Blog

May 19

Some insights for Accountants who want to offer Business Advisory Services

Posted by Andrew Geddes at Friday, May 19, 2017

So you want to offer Business Advisory services?

The accounting profession is being bombarded with advice about moving into “high margin” Business Advisory work.

Most of the people telling us this are trying to sell us software or business coaching advisory IP.

To assess this opportunity, let’s firstly ask what our customers need and want?

Individuals need help with minimising tax, creating wealth, and managing risk to their income streams and assets (protecting their families).

So traditional proactive compliance services (accounting and tax) plus financial services (wealth creation and protection via legal structure and insurances) deliver what individuals need/want.

SME’s need help with the above and the following…

                *improving profit and cash flow in their business

                *improving the value and saleability of their business

                *planning and managing their succession

To assist clients in these three things needs specialist knowledge and skills that comes from study and experience.

Not all accountants have this knowledge and experience.

However, specialists can be engaged  and  “project managed”  by accountants who have learned how to do so.

Functional areas like digital marketing and sales, stock control and logistics management, and information and communications technology come to mind.

The FMRC/Geddes approach has always been to formally Needs Review our clients using our one page questionnaire… then design the service offering for this client that will meet their goals and achieve their desired outcomes; scope the job for value delivered and production cost; then price it with the client.

Usually firm partners and senior advisors are involved in delivering these services. Less experienced team members can do some of the preparatory work and then sit in on meetings and learn. Being a “minute secretary” for a Business Advisory project is a great way to be involved.

Experience suggests doing a couple of Needs Review discussions initially then delivering on these projects. Momentum can then be built over time depending on your communication skills and the receptivity of your client base. Having a set of four BA service offerings described in language the SME clients understand helps tailor written proposals following Needs Review discussions. Eg.

Possible Business Advisory Service Offerings…

1. Your External Chief Financial Officer

Managing cash flow and profits is a challenge for most business people. 

We can help you…                                              

                *get your bookkeeping happening efficiently and easily via the cloud

                *support and train your accounting team

                *set cash flow and revenue budgets to monitor with you regularly

                *set actions to improve cash flow and profits

*build relationships with your funders and re-finance with the bank when needed

We become part of your management team and meet with you regularly (monthly or quarterly) to plan actions and monitor implementation.  It can be done for a fixed monthly fee once we have scoped the job and assessed the amount of work needed.

2. Your Strategic Advisory Board

What three things do you need to do better in your business in the next quarter?

We can help you…                                            

                *set your annual strategic business plan with detailed actions to be implemented

                *design financial and action reporting to assess progress regularly (weekly and monthly)

*be accountable to an advisory board (with external independent specialists if needed) 

Setting two or three quarterly improvement imperatives and managing them as projects can really make a difference to your business success.  And having a formal board to assist you ensures implementation and accountability!!!

3. Getting ready to sell your business

Making a business saleable involves improving lots of little things and making you (the owner) dispensable so it runs without you.

We can help you…

                *understand the value of your business now

                *identify actions to improve your business’ value over time

                *identify what to delegate and how to teach others to do it well

                *get a better sale price

                *plan how to invest the proceeds and minimise any taxes

This is a special project and needs to be run well. We will make sure this happens.

4. Planning and managing your business succession

Your retirement can be staged over a long time if necessary. You don’t have to sell your business if you don’t want to. You can involve family members or senior employees if you wish as well.

We can help you…                

*build a senior management team (SMT) so you can start handing over responsibilities in a careful way

*grow new leaders in your business

*delegate successfully

*work towards your retirement in a planned way

*create an employee share participation scheme if you wish

Succession has many options. You can sell to a big corporate, to a competitor, to employees, to family members or simply put in professional managers and retain ownership. We can help you explore each option and select the one that is right for you.

We will work closely with you to help you set your goals and desired project outcomes.

We will scope the work and provide you with a fixed monthly fee where possible.

Then we will work with you to ensure all planned actions are implemented in a timely way.

Some firms have created a vast list of services in technical accounting language and simply listed this on their website. And asked clients to tick a box!!! This has not worked very well !!!!

The four Geddes Business Advisory service offerings are a natural progression from being an experienced compliance advisor.  You can subcontract specialised marketing and sales projects, ICT improvements or stock and logistics system developments. Sticking to your experience set and delivering actions with clients will build credibility and confidence. 

Making your  Business Advisory service offering project a success involves working through a series of steps…

1. Creating the service offering and resourcing the people to deliver (apps, skills, time)

2. Creating the Needs Review process (clients to be visited and conversation structure plan developed from your Needs Review questionnaire before each interview)

3. Website questions for the home page clicking to service descriptions (see above)

4. Website testimonials from clients

5. eNews articles/blogs on projects regularly as they are delivered

Creation of a Senior Management Team (SMT) to plan, implement and deliver the services to clients will often ensure its success.  Senior advisors will have to delegate existing duties to create capacity to be involved in the design and delivery of the new services.  Regular sales meetings reviewing Needs Reviews conducted, service offerings designed to achieve client goals and desired outcomes, proposals delivered and job scoping (timings, value delivered, production cost and prices) will build your team’s experience in this new offering.

