How to build your
consultative practice

2012 Tax Season is just around the corner.  Many of your tax clients are probably small to mid-sized business owners, and undoubtedly, have gone through a challenging fiscal year.  My last email talked about not overlooking the simple things you can do to make a difference for your clients.  Today, I would like to take it up a notch to a slightly more involved level of service. It is at this time that most companies are trying to lay out some business plans for next year.   For most businesses you must “spend money to make money”, that is, they need to reinvest in strategies and tactics to help reach next year’s objectives.  Unfortunately, most small businesses are “busy being busy”, and do little if any planning for the coming year.  This is where you can make a difference… There are 4 key areas all businesses should evaluate annually for their future financial health.  These are:

Revenue Growth and Sales Strategies:

Granted, in today’s economy, many companies are more concerned about maintaining existing sales, but frankly, better companies understand that in bad economic times, their competitors are also suffering.  Based on a fair assessment of competitors’ client experience, quality of services, and things a simple as how many times each month do you “touch” your customers, better run businesses can often capture market share from their competitors more easily in Bear Markets than in Bulls.  Being a business owner can be a lonely experience.  Become the trusted advisor.   Take the time to let your clients talk to you about it; helping them financially succeed will come out of it!

Human Resources:

People are usually both the single largest expense and the single business asset you can increase a rate of return from.  Most businesses only view their team as an “expense” not an “asset”.  In this approach, efficiency can become the key problem, as the people on the bus may be in the wrong chair, they may be trying to ride in too many chairs, and, most likely, the bus does not have enough riders to maximize the profitability of the bus.  Have you talked to your business clients about the capacity of their team, and whether they can support even modest revenue growth?  30 years of helping businesses turn around in trying times has taught me that in most situations, making sure the company runs efficiently by enough staff doing the right things is the real way out of trying times, not cost cutting.  Be the sounding board for your clients to talk about their teams, and help them discover why most shifts with modest increases in overhead can create significant results in the bottom line.

Cash Flow:

Twelve years ago I was brought into a $15 million per year Services Company that consistently had a hard time not spending $15.1 million.  I will never forget the debate between the Marketing Director, (whose programs were doing a great job), leveraging for a larger budget, and the VP of Finance. Marketing Director: “Don’t you understand, that when it comes down to it, generating customers is the key to pulling us out of this?  Don’t you understand that marketing is EVERYTHING” VP Finance: “Marketing may be everything, but you have to understand, CASH is KING…” Very few business owners understand cash flow beyond, “there is money in the checkbook; times are good”, “there is not enough money in the checkbook; times are bad”.  Trends, seasonality, reinvestment for growth, excessive distribution to principles, and making a move that is “too little, too late” are all key elements of sound cash flow management.  Take on this role for your business clients.

Budgeting:

“What good are budgets anyway?  They are never accurate, I never look at them, and they business changes throughout the year- the company does not work on averages.”  Few businesses take the time to build an accurate budget, fewer of those that do understand what it is there for, and even fewer know how to make their budgets seasonal. Solid, well thought out budgets have a critical purpose in a business; they allow us to track our performance against our financial plan (the budget).  Take the time to help your business client’s build a solid budget (why not with ProfitSee®, that takes into account history, trends, and seasonality, as well as during the year adjustments?).  Help them monitor their performance monthly.  Advise them on what is actually happening while being a listening ear to their thoughts on the company.  Fulfill the role of their contracted CFO!

As always, we welcome your comments on our blog, Twitter, Facebook, and LinkedIn. We also invite you to attend one of our upcoming CPE workshops. Sincerely, Peter M Vessenes CEO