One of the things that make it a challenge to talk with clients about their business is knowing where to start. Well let me simplify this for you. It won’t be about taxation, in whatever form. If their business isn’t going well then tax won’t be a problem, right?
It will be about their business results and it will be one of two things – Profit or Cash Flow.
For the sake of argument, let’s say it’s Profit or the lack thereof. What appears to be the problem, is it sales, is it (gross) profit margin or is it operating costs. The only way to identify which area to focus on is by making a comparison to past years trading results, or industry benchmarks.
Let’s say (again, for the sake of argument) it’s sales. Well what’s an Accountant know about sales you might ask? Plenty is the answer, so long as the Accountant takes the time to learn what drives revenue in a business.
In my ‘Evolution from Tax Accountant to Business Advisor’ classes we explore the 4 Ways To Grow A Business. In this paper we’ll look at just one, Get More Customers. Easier said than done, right? Well ‘yes’ and ‘no’.
Now the Accountant doesn’t have to be a marketing expert. What the Accountant must do is ‘open the discussion’. This will allow the client to look more closely at the way they do business and how well they are managing all aspects of building a successful business.
Remember I talked about the ‘Entrepreneurial Cycle‘ in a previous post and how this diagram in our ‘ClientSAFE – Business Advisor Tool Kit‘ clearly shows a client where they need to build their own expertise (in Business Management) or alternatively, bring in the right people who have the expertise needed? Well building sales by increasing the number of customers who (regularly) buy from them is a part of the process.
If a client isn’t actively increasing the number of customers it has then growing sales will be difficult. Inflation (and it’s effect on prices) is a ‘zero sum game’ and just won’t do it.
Pricing for profit will the subject of a future post.
One of the ‘experiments’ that our ‘Business Analyser‘ software does in the ‘Profit Explorer’ model is allow a client to see what affect say, a 5% increase in the number of customers (regularly buying) will have, not only on Sales but also on the Net Profit of the business.
Once the Accountant has ‘opened the discussion’ the client is then in a position to make a decision on what to do next and this is usually the biggest problem, knowing what to do next!
By being able to do this for your client you are positioning your self as the ‘go to person’ and ‘Trusted Advisor’ when business problems arise. You don’t have to be all things to all people, just be ready to ‘add value’ when the time comes.