ones own limitations and to manage the client's expectations accordingly - this especially applies when the accountant describes him/herself as a business advisor.

I believe that the reluctance of some accountants to offer business advice is because it is outside their comfort zone.  Being commercial requires a certain mindset that not all will have - and where that is the case it is probably best to concentrate on what you do best and not offer it as a service.

Regards

 

David

www.camroseconsulting.co.uk

 

 

 

 

 

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