Accountants That Can Solve Your Business Problems
Is your accountant a trusted interpreter or a high priest of jargon?
Centuries ago in the early Christian church, the worship service contained a call by the priest “The Doors! The Doors!” At that call the deacons would close the church doors to keep out the heathen. That way those outside would not hear the sacred truths of the faith.
For many business owners their accountant is like that priest. He or she carries a secret knowledge that reveals the truths of business. Taxes, financial statements, business analysis are all complicated topics. Most new businesses start out trying to do it all, but at some point an issue arises that is more difficult that the business owner wants to deal with, so he or she hires an accountant.
Problem solved, right? Unfortunately, not always.
You may get the specific trouble taken care of, but when your accountant goes to explain what happened and how to keep it from happening again, what is that conversation like? As she was talking did your eyes start to glaze over? Did his explanation make your brain hurt? And was the recommendation for the future that you needed to start using software to do your books, and hints on how to split a transaction so it goes to the right accounts? And did it all begin to sound like Greek or Latin?
Don’t get me wrong. The accountant’s work is vital to the business world. Scaled from companies like General Motors to companies like Mom’s Corner Grocery, accounting is the universal language of business finance. In a way it is like Latin in the Catholic church–the common language that the church uses to be understood by practitioners worldwide. But just like Latin in the church, it doesn’t make sense to most people. Someone has to interpret it so everybody else can understand it. And simply repeating the same thing–only louder–is not helpful.
As an accountant, I’ve been on the other side of that conversation and I know how frustrating it is not to be able to explain a concept that is crystal clear to me. I know that repeating the words inventory asset and inventory expense over and over will not make the concept any more clear. And more importantly, the reason behind the concept is really an issue for taxes and net worth, not for day to day operation of a business.
What any business needs is someone who can understand both cash flow and profit, and the difference between them. At the start, these are pretty simple, but as a business grows, it gets more complicated. Even worse, if the business doesn’t grow, the impact of the financials on that lack of growth can be even harder to make sense of, yet can also be the issue that closes the door on that business. So the business owner can usually start out with the understanding that’s needed, but later on, he or she is less likely to have all the answers.
And this brings us around to the point. How useful is an accountant who can only recite adjusting entries, journal entries, debits and credits in assets versus liabilities and any other accounting term and concept you can think of, but who cannot explain why your business isn’t showing a profit when you have cash in the bank? They may be the expert, but you aren’t helped by their expertise.
You need someone who can say things like, “If you moved from your six room office suite to a two room conference site you could save money and still meet with clients privately.” That doesn’t need an explanation of leasehold improvements, equipment depreciation, and goodwill value. Although a good accountant will understand the part those concepts play in a real estate decision. Deciding whether employees or independent contractors are the right choice does not need an explanation of payroll clearing and taxes payable accounts. Although a good accountant will be sure to set things up so that either way is properly handled by the tax authorities.
Most small businesses–maybe one just like yours–start when someone has a passion for something. It can range from car repair to carpentry, oil paintings to oil changes, jewelry to jurisprudence (sorry, got carried away with the alliteration) . . .you get the point. You have a specialized interest, and that interest is not operating a business. You can talk all day about your special knowledge. But what their customers or clients want is a result–beautiful necklaces, well running cars and a portrait of Aunt Lucy. Well, accountants (like me) have specialized knowledge, too. The problem is, your accountant may be so wrapped up in that specialty that they can’t give you the result you want–understanding your business finances.
And that’s why so many of you do not hire an accountant. You say, “If it’s not going to get me results, I’m not going to do it.” And that’s absolutely right. It will be worth a search to find someone who can be your trusted interpreter. If you’d like to know more about a system that can help your business, CLICK HERE and get a free copy of the core chapters of Profit First. All you have to do is share your name and email and also receive my almost weekly newsletter.
Leave some comments with stories about experiences you have had with an accountant, both good and bad. It’s useful to know what’s going on out there.