His name is Mike. He wears a button shirt with the tail hanging out and sleeves rolled part way up. He has muscles you can’t get with a gym membership and calluses you only get by building the gym. His salt and pepper hair indicate he’s hit his 40’s, but if you look at his eyes you might guess a little older.
Right now, Mike is sitting at his kitchen table on a chair that looks somehow too small for him, staring at a pile of unpaid bills. “Why can’t I ever seem to get ahead of these bills?” he growls at his wife. “I just want to go to work and do my job and not have to worry about all this paperwork.”
Mike’s wife is a supportive and loving woman. “Maybe I could help take care of paying the bills,” she offers.
But Mike is resolute. “No. You have the children to take care of. And I don’t want you dividing your time between them and the office work. There has to be another solution. What I need is an office kinda guy to help me out…”
Ah, the mythical office creature. That guy with no callouses who will turn that disorderly pile of paper into neatly filed and paid bills. That guy who can make sense out of the jargon from the government. That guy with a coffee dependency who will make the phone stop ringing unless it’s a new job coming in. That guy with no tan who, unbelievably, does not mind sitting at a desk all day. Although Mike will never understand the type, he knows his business has grown to the point where he cannot do everything himself. He needs an accountant.
Accountants are truly an amazing breed. It takes someone special to plow into that mountain on Mike’s table and enjoy making sense out of it. One might argue the special descriptor is of the short bus variety, but when we needed them, we have all been glad they were there for us. That was right before we discovered they are expensive, slow, and apparently speak another language, since we only understand about half of what they say. These obstacles soon make them look like another problem to manage.
Accountants, like everyone else, need to sell their services in order to make a living – either in the form of bookkeeping or tax preparation. Just like when Mike is selling a job, it’s easy to over sell by promising more than can be delivered. Sometimes businessmen and accountants should tell their clients what they cannot do. Perhaps if we business owners know what accountants are ineffective at, we can better utilize the scope of things they are effective at! I have learned a few things good accounting services cannot necessarily do for you, along with some helpful tips on how to get the most bang for your hard-earned buck.
Accounting cannot guarantee good decisions. Being in business is hard. Sometimes the easiest thing about it is the trade skills involved, as hard as those may be to come by. The hard part is effective decision making. Even a good accountant cannot change a history of bad decision making into a future of good decisions. Since no one can see into the future, decision making is always partly a guessing game. When to hire, buy equipment, or turn down an opportunity are questions you wrestle with every day. An experienced accountant can and should weigh in on those decisions. He can provide good data to help make a logical choice. For example, when thinking about buying a piece of equipment versus renting, we might want to look at our debt to asset ratio, and how it is trending, as part of our decision process.
Accounting cannot bring order to the chaos in a business.
This might seem a bit surprising. “I thought that’s what I hired him for” you might say. It is true that accountants are generally orderly. If he is good at his job, he certainly should be able to make order in the financial records, assuming he can get his hands on reliable information. If, however, the norm in one’s business is chaos, it would be unwise to expect an accountant to effect overall change. He will likely have no control over things like scheduling and resource allocation. But his services, such as taking over cash flow management, might give a business man enough space in his own schedule to focus on those areas he has been stretched too thin to manage. Most importantly, he cannot bring order to your thought processes. If one is prone to chasing rabbits in his mind, even a good accountant cannot keep up with the hunt.
Accounting cannot prevent going broke.
Perhaps that was a big concern when we hired him, but it’s true. He might be able to warn us that we’re going broke. He should be able to tell us why we are going broke, but he cannot prevent us from going broke. He cannot prevent overspending. He cannot guarantee we bid with enough margin. He cannot create revenue out of thin air. He can and should provide the businessman with good information to work with, such as identifying areas of the business that are costing more than they should, or finding which type of job we consistently under bid. But as in point number one, our own decisions, for better or worse, make the difference.
Accounting cannot motivate you.
When it is time to swing our feet over the edge of the bed or time to make that extra push through a rain shower to finish up a job. When it is time to skip the coffee shop and go get dirty. When we need to have that dreaded conversation with an employee or a contractor. Accounting cannot make us do it. Good accounting can certainly provide numbers, and those numbers may very well motivate, but are not guaranteed to produce action. Sometimes, the deepest and hardest things about business can only be wrestled between us and God.
Accounting cannot prevent taxes.
Good accounting tells the true story of the business. Its ups and downs, its gains or losses. Good accounting is not somehow magically hiding gains from the government while simultaneously displaying positives to the loan officer. Good accounting does, however, help a businessman to understand where those gains and losses came from and how they may be best utilized or minimized in the future.
Accounting cannot guarantee cash flow.
Unless that guy hunched over his desk is the only person allowed to transact in the business, he cannot promise you there will be money to cover the payments. Furthermore, even if we have given him that level of responsibility, he still cannot guarantee enough profit to pay the bills. An accountant should certainly be able to predict cash flow, again assuming he has good information to work with. But no accountant, no matter how skilled, can figure out a way to help us spend the same dollar twice. The key here is that as our businesses grow, there will come a point where we will need a formal system to communicate between all parties responsible for handling money. An accountant can help us in setting that up. When our systems fail, most of the time we business owners are the culprit.
Accounting cannot guarantee realistic views.
This is perhaps the most nuanced and the most important. Accounting can give accurate information, but it cannot make anyone believe the information. It cannot change one’s view of the world, his business, or himself. It cannot simplify a business that is prone to complicating things. It cannot make one’s gut feeling about an issue come true. It does a very poor job of filling in gaps where information is missing. However, it can inform our gut. It can build our confidence in a realistic approach to business. It can and should be a key component to solid, careful decision making in our businesses.
It is a timeless truth of all leadership positions, including business ownership. We must depend on many inputs and tools for our business to function well. We need equipment, skill sets, knowledge, and yes, definitely good accounting, but at the end of the day, we as business owners must look at that guy in the mirror and make the tough calls.
It is a little like the old ditty I heard my children singing recently. The Farmer picks the wife. The wife picks the nurse. And so it goes until the very end where the mouse picks the cheese. We tend to think of ourselves as the Farmer – picking and directing the help. But it might be more accurate to think of ourselves as the cheese. Hi-ho the merry-o, the cheese stands alone!
The Arrow Team
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