Lately I have had some interesting discussions regarding the accounting industry’s attempt at adding value to their clients, and consequently to their own accounting practice, by moving to provide business advisory services. All of the software companies and industry speakers seem to be espousing it as the next big thing as well.
Yes I agree that the accounting profession as a whole needs to move towards business advisory as the squeeze gets put on the margins and the volume of compliance work. Not only that but great business advice and mentorship can be the making of a business and as a nation of small business that can only be great for our economy. And what better synergy than to have accounting and business advisory services working together.
Can any accountant do a good job of it though? No. It takes a raft of skills, personality and business experience that I would suggest the majority of accountants do not possess.
Perhaps the definition of business advisory, and thus exactly what services are to be offered, needs to be fully fleshed out in the first instance, because I see the potential for there to be some confusion over this term.
Business advisory to me is a term largely synonymous with business coaching and consulting. A business advisor I would expect to have a broad range of knowledge across many business departments, and to have access to experts in any areas they felt they were lacking. Ideally they will have successfully run at least one profitable business before, although I concede that the definition of successful in this context is highly subjective. However, it’s a place to start.
Being an expert in understanding the numbers of a business does not automatically make you an expert in running and managing a business. HR matters, recruiting, leadership and marketing are all integral parts of a business but would you really want to go to your accountant for advice in these areas? Do they have sound business experience in these fields?
Howevert for advice on profitability, cashflow, assets, affordability of a new resource, understanding margins and return on investment then definitely go and talk to your accountant. These are certainly crucial aspects of a business to get right and accountants are experts in this particular game.
I think there is a real danger here as accountants start to position themselves as business advisors, that clients will start to get a lot of well-intentioned but potentially inaccurate and poor business advice.
So be careful is all I will say for now. Accounting firms perhaps need to provide an advisory department or person who is in essence a well-rounded and experienced business coach instead of assuming that any accountant has the skills, or can be taught the skills, needed to be a great business advisor. And clients beware that this is a growing trend in the accounting industry, but do not assume that all accountants are qualified to give great business advice across all areas of your business.