THE NEED AND THE NITTY-GRITTY OF A CUSTOMISED, VALUE-ADDED ACCOUNTING SERVICE

A recent survey of Canadian owners of small businesses revealed that 90% of small businesses don't plan. Instead they seem to manage the business on the basis of what is in the bank account on a given week.

Planning is not just for start-ups or for bigger businesses. You need to have a road map which the business must follow.

According to the same survey of Canadian owners of small businesses , their most common problem is the shortage of time to devote towards financial planning .

Small businesses have all the administrative, sales and production headaches that large businesses have but without the army of well equipped and trained executives. That leaves the entrepreneur little time to devote to strategy and business development. It is a wonder sometimes how small businesses survive, given the huge demands on the owner's time.

A common feature underlying most small businesses is that the founder is central to all major businesses procersses. That includes generating and retaining new business, actually providing the service, interviewing new staff and dealing with suppliers. .

Overburdened management can be a danger signal. As small business owners are overworked in the daily running of the business, perhaps the last thing on their minds is rectifying badly kept financial records or do some long-term planning.

Another basic reason for the lack of any basic financial planning has to do with human nature. People don't ask their accountants for assistance because they know that time, effort and co-operation on their part will be necessary. Without acting on the advice given by their accountants and acting soon enough, things cannot get better.

They also don't want to face the music (read bad news) if they already suspect that there are problems with their business.

The important thing is not to look the other way and hope things will get better, but to tackle the problems you are facing as soon as possible.

The owner needs to delegate problems that rob precious time (e.g. administrative and other unproductive tasks) from the primary purpose.

He can also use some outside help from someone who has the expertise and experience to assist with strategic issues such as growing the business and increasing profitability. A second opinion from someone who is not directly involved or does not have a conflict of interest and who is trustworthy. Two heads are better than one!

When an accountant takes on a new small business client, it's only natural that he takes an interest in their survival and growth and becomes more involved in the client's business.

A good accountant can provide a value added, beneficial and customised service that can assist small business owners who cannot afford the resources to internally hire personnel, in achieving their business objectives. This service o be beneficial must be customised, i.e. oriented towards satisfying the specific business' unique needs and requirements. But, why is a customised service necessary?

Each business is different from the one next to it. It has different needs and requirements. It belongs to a different industry, it competes in a different market, the degree of its owners' involvement is different etc.

A unique set of critical key areas exists for any specific business. The success of a business depends largely on how well or badly those areas develop. Those must be identified and closely monitored. Decisions must be taken to decide what action is required to improve where there are problems and take advantage of favourable opportunities where they appear.

For example, sales per day must not fall below a certain level for the business to break even. It might be necessary that new products have to be introduced each year to keep the business going! Customer satisfaction should be regularly measured to ensure the business is in the right direction!

Equally, production or purchasing costs must be kept to a minimum to ensure the business is profitable.  To achieve this, it might be necessary to purchase directly from the suppliers or to keep just enough stock to serve customers.

Such a customary service must begin with identifying those critical key areas that we described above and on the development of which the success of the business relies.

Once those areas are known, the key financial figures that measure the progress of those key areas must be regularly monitored. Their development should be reported and explained to the business owner in an understandable language, away from any jargon.

The accountant should be ready to offer advice and make suggestions to the owner on any action to solve problems or take advantage of opportunities if requested by the owner. Those problems will be easier to solve if dealt with at an early stage. Equally, maximum benefits will be derived from opportunities at an early stage, perhaps before the competition catches up.

An accountant who is paying close attention will certainly notice if your business just can't shake off that nasty cough or if something appears to be threatening its overall health. And a good accountant will call your attention to the problem even if you would rather not hear about it.

An accountant can suspect that a business may be in trouble just by looking at the state of the books. This is a good enough indicator that problems may lie ahead. Poor bookkeeping that gives no or little information about the development of business finances from month to month is a trouble symptom.

Clear signs of pending difficulties include being dependent on borrowed funds.
Undue and excessive reliance on one or few customers or suppliers is another potential danger. Lag between sales growth and profit growth is another sign of trouble. Poor or no cash management is another.

A good accountant should not be just a tax form filler. They should be involved in the planning stage of any new business and offer advice on choosing a business structure on the basis of tax considerations.

Tax planning is a continuing process because both your circumstances (personal or business) and tax legislation keep changing. That means that constant review of your affairs and proactive tax advice is essential. If you would like to identify any areas where you might be overpaying taxes and decide whether you can or want to do something about it and how, please click here!

Often, personal tax issues are closely related to and affected by business tax issues. For example, the accountant can help set up retirement planning for the business owner. He can also assist in areas like exit planning.

Your accountant may become your best business partner, saving you thousands of dollars and headaches. Your accountant will be worth every penny spent.

With so little added cost you could get SO much more...

I won't lie to you. An accounting service which INCLUDES monitoring several (additional) key figures will cost you more than if you had your accountant only do those customary basic (mandatory) tasks for you. Similarly, if the accountant analyses the data and writes a short clear-form report and contacts you for a verbal report, it takes more of his time and requires more of his work... and, obviously, more cost for you.

But it won't cost that much more.

If the accountant has organised his services then it won't be THAT much more. A customised accounting service should be affordable if the accountant already does the bookkeeping and is responsible for dealing with the tax affairs of the business.

How much more?

Well, that depends on your individual needs and wishes, of course. But it shouldn't be that much more than what you're already PAYING for accounting services.

The true cost of an accountant is not what he charges. He might charge too low but be more expensive than others because paying high taxed and not providing any assistance to increase profits.

However, the BENEFITS of such a service can be surprisingly substantial. What you can DO with the information and support, how much you can improve things in your company and how much easier it can make your own job... the difference is simply amazing.

But people can go lazy sometimes. It's human nature. Therefore a clearly defined set of cooperation rules of cooperation must be mutually agreed and govern the relationship. To protect both parties.

If the business owner is not willing to co-operate and take action where required, nothing can be done. For example, if you don't give the records or some of the records to the accountant or if you don't pay him, he is entitled not to deliver.

Please feel free to use all the information that you will find on the web site.

If you have questions, please feel free to contact me personally at any time. You can call, e-mail, fax or write to me and I will be happy to answer any and all of your questions.

Good luck in your business ventures!

Demetris Savva BA FCCA
Constantine Savva Accountants Ltd
Chartered Certified Accountants
155A West Green Road
London N15 5EA
Telephone: 020 88094468
Fax: 0845 0500905

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