Image courtesy of user “777546” on Pixabay.com

This is a follow-up to one of my recent editorials about the pitfalls of “proactive planning” with business clients. The “experts” say accountants are failing our clients by not being “proactive.”

Rarely do the “experts” define what “proactive” means, but one of the vibes I get is that the experts think our clients are these damsels in distress, wandering in the wilderness. Lo! If only an accountant would ride in on a white horse to save the day!

This brings up a question: can an accountant really “save the day”?

Why Do Businesses Succeed?

Here’s what I think the keys to success are for a business:

  1. Having a product or service the marketplace wants or needs
  2. Having the ability to sell the product or service to the marketplace (so, the ability to convince the marketplace to buy the product or service)
  3. Having the ability to effectively deliver the product or service to the marketplace
  4. Having processes and procedures in place to manage it all

Now, most businesses fail because they run out of money. “Under-capitalized” is the fancy term you’ll often hear for that problem. That falls under #4, not adequately managing the business.

In my own experience with my own business, my biggest malfunction is in #3. Work piles up, I fall hopelessly behind, and then clients get mad because their project has sat on my desk for weeks. Yet, I can’t really afford to hire employees. This means I struggle with #3 and also at least somewhat with #4, as this ultimately comes back to adequate planning.

How Much Can an Accountant Do?

Now, let’s look at these 4 predictors of success within the framework of what an accountant can do for a client.

Items 1 and 2 relate to having a viable product or service and being able to convince customers that they should buy the product or service. If a client is struggling with these things, their business is likely doomed, and there’s nothing an accountant can do to help them. They either have a viable product or service or they don’t; they can either effectively sell the product or service in the marketplace or they can’t.

Item 4 and perhaps item 3 are where an accountant can have more input.

I can, and have, helped clients with internal procedures, budgeting, cash management, etc.

But here’s the problem: items 3 and 4 are complex, with a lot of moving parts.

For example, if I’m helping Joe the Window Washer, I can offer advice on budgeting, and maybe even office procedures. But I can’t help Joe with efficiently delivering his service in the marketplace because I’m not an expert on window washing.

Only Joe can take steps to create more efficient processes to deliver his service effectively to the marketplace.

Bottom Line

The point I’m making is, it’s grossly unfair for the “experts” to opine that accountants need to be a knight in shining armor to our business clients. Of course we should help in any way we can. The problem is, the ball really is always in the CLIENT’S court — they’re the ones who have to take action, and there’s so many moving parts that we as accountants can’t control.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”