6 Ways Accountants Can Be Management Consultantsby
While many small business owners are excellent at sales, they may struggle when it comes to effective business administration. You may be surprised to hear financial guru Bryce Sanders say that's where you come in. Here are six ways you can offer management consulting services as an accounting professional.
Good salespeople often make lousy administrators. You’ve seen it all before. A client had a great idea. They started a business. It took off. It grew and grew. The inventor has no idea how to manage a business. It’s time to introduce another of your business advisory service: Management consulting.
"Why are you qualified?" Your client asks this logical question. The immediate answer is: This is what major accounting firms do! One side does tax work, while the other consults on business efficiency. OK, they counter. "But you are the neighborhood accountant. What do you know?”
As the accounting firm leadership, you know plenty. You understand their business as well or better than they do. You’ve been working alongside each other for years. You’ve visited their facility numerous times. You understand what they are trying to accomplish. You also see the big picture. You have other clients in similar businesses. Without violating confidentialities, you have spotted best practices. You also understand the landscape of the local market. You are the best man or woman for the job.
Let's look at six ways you can help:
1. Business planning. Where does your client see their business going in five years? Is it in a high-growth mode? How will it grow? Acquisition of competitors? Opening more sales stores? Increasing the customer base? How will this happen? Where will the money come from? The bank? If that’s the case, they will want to see a business plan.
Deliverable: Together you can produce a business plan your client can use as a roadmap or take to the bank to secure funding for expansion.
2. Optimizing staff time. What needs to get done? What activities ring the cash register? How does the business owner spend their time? Years ago, this was called a time and motion study. The owner may have the “If you want something done, do it yourself” mindset. They may have a short attention span. Multitasking is overrated. The business might have grown in understaffed area while others sit idle. Employees who work in stores might need retraining and deployment addressing social media, the online store and order fulfilment.
Deliverable: With additional help, you should be able to deliver a staff analysis along with recommendations on how to redeploy personnel.
3. Controlling expenses. Sticking with the same vendors can be admirable, but not if they are charging prices out of line with other providers. Vendors may offer significant discounting to onboard new clients or retain departing clients. They often keep rates the same for those who stay silent. Your client’s expenses should be identified and those services comparison shopped by their office staff. They can remain loyal to current suppliers, yet need to tell them what competitors are offering. Prices often come down.
Deliverable: An analysis of current vendors, fees paid and rates available from comparable providers. Armed with this data, their office staff or the business owner should be able to negotiate better pricing.
4. Smoothing cash flow. Some clients pay promptly. Others delay. Some never pay and need follow up. Many businesses have moved to paperless billing. The client’s bank account or credit card is debited for monthly charges on an agreed date. Other clients prefer a payment plan. Your homeowner’s insurance might charge a monthly fee for this convenience. Some businesses offer a small discount for bills paid early.
Deliverable: You can analyze their accounts receivable history, identify problems and opportunities to offer clients more options on how to pay, at a cost.
5. Optimizing pricing. Your client sells a range of products. Maybe they own a restaurant and sell food. Business is slow. Are they aware what their competition is charging? This can be researched. Mystery shoppers visit similar businesses, buying same products. You can conduct internet research to compare prices in their online stores along with those of national providers. Is your client’s pricing competitive?
Deliverable: You can provide a price comparison study, conducted in the local market and online.
6. Liability management. Your client owes money. They might be late in paying their bills. This results in late fees, penalty interest rates on credit card balances and damage to their credit score. You can study where they owe money and what they are paying. This can lead to consolidation or finding different lenders. You might tell them how they could improve their credit score. At the very least, you could show the cost of not paying on time.
Deliverable: You can produce a report showing where they borrow money, what it costs and the fees paid in the previous year. You can recommend common sense changes.
This process is designed to tell a business owner what they need to know. The greatest value you bring to the table is your role as a fiduciary, offering advice and charging appropriate fees. You aren’t selling any products or services. Many people they bring in are salespeople who identify a need within a narrow area and recommend purchasing their product. However, you aren’t a salesperson. You are a business consultant looking at the big picture. You have your client’s best interests in mind.
Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides high-net-worth client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor, can be found on Amazon.com.