The one issue which doesn’t divide experts in the field is that, as an owner manager of a business, you will need help.
“Don’t let Tom, Dick or Harry tell you what to do with your business,” says Lisa Martin, MD of specialist small-business bookkeeping firm, Go Fi8ure and vice-president of the NZ Bookkeepers Association. “Unless, of course, he’s your accountant. Because accountants are the new business advisors.
“While knowledge is everything and if you have never run a business before, talking to others is a great way to glean good information, beware the throngs of know-it-alls – mostly in the guise of your friends and family – who can barely hold themselves back from offering you their ‘expert’ opinions about how you should manage
Martin points to the other great dilemma: new businesses tend to operate on a shoestring budget for the first three to five years and quite simply can’t afford to employ anyone else.
“Ironically, this period is typically the very point at which a business owner would benefit most from a bit of strategic input from a real expert. Consequently, in true Kiwi fashion, knuckled down to do their own analysis, they’ve followed that ‘she’ll be right’ instinct and given the tricky decision-making their best shot (crossing their fingers behind their backs).
“Well, I’m delighted to say, times are changing. Finally, bookkeeping and accounting firms are putting their hands up and saying: ‘Hey, we know pretty much everything about your business. We can do more for you than just crunching the numbers for the taxman’.”
Martin believes real-time software, “the best financial software ever”, has tilted the balance back to accountants.
“This enables them to enter all your financial information to create a road map – or even a ‘treasure map’ – for your business. Importantly, your accountant knows how to interpret all this data for the benefit of your business.
“Even, say, if you want to recruit a new sales manager; open a new office; or export to one of the emerging markets, why wouldn’t you ask your accountant – who has all
the information right there at their fingertips – if it would be financially viable? “It’s like a marriage made in heaven,” says Martin.
Adam Davy, head of business advisory BDO, has a very pragmatic view on the issue.
“First and foremost, I’m an expert adviser, with an accounting background. The reality is if you’re making money, the little things don’t matter. And if you’re not making money, they matter even less.
“To be a good business adviser, it’s critical you have that foundation in financial training and the in-depth experience accountants earn by being involved in all aspects of a business, day-to-day, through to a governance level; from ‘setting-up’ to growth management and buying and selling.
“That said, not all accountants make good advisors. While the numbers and fresh ideas are one thing, having the ‘street-smarts’ of business and a grasp of the ethical and moral codes of doing business are critical,” Davy says.
Sustainable and saleable
Davy emphasises that BDO focuses on maximising the value in all client-companies, making them sustainable and ultimately saleable. But unlike some advisors they do not follow a franchised formula, with a one-size-fits-all approach.
“We like it when a business is paying a lot of tax – after all the legal deductions, of course – because that means it is demonstrably successful. We focus on
He also cautions against making the assumption that just because your accountant “knows your numbers and you trust them”, doesn’t mean they’re going to give you good business advice.
“If they don’t have that essential background in commercial experience and grasp of governance, then they’re probably best left to do your books.”
He offers his guidelines on what a business owner should expect to get from a good advisory firm:
- Rapid throughput and being ‘up with the play’ at all times.
- Always accessible – not 24/7, but return calls promptly and ready to assist.
- Understandable and jargon-free communication at all times.
- Always looking to add-value in all they do.
- You form a valuable and enjoyable relationship.
“In many cases, partners in accounting firms will work collaboratively with their clients, one taking on the financials/bookkeeping role and another partner taking on the advisory role. That is a very advantageous model for the client, as the close connection and relationship between the companies is more likely to continue because it is not tied to an individual.
“This team approach is great for the clients, and ultimately that’s what it’s all about.”
Rightway Limited’s head of sales and marketing, Darren Eagle, takes a slightly different view. “Why choose between the two when you should be able to get it all from one person?” he asks. “The days when accountants sat behind their mahogany desks, peering over reading glasses, looking ever-so-slightly down their nose at you, and offering some ‘genius hindsight’ advice are over. Well, they should be anyway.
“Technology has changed the game; specifically Xero “and the hundreds of add-ons that work with this great product”.
He believes owner managers are looking for more than just tax compliance from their accountant.
“Instead, they are looking for someone who can handle tax compliance with ease, but also offer up sound commercial advice. While times have changed, the mentality and often the ability of many accountants is stuck in the 70s. They love the numbers; revel in spreadsheets; and nothing excites them more than the sight of a client walking in with a shoebox full of receipts.
“Of course, if a small business owner tries talking to them about HR issues, marketing or asks how to build a sales pipeline, you will see their eyes glaze over.
“We say your accountant should be able to discuss invoicing, sales and marketing, PR, production, and customer service with you – and, of course, you can now add social media, web development, SEO strategy, and even more advanced technology like augmented reality.
“We know that most accountants don’t know how to grow their own business, so how the hell are they going to help SME owners grow theirs?
“Yes, there are plenty of business coaches; mentors; advisors or specialised sales/marketing coaches, but again they often charge a premium and, importantly, don’t have any ownership or accountability over the financial sustainability of the company they service,” says Eagle.
