Back home as an accountant in Lancashire in the late ‘80s and early ‘90s we made it our mission to visit our A class clients at least four times a year at their premises. When we were there, we would inquisitively ask questions (starting with a very simple one – “do you mind showing me around?”) We would take a keen interest in what was going on on the shop floor. We would mystery shop our retail clients and offer feedback to our clients. This simple process showed the client something very important; we were actually INTERESTED in their business (which we genuinely were.) And with that premise established we would then transition into a discussion about their business goals.
During that discussion, we focused the client on their revenue and specifically, the make up of that revenue (and from that, the impact on net profit.) In most businesses, the simple model espoused in our growth equation (number of clients x number of transactions per year x average transaction value) worked wonderfully well and opened the client’s eyes as to what was possible. To be able to show a business owner that adding $1 to the average sale would drop $50,000 to the bottom line, or if they could get their average customer to buy from them just 0.5 more times during the year it would mean $120,000 in their back pocket, or if they focused on reducing their attrition rate by just 5% it would double their profit is often a revelation to clients. Their most common response – no one has ever spoken to me about this before.
Small business owners tend to find this approach to be eye opening. Most clients I worked with in this way were excited about the potential we were able to demonstrate and were then keen to implement changes and new ideas to move towards the new reality that they did not previously know existed. Members of our Proactive Accountants Network (www.proactiveaccountants.net) routinely take their clients through what-if based planning as part of their standard work. This is why accountants make the best business advisors – they understand the numbers and how all the bits and pieces fit together. Do not underestimate this critically important element.