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Are you an accountant that can spot an opportunity?

Recently I was chatting with a CFO on the phone. To protect the innocent lets call him Anthony as in Anthony Hopkins.

Anthony is an accounting and finance professional with over 40 years experience. Over the last 15 years or so he has worked as a “gun for hire.” His speciality is to go into a business that is experiencing trouble and turn the place around.

Anthony’s current assignment is as an interim CFO of a small to medium manufacturing company. This particular business has been in operation for 50+ years and employs over 100 people. For some reason, the business has been trading at a loss for the last 10 years. Anthony, with a fresh set of eyes and some skill, within one year has turned around the business from a loss to a profit.

Now I know what you’re thinking … that’s easy James. Anthony simply went in, sacked a lot of people, controlled some other costs and got the business to make money. No – it didn’t happen that way. Rather, Anthony asked questions of people on the shop floor, middle management and of course of the owners. Through a combination of asking the right questions and some digging into the financial records, Anthony was able to uncover a fundamental flaw. The flaw was both simple and destructive. Believe it or not – no one knew what margin the business made on the products they manufactured. Or put another way … that they didn’t really know what it cost them to produce their products. So how on earth can they make a profit when they didn’t know the cost of what they were making.

In my phone chat with Anthony he told me that, armed with the above knowledge, it was a relatively straightforward process to make the necessary adjustments to get the business back to profit. A success story!

However, it was Anthony’s next comment that caught my ear the most. He noted, with some frustration and amazement, the fact that that the external auditors and accountants that this business had been using over the last 10 years (trading at a loss every one of those years) wern’t proactive enough to at least ask the question “Why the loss was occurring year after year?” As Anthony said to me, “It just reinforces the stereotypes of accounting firms and their people – they look through the review mirror and don’t come up with ideas to tangibly help their clients. They are more focused on ticking forms about the past and making lodgement deadlines. Its very sad – 10 years of missed opportunities.

Now compliance is important, but clients see it as a necessary evil – not as something that helps their business. Lets face facts, the majority of compliance services are simply commodities. The now and the future for the profession lies in advisory work which helps businesses make more money, save more money or save time.

Until next time,

James

Be an accountant who is known for great communication (3 of 3)

The third hallmark of effective communication is the ability to ask good questions.

You would have heard me bang many times over the last year about one of my favorite maxims – “If you want a better answer … ask a better question … then listen”

Clients are impressed by accountants and advisors that ask questions they weren’t expecting or that they haven’t been asked before. It shows a preparedness on the part of the questioner that he/she invested time and effort in understanding the clients business and circumstances.

One of the best questions one can ask is “why?” If asked in the right way, the question of why can uncover a treasure trove of insights. There is a body of work that claims that asking “why” at least 3 times in the one meeting or conversation can uncover the root cause or motivation behind any aspect of business activity undertaken by people both internal and external to an organisation.

For example, a business owner may be asked the question, “Why are you in business?” The first response would most likely be “to make money” Further in the conversation, the business owner may then be asked “Why is it important to make money?” The next reply could be something along the lines, “so I can invest in my business” At a later point in the same meeting, the owner can then be asked, “why is investment important to you?” The answer may well be, “my core market is declining and I need to develop offering to new markets.”

By asking “why?” just 3 times the questioner has moved from making money to the business surviving. How interesting. The quality of advice that can be given based on the 3rd response rather than the initial 1st answer is chalk and cheese!

The above of course is an obtuse example but you get the idea!

Keep well,

James E.

As an accountant – are you blind to opportunities?

Recently I was chatting with a CFO on the phone. To protect the innocent let’s call him Ed.

Ed is an accounting and finance professional with over 40 years experience. Over the last 15 years or so he has worked as a “gun for hire.” His speciality is to go into a business that is experiencing trouble and turn the place around.

Ed’s current assignment is as an interim CFO of a small to medium manufacturing company. This particular business has been in operation for 50+ years and employs over 100 people. For some reason, the business has been trading at a loss for the last 10 years. Ed, with a fresh set of eyes and some skill, within one year has turned around the business from a loss to a profit.

Now I know what you’re thinking … that’s easy James. Ed simply went in, sacked a lot of people, controlled some other costs and got the business to make money. No – it didn’t happen that way. Rather, Ed asked questions of people on the shop floor, middle management and of course of the owners. Through a combination of asking the right questions and some digging into the financial records, Ed was able to uncover a fundamental flaw. The flaw was both simple and destructive. Believe it or not – no one knew what margin the business made on the products they manufactured. Or put another way … that they didn’t really know what it cost them to produce their products. So how on earth can they make a profit when they didn’t know the cost of what they were making.

In my phone chat with Ed he told me that, armed with the above knowledge, it was a relatively straightforward process to make the necessary adjustments to get the business back to profit. A success story!

However, it was Ed’s next comment that caught my ear the most. He noted, with some frustration and amazement, the fact that that the external auditors and accountants that this business had been using over the last 10 years (trading at a loss every one of those years) weren’t proactive enough to at least ask the question “Why the loss was occurring year after year?” As Ed said to me, “It just reinforces the stereotypes of accounting firms and their people – they look through the review mirror and don’t come up with ideas to tangibly help their clients. They are more focused on ticking forms about the past and making lodgement deadlines. Its very sad – 10 years of missed opportunities.

Now compliance is important, but clients see it as a necessary evil – not as something that helps their business. Lets face facts, the majority of compliance services are simply commodities. The now and the future for the profession lies in advisory work which helps businesses  make more money, save more money or save time.

