Accounting pros, what your clients care about is how they’re doing and if they’re on the right path. Are you helping them understand that, or are you just the guy who works with the numbers to make sure they’re accurate?
Accounting professionals are having a hard time of it right now, with clients demanding more insight and assistance in helping to build value and profitability in their businesses, yet accounting professionals continue to be mired in the details of the numbers. It’s like the old saying about not being able to see the forest for the trees. You spend time in the trees, counting trees and making sure the trees are properly categorized, but are you seeing how this group of trees performs compared to others in the forest? The analogy isn’t that far off. You see, if there are other trees in the way, or if it doesn’t rain enough, the tree won’t grow and thrive.
This is what it’s like out in the world, where your business is just one of many. It’s not like you can grow and thrive no matter what others are doing. If they’re bigger than you and take all the light, then you can’t grow. If they take all the nutrients and resources, you can’t grow. If it doesn’t rain, you can’t grow. Somehow, some way, you have to find a way to stand above the others, get the light and the resources and the rain. Someone in the business should be paying attention to this bigger picture, and it is often the business owner. Their accounting professionals, on the other hand, tend to remain in the dark, below the sun, counting numbers because the owner isn’t interested in counting. The owner is interested in growing.
Accounting is about numbers, but growing a successful business is about numbers and strategy. Historically, the numbers tell you how the business has performed up to this point. Adding in the elements which speak to strategy, you can then look at what your potential performance will be in the future, and then make the necessary adjustments to make sure that the potential is realized. The accounting professional acting as a small business CFO must be prepared to help business clients look beyond the numbers to their meaning and what they say about the business today, factoring in elements relating to business strategy and market forces to reveal what they indicate about the future.
Accountants, it’s time to recognize that you are the only ones really worried about the numbers. Business owners just want to understand what the numbers mean and what they can do about them.
Reducing costs and managing expenses and cashflow is critical, yes, but how many business owners actually know what they’ll be up against when looking for financing, or a buyer? Or do they even realize that they’re not on the path they wanted… building something valuable they can leave to the kids? Sure, the cashflow may be there, and they’re taking a healthy monthly salary… but does that really tell the entire picture or show them where they’re likely to end up? No, it doesn’t, and every accounting professional knows that truth.
While it’s true that bad accounting data turns into bad decisions really fast, it’s also true that too many accounting professionals THINK their client’s don’t care about what the numbers SAY just because they don’t care about the numbers. I would suggest that maybe small business owners care far more than their accounting professionals recognize… and they care about building value and not just accurate digits. This is one of the reasons why KPI dashboards, dynamic reporting tools, and business valuation solutions are so popular among small business owners – they are able to have a conversation with their business data that their accountant isn’t having.
Can self-help reporting and valuation tools be useful to business owners? Well, that’s sort of like asking if trying to figure out what you’re worth (or not, as the case may be) will hurt your business. Information is power, and every business owner wants to believe they have the power to succeed in their own hands. Just because they’re not having this conversation with their accounting professional doesn’t mean they’re not thinking about it. Maybe they’re just not asking and the accountant isn’t offering.
Accounting professionals, go ahead and continue to monitor KPIs and crunch the numbers and show cash flow (real cash flow, not just today’s bank balance). But if your client had 1 hour per month to actually spend working ON the business (on the forest), trying to make sure their business is heading where they originally planned to go with it, wouldn’t it be a good idea to show them where to spend that time? Yes, it would, and adopting the use of realtime reporting and analysis tools for business clients can help do that.
Data dashboards and decision-support solutions are important tools which help business owners understand their businesses better. Rather than viewing these tools as dangerous or competitive, accounting professionals should view financial analysis, business valuation and KPI reporting tools as something they can use to help build value in the information they develop, rather than trying to convince clients that the value IS the information and not the guidance it suggests. The data won’t make the tree grow, it’s the guidance that feeds it.
- Read more about Bookkeeping and Benchmarks – Getting the Numbers Right
- Read more about Data Dashboards and Financial Analysis: Comparing Apples to Aardvarks
- Read more about how accountants need business intelligence, too
- Read more about how there’s no fear and loathing in accounting
- Read more about the pressure on accountants to deliver more value and intelligence to their clients
- Read more about Data Warriors: accounting in the cloud