How to inspire confidence in your Business Advisory Services

(As posted in the Public Accountant 
website - see below for link) 

Inspiring client confidence is one of the most important steps in implementing business advisory services.

It’s your year-end meeting with an SME client, and you’re faced with the standard questions:

• ‘Why does my bank account not look like my profit and loss?’
• ‘You say I made profit and now have to pay all this tax … but where’s my profit?’

You delve into the many reasons, discussing debtors, creditors, loan repayments, overdrawing of funds … then you look up at your client, and they have that all too familiar ‘Duhhh … I hear what you are saying … but I don’t really understand’ expression on their face.

How many times has that happened?

Do you feel that no matter how you change the words, your clients look at you as if you’re speaking Klingon from a 1980s Star Trek movie?

Is this conversation something you enjoy? More than likely, it’s not! Do you think this is something the client enjoys? Probably not.

It can be really frustrating explaining the technicalities of profit & loss vs balance sheet transactions (or any other business performance matters) to business owners who are not as number savvy as we are. In fact, this uncomfortable and frustrating engagement between you and the client may be part of the reason why you (may) have held back on more business advisory work. It may be part of the reason why you don’t talk more about ‘business performance’ or ‘profitability reviews’ or ‘budgeting’.

So how can we offer this service – and charge for it at a reasonable recoverable rate – if a simple year-end performance conversation seems worse than pulling teeth?

What do we need to do to make this conversation flow much more easily and happen more often?

How can we smooth over this chat, so it opens the door for more business performance conversations? And more formal business advisory work?

Bottom line, slow it down and simplify it for them:

One thing at a time

When delving into the “Why does my bank account not look like my profit and loss” question, stick to one reason at a time. Instead of overwhelming the client with too many reasons (creditors, debtors, overdrawings, etc.), just give the most appropriate answer as a start. For example, if recovering of debtors is the biggest problem, let that dominate the conversation.

The devil is in the detail

Business owners are too busy to be confused! When you’re talking over the past year’s general financial performance, stick to the TOP THREE important issues for that client. Too much detail all at the same time can leave them overwhelmed and confused. Make sure they leave your office with clarity and confidence – even if it’s just about one thing.

Analysis paralysis

Ratio analysis can provide such valuable clarity on the progress of financial performance. Unfortunately, it can be very confusing for those who don’t use these ratios very often, or really understand them. If need be, stick to the TWO most important very basic ratios of GP% and NP%. At the end of the day, those two are the driving force of where the money is and where it’s going. Debtors Days, Creditors Days and Return on everything ratios can be very confusing at the start. Just stick to the basics and help them master that first.

Avoid overwhelm

The temptation is to cram too much information into a one hour session because, to you, it all seems vital to your client. Instead, think about what they need most. Ask the client ‘What is the most important thing you want to get out of this meeting?’ Then just focus on that. Remember, you don’t have to solve ALL the business owner’s financial woes in one meeting. If they feel more confident in their understanding of their finances, even if it is only a small part, they will be more inclined to come back and ask for more. And that’s when the discussion can become more formal, structured – and fee based.

Let the client know there is more

Let them know that you have only touched on a small part of their businesses financial performance. Tell them that you can help them with a more detailed analysis and clearer picture so they can make more informed business decisions. Tell them that you are available to discuss at a later stage how this could look – and that all they need to do is ask.

(As posted in the Public Accountant website)