It is not as easy as the spruikers make it out to be.

Remember, “Prior preparation and planning prevents p*** poor performance!!!!”.

Good luck.

Andrew Geddes

Jan 18

“Do you have an exciting One Page Strategic Plan and engaged Senior Management Team (SMT) driving innovation for 2017?”

“I need to clone myself to get stuff done!!!” is a lament we often here.

Do you feel the same way?

Back in 2007 I took my CEO and CFO of Greencross Limited to a Verne Harnish seminar in Brisbane. I was the company chairman at the time. I had been using tools promoted by Verne for decades so wanted to expose my colleagues to his teachings. Here’s a brief summary of what we were exposed to.

“Do you have a Big Exciting Audacious Goal for your company?”

We wanted to grow to 10% of the veterinary market in Australia and New Zealand. It meant growing our turnover and profits by more than ten times!!! We did better than that.

“Do you have a passion and purpose that unites your team and focuses them on innovation?”

We wanted to provide the most professional veterinary care and advice for passionate pet owners.

“Do you have a great team meeting often enough to create a sense of urgency to implementing actions to improve the business?”

We created a Senior Management Team or executive group, met daily for 15 minutes to identify what’s happening for you, how are we going against our daily targets, and what roadblocks exist?

We referred folk to where they could get help, allocated resources to assist, and got actions happening to unblock solutions.

These meetings were no more than 15 minutes…debate solutions elsewhere. This is a SMT download on stuff to be done and where to go to get help.

Refer debate on process changes or new opportunities to the Weekly SMT Operational Meeting for detailed discussion and action planning where there is time to do so.

This meeting rhythm allowed us to improve communication between the SMT members and actually saved time for all team members. We set priorities for unsticking customer and team member concerns and created a more dynamic decision making process in the company.

SMT members then added daily stand up huddles with their direct reports and took the same lessons into their teams.

Front line team members in sales, admin or “job doing” in its many forms in different parts of the company then were listened to daily and got immediate encouragement to fix stuff instead of waiting weeks for it to go up to SMT meetings and struggling to get the go ahead.

We found the quality of debate around improving the company and developing smart strategies to deliver what customers really valued also improved.

It sure beats trying to run a company on your own and feeling you have to make all the decisions and do all the stuff that needs doing.

It engages and energises all your team members.

But it is not about simply delegating responsibilities…it is more about creating a faster pulsing communication process between front line team members and your SMT.

This approach allowed us to grow from a micro listed company to the top ASX 200 over 10 years.

We’ve taken the lessons from Greencross and all the other businesses we’ve been working with into our new “Leadership for Profitable Business” workshop.

The next one is scheduled for February 21st in Auckland.

It’s a one day learning experience…click here for a detailed programme and registration process.

Bring your senior team members and create a SMT to work on improving your business and finding you time.

Then set an appropriate “Pattern of Meetings” and meeting rhythm to get decisions happening much faster than before.

You’ll profit from this experience.

Cheers.

Andrew Geddes 17th January, 2017.

Oct 15

It's smart Daily activities that create profit or not!!!

Posted by Robert Drum at Wednesday, October 15, 2014

One of the great pleasures of working as an external CFO is helping the business owner(s) and the members of their Senior Management Team (SMT) ‘get’ how the financial reports tie in with what they are doing on a job by job level.

Many of the businesses we work with are what we call ‘jobbing’ businesses which means the critical success factors of the business are:

  • Winning enough jobs at the right price to keep the team and machines in work. This is often in a competitive situation where “price is the most important consideration” and significant time and resource is put into tendering for work.
  • Passing the jobs on to the production teams in a format that they understand so they know the scope, margin and time lines of the job.
  • Managing the job to scope, meeting expected production rates and capturing variations.
  • Invoicing correctly and in alignment with any progress claims process.
  • Collecting the money when it is due; and perhaps most importantly….
  • Keeping the team engaged in the process. 

Those of us who have been trained as technicians (professionals) often need to learn the financial management skills needed to run a successful business. Having these skills is essential when in a strategic leadership and management role as a business owner or SMT member.

Our experience has been that these financial skills often need to be learned ‘on the job’ and as our client’s and their SMT members predominantly ‘work in’ the business, we are in the privileged position of being able to teach these skills to them both on the job or in training workshops. 

Generally our business owners and/or SMT’s have many tasks they have to focus on in any given day and it’s difficult to keep the big picture in mind and to understand that many small decisions can have a significant positive or negative effect on the overall profit result.

To assist with keeping the big picture top of mind, we use the “AndrewGeddes.Com.Au  Goal Oriented Budgeting and Job Targeting for Profit and Growth Tool”  to assist our owners and their SMT’s understand capacity, productivity, pricing and margins.

Understanding the difference between Mark Up and Margin and the relationship between the two is an essential skill for exceeding profitability targets because it sets the targets when pricing on a job by job basis.

