playground:Accountant

Questions to discuss:

1/ Which company structure? sole trader, partnership or limited company : LookThrough etc ?

2/ Partner as employee.

3/ Lowest taxation

4/ Potential shareholders

5/ WaveApps or other accountancy software

6/ Can you provide me with a fixed fee for the work you'll do for us? Please bundle in ad hoc access to you for short phone calls and emails as part of that fee.

7/ What is my break even point? (The level of sales required to fully cover general business overhead, and it is the point where you start to move into profit.)

8/ What drives my revenue? If you ever think (or if your accountant ever suggests to you) that you need to increase sales, do you know where to start? What are the key drivers of your revenue? In many businesses, revenue can be broken down to this formula:

Number of Customers x Transaction Frequency x Average Transaction Value = Revenue

It may or may not be this same formula for your particular business. Ask your accountant where you should focus. Your accountant might tell you to concentrate on one or more of the following areas:

Retaining existing customers Generating new leads or enquiries Converting leads to new customers (or new jobs) Getting existing customers to buy from you more frequently Analysing your pricing strategy Looking at ways to sell more on every transaction There are a variety of strategies to look at. For the benefit of this discussion, let's talk about pricing. In my experience, too many businesses have little knowledge about the impact of pricing on their sales. For example, many businesses offer discounts to people who don't ask for them, or make assumptions about what will happen if they increase prices, which leaves money on the table.

Ask your accountant this: At my level of gross profit margin, if I increase my prices by 20%, how many of my customers could I afford to lose before I am any worse off? The number might surprise you - and help you with your pricing strategy.

8/ Are my financial results good, bad or indifferent?

If you're lucky, your accountant will take you through an analysis of your financial performance each year, pointing out key ratios such as gross profit percentage, days locked up in receivables and inventory, and others. (If they are not doing that, then ask them to do so!) But the question to ask is: Is that good, bad or somewhere in the middle? Who knows, for example, if a gross profit of 42% is where you should be? Ask your accountant what the trends are like: Is the number increasing or declining, or steady? And depending on the response, what is the accountant's insight as to why that might be happening?

Equally as importantly, ask about benchmark data. Comparative data by industry is becoming more readily available. For example, in Australia the ATO provides key benchmarks on its website for a variety of industries. Your accountant can easily access these and compare your business to the 'norm.' You can then have a quality discussion with your accountant about what action you might take to fix your weaknesses and, more importantly, build on your strengths.

9/ What are your most successful clients doing?

Most accountants work with many business clients. Some are very successful; some are doing OK; others, of course, are struggling. So why not ask your accountant what their observations are on what their top 10 clients are doing to make them successful? It is a great question to ask, and if you pick up just one idea you could implement to improve results, it is worthwhile.

In all of the surveys, the accountant is cited as the most trusted business advisor. Make sure you are making the most of the relationship with your accountant. I often tell accountants that they should ask more questions. Here, I am encouraging business owners to do the same. It's my hope that a double pronged approach will have a dramatic impact - not just on your business, but on the economy as a whole.