The support of quality advisors can make a big difference to the success of your business. This guide offers some pointers on how to choose advisors and how to get the best results from them.
The need for advisors
Most successful business people acknowledge that their success is in no small part due to the help they get from a carefully selected group of advisors. It is a mistake to think that you can do everything alone. Firstly, most people are unlikely to have all the specialised skills necessary to run a business and secondly, it’s a recipe for stress and burnout. You simply don’t have the time or energy to do everything well yourself.
Smaller business owners especially face the stress of isolation. Making decisions on your own can be an anxious process. But there’s no need to do things alone or in isolation. Consulting others is not a sign of weakness: the better informed you are, the more likely you are to make quality decisions. Your aim should be to build up an effective network of advisors that can really help you add value and profitability to your business.
The core advisory group
What kind of help are you likely to need? The core group for most businesses involves an accountant, a lawyer, and a business banking manager.
Getting accounting help
Your accountant is the advisor you’ll probably speak to the most. Choose an accountant suited to your level of business. For instance, if you’re a small business, look for a small business specialist rather than an accountant who has worked mainly with large corporates. An accountant who works mostly with small business clients is more likely to be aware of the special challenges faced by small business owners.
Industry-specific knowledge is also an advantage. For example, if you’re a chemist, look for an accountant who has other pharmacy clients. An accountant familiar with an industry will be better placed to benchmark your business against industry averages and advise you on how efficiently your business is performing.
If you see your accountant only once a year, you’re not making the best use of what they should be able to offer you. Choose a proactive, forward-thinking accountant, not a historian. What you achieved last year can be revealing, but the more important question is: how can you improve your business this year? Ideally your accountant should work closely with you on a regular basis, providing the specialist financial skills you need to build the profitability of your business. For instance, a proactive accountant can help you to interpret the key ratios for your business, enabling you to spot trends and make any necessary changes promptly. For more on this topic, ask for the related Solution Guide, ‘Checking the health of your business.’
Think about negotiating an agreed annual accounting fee (including regular consultations) that you can pay by monthly instalments. Many accountants offer such an arrangement, and spreading the payments over 12 months this way is more manageable for many businesses than facing a consolidated fee at the end of the financial year. In addition, this kind of arrangement encourages a closer working relationship by eliminating the worry of getting a bill every time you contact your accountant. As with all advisors, though, remember what you pay is less important than the value they can add to your business.
You can reduce accounting fees by keeping accurate, up-to-date records. A major benefit is that you will know far more about the progress of your business than a ‘store all the paperwork in a file until the end of the year’ approach. If a disturbing trend emerges (such as a diminishing profit margin) you can take corrective action quickly before it damages the viability of your business.