In our External CFO’s role, we tie the jobbing activity together in regular financial reports and ensure the owners and their SMT’s understand their financial performance and position. And, as importantly, ensuring they understand the difference between profit, cash flow and financial position. Knowing the drivers that affect business value are also key learnings.

This information is discussed at regular meetings with the owner and the SMT to set, measure and adjust strategy as necessary to maximise business performance.

The financial numbers are the result of the activities taking place. The strategies that are set, therefore, are essential in helping make the ‘steering corrections’ that keep the business on course to achieving its budget.

The activities and strategies that are regularly reviewed include:

  • Winning Jobs (Marketing and Referral systems…the jobs pipeline)
  • Gearing (team members per director??)
  • Productivity (sales per team member)
  • Pricing (job yield…income per job hour)
  • Job Management (under/over recoveries to initial job targets)
  • Liquidity (WIP/Debtors control)
  • Overhead management
  • Capex/Funding

Using this timely and accurately financial information also allows the business to be bench marked against the industry as a whole and to set or review strategies that will improve business profit performance.

Probably the most rewarding aspect of the role is working with the owners and SMT’s to build a successful team, improve their leadership skills and grow a very successful and valuable business that is saleable when the time comes.

And to fast track this process we have owners and SMT’s regularly attend the AndrewGeddess.Com.Au Profitable Business Workshops. The next workshop is scheduled for Brisbane March 25/26, 2015. Book now to avoid missing out as numbers are limited to 20 participants.

Jan 16

Do you need an effective Chief Financial Officer? Robert Drum is a different type of accountant...he only has 25 clients!!! His specialty is working closely with his clients to ensure their financial management is top class. And their profits and cash flow. Robert can teach your accountant to play a similar role with you.

In your business are you getting?

  • Budgets and cash flows that reflect your strategic goals
  • Timely and accurate management accounts that reflect your business performance compared to your targets
  • Financial analysis that generates thought and action
  • Cashflow management that takes away surprises and stress
  • Thorough analysis of job costs and margins
  • A well trained and accountable accounting team that understand it’s role and deadlines
  • Systems and process development that give you a competitive advantage ie job profit analysis
  • Your data recovered in the event of a system failure
  • Proactive Finance relationship management with bankers & solutions before problems occur
  • All your compliance requirements completed in a timely manner and a proactive relationship with the tax office/department
  • A highly trained and professional member of your senior management team

These are the outputs that are the responsibility of a Chief Financial Officer (CFO). Many significant owner operated businesses are missing out on these business essentials as they don’t have a full time CFO. And as you can see from the list above, this important role can make the difference to the success of your business.

We have developed an external CFO role with our clients to ensure they get these essential outcomes in their businesses.

We are happy to work with your current accountant and teach them what we do and how we do it. If three people from your firm book into our "Profitable Business Management" workshop for design professionals in Brisbane March 24/25, your accountant can come too for free!!! Or book into our "Improving margins and profitability in your firm" workshop in Auckland March 27th and your accountant can come for free!!!

The development of cloud based accounting solutions such as Xero make the process more efficient and allows for the concept of a virtual CFO for even smaller businesses, particularly where the accounting function is either the responsibility of an accounting/wages clerk or you the owner.

Another important aspect of the external CFO role in growing your businesses is providing leadership and technical support to your accounting team. This often allows for the accounting team not needing to be fully qualified from a professional perspective and has the added benefit of providing high level information with robust systems at lower costs.

Where a relationship with lenders is required, having an external CFO on your senior management team supporting you, the business owner, is often the difference between getting the right finance and not, as Banks are looking for applications that include accurate forecasts and a management team that are setting achievable strategic goals and making good managerial decisions based on accurate and timely financial information.

An external CFO also helps you, the business owner, manage your balance sheet effectively which in real terms means you:

Actively manage the terms you set with your debtors and have processes in place to collect on time with KPI’s to highlight when you don’t.

  • Manage your stock and work in progress effectively.
  • Minimise the cash needed in your business.
  • Maximise the effectiveness of your use of fixed assets.
  • Manage your debt levels.
  • Maximise your return on investment 

Having an external CFO helps you as a business owner to focus on the aspects of the business in which you excel and are most valuable to your business without having to worry about financial management. With the overall outcome being higher profits, better cash flows, a team that can learn to run the business when you are not there, less stress and an asset that is growing in value.

Enzo is a boutique advisory/accountancy business that works closely with business owners like you to achieve the outcomes listed above through three services….being on your advisory board to help you plan for a profitable future;, being your external CFO to prepare budgets and manage finances; and being your Chartered Accountant to do your tax compliance management. Visit us at www.enzoadvisors.co.nz.

 Remember, we are happy to work with your accountant to show them what we do and how we do it. Bring them to our "Profitable Business Management" workshop in Brisbane March 24/25 with your team of three for free!!!

Or to our "Improving margins and profitability in your firm" workshop in Auckland March 27th for free!!!