RightWay, headquartered in the Wairarapa and with offices around the country, invests a good deal of time and money on researching industry-specific education and up-skilling its regional partners.
“It is important, as accountants and business advisors, we can have these insightful conversations with our clients. It’s what they are asking for; it’s what they need; and when you consider our core service is dependent on these companies growth, then we have a responsibility to ensure we get it right,” says Eagle.
“Our entire model is based around being able to set the numbers aside and have ‘real’ conversations. There is no point in presenting a wonderful profit-and-loss, if the client is stressing about an HR issue or a lack of sales.
“Today, being an accountant is less about the numbers and more about the 450,000-odd SME businesses and their entrepreneurial go-getters, Kiwi grafters, inventors, hard cases, characters and some downright clever buggers. It is about how the numbers can be used to make these people’s lives better and less stressful.
“Rather than looking for a hugely expensive business coach or mentor, maybe it’s time to look for a new accountant? After all, it is 2014, not 1420,” says Eagle.
Engine Room, despite its macho-male sounding name, is, in fact, a largely female, CA hot-house, rapidly expanding in the Auckland-Tauranga-Hamilton triangle and beyond. Practicality and empathy are what they are about.
Explains driving-force, founder and boss, Margaret Holmes: “At the Engine Room we’ve always been focused on helping businesses improve performance. Successful businesses are essential to New Zealand becoming a more prosperous country. Every business which employs another person helps another family, improves life in their community and helps grow New Zealand.
“We believe there are some key strategies to having a better business:”
- Have a plan – not a 20-page document, but a simple one-page overview of what you are trying to achieve in the next three-to-five years, and the steps you need to take to get there.
- Put in the right system to manage your business – work smarter not harder.
- Understand your finances – while your accountant might undertake to prepare your GST and income tax returns, you still need to understand how much profit you are making and where it is going.
- Cash is king – making a profit is not enough if you don’t have the cash in the bank.
- Reducing debt is a ‘no-brainer’; $1 of interest may save you 28 cents tax, but you are still spending the other 72 cents.
- Save some for a rainy day – making money is easy in the good times (even for badly run businesses); but bad times will come again.
- Accept that paying tax is good. If your business is paying tax it is making more money than you need to live on – this is a sign of your success and makes your business a more saleable investment.
“Good business starts with good thinking,” says Holmes. “We’ll help you take your business to where you want it to be, whether that means simply taking the hassle out of your annual books or helping you achieve your financial and management goals.
“We are passionate about helping businesses to perform at their best. More than ever before, business owners looking for more than compliance, approach us for advice on running their businesses more successfully. Traditionally accountants have been the ‘go to’ professionals to keep you out of trouble with the taxman, and many accountants are prepared to continue to simply fulfil that role.”
How does an owner manager differentiate, when so many advisors are all called accountants?
“It can be hard – but key is to understand the type of advisor you need, or are looking for,” says Holmes.
“If cost is an issue, an accounting firm which strictly does compliance is likely to meet your needs. But if you are looking for more, you need to research your options. Take the time to meet with several accountants to find the one that is the ‘match’ for you.”
Holmes believes accountants who want to offer advisory services, need to have a much broader knowledge than in the past.
“We find business owners need us to have an understanding of employment matters; a general knowledge of trust and company law; as well information technology, and even marketing. And, it is important to have a good network of advisors to refer clients to for specialist advice when required.
“Make sure you comply with New Zealand employment law; or it will come back to bite you. Most importantly, love your customers and employees. Businesses won’t grow without both of them,” says Holmes, who has more than 25 years’ experience in both corporate accounting and public practice, and is a member of the Institute of Directors.
Auckland-based ENZO Advisors is owned and managed by Robert Drum, CA, with 30 years in the business advisory game. He reckons they partner mainly with smart, progressive, local businesses which don’t necessarily have the resources to ‘do it all’. Their philosophy: Maximise + Optimise. As with Engine Room, Xero features prominently in their basic offering.
“To meet those needs, we’ve shaped our business to better help yours: by adding advisory and CFO services to our offering,” says Drum. “Thereby becoming a true business partner, which can help your business evolve and succeed.
“Our USP is building business-value. To help you get there, we help you manage every aspect of your business. Because we establish one-on-one relationships, our advice is totally customised to your business. And we’re not afraid to ask the tough questions. To challenge, as well as support you.
“Our team of advisors can help you create your game plan, support you to make it happen, assist you with investment decisions and risk management, as well as succession planning; you name it. Not only that, we can help develop your skills as the owner, leader and manager and those of your team: whatever it takes to get you to where you want to go.”
ENZO Advisors offers a full range of professional accountancy services, while noting their ‘biggest plus’ is the advice they offer. At the ‘softer’ HR-end they assist businesses to: “Recruit, retain and remove”.
“Smart, strategic advice that can make all the difference,” says Drum.
Seems the age of the ‘accountant advisor’ is upon us. Or perhaps this new breed can simply be referred to as your ‘business partner’ who wears many hats.
Keeps it all rather nice and simple don’t you think?
Kevin Kevany is an Auckland-based business writer.