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How Accountants Can Help Businesses Expand in 2021


Although the news has largely focused on the struggles created by the COVID-19 pandemic, some businesses are actually thriving (and that doesn't just mean Amazon). As an accounting professional, you're well placed to help your business-owning clients if they'd like to expand their company. Bryce Sanders offers some tips you can provide.

Feb 8th 2021
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Not all businesses are struggling during the COVID-19 pandemic. Here’s an example: If your local investment advisor earns their revenue by charging a percentage on assets under management, the 15.76 percent 2020 return on the S&P 500 index should have swelled their bottom line. Some of your business-owning clients might be in the position to expand and will want to talk about it after completing their 2020 tax return. Whether you've thought of it yet or not, you're actually in a perfect position to help them do more than just find IRS tax breaks and get all the possible business tax deductions.

Considerations Before Anyone Makes a Move

Business owners can be impulsive. You’ve read stories about people winning a restaurant or a railroad in a card game. Real life requires more thoughtful planning.

What would complement their business? People buying one product often buy another. When you buy shrimp at the supermarket, cocktail sauce and lemons are nearby. Financial advisors, known for selling investment products, often expand into the insurance and lending spaces. Clients buying their product are usually buying the others elsewhere. Can your business owner expand their product line?

Can they handle additional business? Expansion doesn’t always result in an immediate increase in revenue. As a business owner, they need to leverage capital and labor. Do they have sufficient resources in each category? As an accounting professional you know businesses often fail when they overextend themselves and run out of money.

Get your bank on board. You will need financing for expansion. Interest rates are at historic lows, but the bank still needs to say yes. They will require a well thought through business plan and an excellent credit rating.

Eight Ways Your Client Could Expand Their Business

Many people don’t consider all the possibilities. When advising their business, you can expand their thinking by making the following suggestions: 

1. Buy Out a Competitor: Not all are successful. Some are owned by people wanting to retire. Other businesses are overextended and undercapitalized. Your client knows their competitors.  It’s a good starting point.

2. Merge with Another Firm: It’s an alternative to a buyout. You’ve seen real estate brokerages merge in your area. This can tie into the concept of complimentary product lines. The investment firm selling no insurance could merge with the insurance agency with no one licensed or trained to sell investment products. The big benefit is each firm’s book of clients is a ready market for the other firm. They can grow without cutting into each other’s business.

3. Connect Them with a Business Broker: We all understand the value of shopping locally. We know the best prices and product selection are often found online. Connecting your client with a business broker gives them access to a much wider universe of businesses that are for sale. As an accounting professional you know there are standard protocols for valuing a business.

4. Move to a Larger Property: Drive by an outdoor shopping mall. You'll see lots of empty stores. You’ve seen the downsizing. You know malls have big spaces available, formerly occupied by anchor stores like Lord & Taylor or Sears. When big stores close, there’s likely a longer-running lease where the purchase could be negotiated and assumed by another business.

5. Open Additional Locations: Now it’s not a situation of big chains downsizing. It’s mom and pop businesses closing. You might have firsthand experience with some business clients. These small locations provide an opportunity for your business owner to increase their number of locations.

6. Add Complementary Product Lines: Expansion isn’t always physical. The “share of wallet” concept involves getting current customers to do more business with you in different product lines. Years ago, financial advisors developed new client relationships with a single product. A good example was municipal bonds. The advisor focused on showing the client more bonds, because that was the path of least resistance. The client thought of the advisor as “my bond guy” because that all they were ever shown. The client’s additional interests and the advisor’s full product line never met.

7. Grow Their Sales Force: Your client sells through reps in the field. Each has a geographic or industry territory. There’s no overlap. Each salesperson cannot cover the entire industry or area singlehandedly. By increasing your sales force, you should also increase order flow and new customer growth.

8. Dive into eCommerce: Online sales is considered to be a big winner coming out of the pandemic. Has your client fully embraced this marketplace? Their clients have become used to buying product online. Clothing selection is often better than in stores because the full range of colors and sizes can be stored in a central warehouse. Your client will need to bring in some experts. One firm to build their online store and another to promote it online. Order fulfillment and data security are serious issues.

9. Sell to the Government: You can sell one item to many customers or thousands of one item to one customer. The Federal and state government buys lots of stuff. They prefer dealing with American suppliers when possible.  They often have programs giving preference to businesses owned by veterans, women and minorities There is a formidable application and vetting process involved. Has your client considered this option?

Suddenly your client realizes there are many more ways to expand their business than they imagined. Again, you have added value to the relationship.

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