Strengthen Your Client’s Business Foundation

Is a recession coming?  Are we headed toward an unprecedented business boom?  Do you have clients whose business or industry is heading to a best year ever…or watching a decline start?

No matter how you answer these questions, navigating major economic cycles and business-specific ones is as much art as it is science.  That said, this remains true:  strong leadership, creative problem-solving, and the ability to maintain composure in stressful situations will always be what carries businesses and business owners through the other side.  Now is an ideal time to demonstrate your resourcefulness and focus on your clients’ success by helping them build or strengthen their business foundation.

As a key service provider for your clients, there is much you can do to enhance their financial and operational footing.  As one example, you can use a standard SWOT (strengths, weaknesses, opportunities and threats).  Not only will this provide them valuable information on things that can be addressed quickly, it also helps them focus on the longer term by protecting their company’s value and provide long-lasting benefits.  Here are few areas in which to get started.

Expense Analysis

As a CPA, you have easy insight into your clients’ expenses – and likely into comparisons across your client pool.  This gives you much more depth into helping all of your clients analyze and understand patterns, red flags and opportunities.  (We assume it goes without saying that you won’t breach any confidentiality here.)  Cost analysis can be done in a variety of ways.  The methods you choose may be based on the client’s business, the industry, the relative category or some combination.  Here are a few of the most common approaches:

•  Variance to budget.  This assumes that the client has a budget.  Mainstream financial media portrays that every business (and every individual) does or should.  It doesn’t work that way in the real world.  In our private client base, only about 50% of our clients do.  And also?  Many of the assumptions fall apart due to macro conditions that couldn’t be planned for when the budget was done (like a direct competitor going out of business).

• $ Changes from the prior month.  If the business is stable, stable, stable (and non-cyclical), this can be a great tool to use.  It is easy to see the ups and downs and look for patterns.

• % Change from the prior month.  If the business is more seasonal or cyclical in nature, using absolute $ can be an exercise in chasing ghosts.  This is also true if you have a business that has certain costs increase as sales increase (whether for actual product costs or labor or both).  By using percentages, you can see variations that are not due to volume.

For many of our clients, we use a combination of the last two:  $ and % changes.  The absolute dollars work best for fixed expenses like rent, Saas fees, administrative employees and other fixed overhead.  The percentage work best for any items in cost of goods or cost of services sold.

Workforce Review

Are your clients using their workforce as efficiently and productively as possible? How much flexibility do they have in the actual scheduling for peak and slow times?  Is everyone on salary?  Are they delegating responsibilities that most effectively utilize the talents of each team member? Answering these questions may uncover gaps.

Many employers with business cycles can be more challenged in this area as they may have to provide minimum work hours to ensure that they can retain key talent for the more demanding schedules.  This is even more true in today’s work environment.  For some employers, providing other perks related to the number of days worked, remote options and more flexible time off policies can help – and can also cost additional money. 

You can help your clients analyze the options taking into consideration the financial costs but also looking for the intangible benefits including increased productivity, less turnover and improved culture.  Those intangibles can then be turned into actual financial benefits as a way for you to add even more value to the process.

Technology Review

Examine their operational processes to see where they could benefit from automation. Converting manual procedures to automated systems will save time and money. In an age of digital transformation, companies that are slow to automate are in danger of losing ground to their competition. Find out what equipment upgrades – hardware or software – might benefit your clients and provide them a rough business case for these changes. 

This is particularly strong when coupled with the Workforce Review as they often complement each other.

Next Steps

Not sure where to get started?  Here are 2 great ways:

• Get our Profit Leaks product suite (it’s free!) and walk through it for one or more of your clients.

• Subscribe to our private podcast to get the scoop on what inspired this blog post and some real-life client situations that go along with it.