A good accountant can be worth their weight in gold to SMEs because the simple fact is accountants see things business owners do not.
A study into the cause of business failures in Australia illustrates the point.
The study asked more than 1000 business owners and 250 accountants why most businesses failed.
Business owners overwhelmingly said it was an “inability to manage costs”. Accountants, on the other hand, said “bad business models” doomed most enterprises from the beginning.
The lesson here, according to the study’s authors, is that what business owners perceive as unforeseeable spiralling costs were actually caused by flaws in a business model.
For example, owners may have prioritised products or service with low margins at the expense of more profitable lines.
Business owners often find it hard to analyse their operations objectively. And that’s where a great accountant comes to the fore – to point out practices eroding your profits and direct you towards new opportunities.
Your accountant is a key part of your business, so don’t be afraid to treat it like hiring a new staff member, says KPMG Perth partner Bruce Sinclair.
Ask around your personal and professional networks for recommendations then book meetings with several accountants.
“Don’t be afraid to be sceptical and ask questions,” Sinclair says, reeling off a list of queries such as: “If you were running my business, what would you be doing differently? What sort of initiatives would you implement? Where would you be investing resources? What do you see happening in the market I’m playing in for the next two to five years?’’
Sinclair says most accountants offer SMEs obligation free consultations.
“Look for some honesty in that initial conversation about their experience and how they can add value,” he says.
Also, be clear on costs and what level of service you can expect. KPMG generally operates on a model of monthly contact, with more in-depth quarterly reviews.
Most importantly, you need to match your needs to your accountant’s skill sets, Sinclair says. If you are a micro-business with no designs on expansion, you may just need someone to handle compliance and end-of-year financials.
But if you’re aiming to expand, you need a growth-oriented accountant.
In that instance, paying for expert guidance is best viewed as an investment rather than cost. Things such as getting your business structure right at the outset can save thousands.
Business owners should also think about how they can help their accountant. Keeping your records up-to-date means they won’t need to waste time (and your money) on data entry, giving you more bang for your buck.
