Why is Business Advisory So Important to Accountants?
These days, it’s hard to talk about the accounting profession without the words “business advisory services” getting thrown in. But why, and why now?
Some accountants would admit that it’s just not in their so-called genetic makeup or in their purview to provide such services, while others haven’t entirely sorted out the importance of moving outside the comfort zone of tax and compliance work.
AccountingWEB recently caught up with long-time management consultant and business developer Frank Coker who shared his thoughts on the need for evolution in the accounting profession, the timing for that need, and how practitioners are well-positioned to be more to their clients.
AW: What are your thoughts on the seemingly recent focus on accountants “evolving” to become business advisors?
Coker: There’s two things driving that trend: One is the fact that accounting is just becoming more and more commoditized and it’s harder to do value-based pricing for traditional accounting services. Accounting, in general, has become more automated and less valuable to just do the numbers. Businesses are also seeking ways to become more agile, and the more expertise they can outsource, the more agile they become. They haven’t done a good job of outsourcing things like business planning and strategy. Typically, those services had been provided by expensive business consultants who don’t have a deep history with those individual businesses. Accountants right now are well-positioned to step in and do that, but it takes a willingness to think more broadly about performance metrics rather than financials.
AW: Why is the current business environment ripe for business advisory services to come into focus?
Coker: The global economy and new competition it brings, the economic pressures of business in nearly every sector, margins are getting smaller, you need to figure out how to maximize performance, and there is less room for error. All of these are factors. Also, the continually dropping cost of available technology is eliminating barriers to entry for all kinds of businesses. There’s more competition at lower prices. All of these factors put businesses under pressure, and they need help.
AW: Do you believe that bookkeeping services are a gateway to becoming a business advisor?
Coker: I absolutely believe it, and I think it’s the best gateway of all … if a firm is willing. You have to be trusted in order to “do surgery” on accounting data. You get right to the middle of what a company is about when you have access to that data. It’s actually easier than an outside consultant who has no frame of reference with the historic financials. Accountants who are in the books already can have it easier from their position.
AW: What is your advice to firms that want to “think outside the books” in terms of first steps to take?
Coker: One strategy for an accountant is to actually pick a vertical, specialize in some area. I know for Woodard we’re putting programs together for those who serve law firms, nonprofits, and business financial metrics. It’s an area of expertise and we’re building out training programs for accountants. There’s no substitute for training and credentials for a specific area of expertise. It’s a badge of evidence, and then getting the first couple of clients on-boarded, those are the toughest and people often give up before that. Accountants need to get more bold and think of themselves more as entrepreneurs rather than mechanics.
AW: Are firms that don’t embrace business advisory services at a comparative disadvantage?
Coker: They are at a disadvantage, even the big firms are having the very same conversation they did decades ago, asking “how do we remain relevant to small and midsized businesses?” When firms figure that out, then they can grow much faster rather than tying themselves to a few big or long-term clients. Firms that are just doing traditional tax and accounting are being phased out, as firms with more breadth take clients away. It’s hard to declare that you bring value when you are just bringing hands to crank numbers or compliance.
Frank Coker has been a management consultant and business developer for more than 25 years. He is a director with Woodard Consulting, and is founder and CEO of business intelligence company CoreConnex Inc. He will be speaking in more detail about management consulting for accounting professionals at the upcoming Scaling New Heights conference May 22-25. Please visit this link for more information about the event and registration.