Until next time,

James

Are all accounting firms created equal? (2 of 3)

Following on from our last post, here is the 2nd feature of great accounting firms.

2. Asking questions and listening.

Great accounting firms seem to have a higher proportion of partners and staff who ask good questions and really listen to the responses given. You would have read in my posts before the statement – if you want a better answer, then ask a better question then listen to what the client or prospective client is saying.

Here is the true story of a friend of mine and the question he asked and how it changed the way he sold his services in the future.

As an adviser to the SME market, I often tell others about an event that occurred with a potential new client back in 2008. It was a busy time of the year, and I had been referred a potential client from another professional to assist with a transaction. Needless to say, I had a busy few days leading up to meeting with the potential client and was unable to do my usually pitch approach.

When meeting a potential new client for the first time, I often do research about them (where possible) and the industry that they service to get a better understanding of the client and the market that they trade in before I actually meet with them. I would do this to assist me in identifying potential talking points. Unfortunately, or fortunately as it turned out, I didn’t have the time to do the usual preparation and was actually 10 minutes late to our meeting. I was so unprepared that the first thing I said after introducing myself was to say, “How can I help you?”

It wasn’t until the potential client spent the next hour telling me about their business that I realised how important those words were to them, and that they were actually looking for an adviser who would listen to their needs fi rst and then see where (if at all) they could add value to their business. I must admit that this changed the way I sold my services, from identifying what I could do (talking points), to actually seeing if there was a need for my services in the first place (listening points). This ensured whatever services I sold were valued. As an adviser I keep reminding existing clients that I need to know how I can help them before I can actually help them.

Tune into the next post to read the final installment in what makes an accounting firm great!

All my best,

James E.

Missed opportunities

The other day I was chatting with a CFO on the phone. To protect the innocent lets call him Sean as in Sean Connery (the slightly older version).

Sean is an accounting and finance professional with over 40 years experience. Over the last 15 years or so he has worked as a “gun for hire.” His speciality is to go into a business that is experiencing trouble and turn the place around.

Sean’s current assignment is as an interim CFO of a small to medium manufacturing company. This particular business has been in operation for 50+ years and employs over 100 people. For some reason, the business has been trading at a loss for the last 10 years. Sean, with a fresh set of eyes and some skill, within one year has turned around the business from a loss to a profit.

Now I know what you’re thinking … that’s easy James. Sean simply went in, sacked a lot of people, controlled some other costs and got the business to make money. No – it didn’t happen that way. Rather, Sean asked questions of people on the shop floor, middle management and of course of the owners. Through a combination of asking the right questions and some digging into the financial records, Sean was able to uncover a fundamental flaw. The flaw was both simple and destructive. Believe it or not – no one knew what margin the business made on the products they manufactured. Or put another way … that they didn’t really know what it cost them to produce their products. So how on earth can they make a profit when they didn’t know the cost of what they were making.

In my phone chat with Sean he told me that, armed with the above knowledge, it was a relatively straightforward process to make the necessary adjustments to get the business back to profit. A success story!

However, it was Sean’s next comment that caught my ear the most. He noted, with some frustration and amazement, the fact that that the external auditors and accountants that this business had been using over the last 10 years (trading at a loss every one of those years) weren’t proactive enough to at least ask the question “Why the loss was occurring year after year?” As Sean said to me, “It just reinforces the stereotypes of accounting firms and their people – they look through the review mirror and don’t come up with ideas to tangibly help their clients. They are more focused on ticking forms about the past and making lodgement deadlines. Its very sad – 10 years of missed opportunities.

Now compliance is important, but clients see it as a necessary evil – not as something that helps their business. Lets face facts, the majority of compliance services are simply commodities. The now and the future for the profession lies in advisory work which helps businesses make more money, save more money or save time.

Until next time,

James

Accounting Firms – are all created equal? (part 2 of 3)

Following on from our last post, here is the 2nd feature of great accounting firms.

2. Asking questions and listening.

Great accounting firms seem to have a higher proportion of partners and staff who ask good questions and really listen to the responses given. You would have read in my posts before the statement – if you want a better answer, then ask a better question then listen to what the client or prospective client is saying.

Here is the true story of a friend of mine and the question he asked and how it changed the way he sold his services in the future.

As an adviser to the SME market, I often tell others about an event that occurred with a potential new client back in 2008. It was a busy time of the year, and I had been referred a potential client from another professional to assist with a transaction. Needless to say, I had a busy few days leading up to meeting with the potential client and was unable to do my usually pitch approach.
When meeting a potential new client for the fi rst time, I often do research about them (where possible) and the industry that they service to get a better understanding of the client and the market that they trade in before I actually
meet with them. I would do this to assist me in identifying potential talking points.
Unfortunately, or fortunately as it turned out, I didn’t have the time to do the usual preparation and was actually 10 minutes late to our meeting. I was so unprepared that the fi rst thing I said after introducing myself was to say, “How can I help you?”

It wasn’t until the potential client spent the next hour telling me about their business that I realised how important those words were to them, and that they were actually looking for an adviser who would listen to their needs fi rst and then see where (if at all) they could add value to their business. I must admit that this changed the way I sold my services, from identifying what I could do (talking points), to actually seeing if there was a need for my services in the first place (listening points). This ensured whatever services I sold were valued. As an adviser I keep reminding existing clients that I need to know how I can help them before I can actually help them.

Tune into the next post to read the final installment in what makes an accounting firm great!

All my best,

James E.