(Article first published on Ideate - The only South African blog written for entrepreneurs by entrepreneurs as guest author)
Every business needs one; it's one of those essential service suppliers like your insurance broker or stationery supplier. You can't really go without one.
How you regard your accountant however is a completely different matter.
Fixed Costs or Asset
If you expect your accountant to just "do the books" then most often you hand in your ledgers (shoe box filled with receipts even?) once a year and he/she'll turn it into a readable profit and loss statement, balance sheet and tells you how much (corporation) tax you'll have to pay. And of course bills you for the works done. End of story. The invoice gets booked under your fixed costs - like the utility bills, travel costs, letterheads etc - those type of costs that only deduct value from your bottom line.
- Your accountant talks to you at regular intervals, quarterly or even monthly. Informing you about new legislation your business can take advantage of by adjusting your methods, your legal position.
- Or he tells you how you can lower your salary costs by turning employees into B-share holders. This might also give your employees an extra incentive to find more efficient/effective ways to do their work, now their earnings are more directly related to the overall performance of the business.
- Or he spots a marketing opportunity for you, a new marketing method other clients of him have implemented rather successful and he's convinced it can work for your business as well.
- Or you pick up the phone to him and bounce off an idea you have, would/could it be feasible? He's a step further removed from the business so can give you a more objective view; highlight the risks or the gains you hadn't spotted.
- And together you discuss, brain storm where to take the business next, a rolling 3 - 5 year plan. Put on paper, outlined in more or less detail to which he refers every time you meet up again: are you where you are supposed to be now, are you ahead, are you implementing all the tactics and strategies from the plan? If not, why not?
When you regard your accountant as trusted team member, an essential part of your business then he becomes an asset: adding value to the bottom line.
Been there, done that, paid the bills
10 years ago, after an initial meeting we never saw our first accountant again. We did talk to them in the beginning, only to receive a new invoice every time they'd picked up the phone to answer any of our questions. And as newbie's on the block there are many questions. To be honest, they never did more than answering our specific questions. Billed us for the annual accounts and "advice" given. Fixed costs - not an ongoing relationship.
We stopped calling in the end, rather struggled on/muddled through on our own than having to add to the fixed costs.
When the business we worked for folded and we started on our own we were in the fortunate position to have found a true asset. From day one he's been driving us onwards and upwards, helping us grow the business from a struggling start-up to the successful business we are now 8 years later - and he's still convinced we can do more, better, grow further/faster.
We're always looking forward to our meetings, bouncing off ideas, plans, being brought down to earth again - often too, we're being told we're not bold enough. He's relentlessly driving us forward. An asset, an ongoing valuable relationship, adding value to the bottom line.
Which of the two above examples does your accountant represent at the moment? Is he/she only a fixed cost, can he be changed into an asset or do you have to part ways and find one who is?
Think hard about what your accountant represents to you, but don't think too long about it. If you regard your accountant as fixed costs it's high time to stop wasting money. Find an asset, quickly and start adding value.
If you are in any doubt, fill in this little questionnaire to help you decide. We decided 8 years ago and have never looked back.