The future of accounting firms is in consultancy. And as an accountant, you are expected to jump a chasm into the new world of consultancy. All industry sections have echoed this message, including professional bodies, industry advisors, and software vendors.
Most practice accountants have expertise and value in understanding your clients' accounting data. And most of their time is likely consumed with analyzing the client's historical financial data and how to structure their business to minimize tax, protect assets and protect wealth.
Therefore, understandably, jumping into consultancy seems easier said than done. Several doubts and questions arise.
"We don't have the internal expertise or the capacity; what if we fail?"
And these fears are further heightened by the impression that one needs to turn their whole world upside down and suddenly become a guru business adviser!
Scary as it all sounds, there is a simple solution to this change. Begin by using your existing skills and relationships to build a small bridge to consultancy with your clients. Also, involve all your partners and associates in this process.
The common aim of consultancy is to focus on the future
Clients have many questions: "How do we grow our business, increase our wealth, manage our future cash flow, take on and manage future financial risk?" And so on. Thus, you must use your existing skill set to transition your focus from the past to the future.
The simplest way to do this is by creating a 1-5 year cash flow forecast using your client's current financial data (this is the bridge). To do this, you do not have to be an expert in the client's business. You just do what you do best, ask the client several questions about their business, and translate this into numbers. For example,
- What are your forecast sales for the next 12 months?
- What is the basis of these assumptions?
- When will you receive the money?
- Are you looking to expand in the next two years?
- Will you need more staff? When?
All the answers are in your client's heads, and you are just the facilitator.
The next step is to setup a regular meeting with your client, weekly, monthly, or quarterly, to review and discuss the forecast vs. the actual financial performance of their business. You are now over the bridge and into consultancy land.
This is where you can ask further questions. For example:
- You forecast to receive $XXX, but you are ahead or behind $xxxx; why?
- Do you need to make any adjustments in the business?
- Are you still able to operate within the overdraft limits you have?
- Can I suggest you move this excess cash into a better working account?
- The business is growing ahead of forecast; let's update the forecast and contact the bank to ensure they will support your growth and so forth.
None of this advice is beyond your level of expertise or ability
The level and quality of your expertise will grow with your clients and time. Remember, most of the answers are already in your client's head. Your job is to help them make sense of it in a logical and controlled way.
Congratulations! You are now a business advisor. You have diversified and increased your income stream. Your clients are happy to have the support; in their minds, you are now an asset to their business, not a grudge payment.
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