What happens when the reports lose their shine?
I hear so often from accountants that their advisory is based around producing management accounting reports and meeting clients monthly or quarterly.
Now I’m an accountant. There’s no denying that and I love numbers as much as the next person. Also, the reason that I do business advisory, is that I feel that the business coaching industry is just full of so many people that are out there talking to our clients, business owners, with no idea of the numbers .Generalization of the industry as a whole perhaps but hey..it’s my opinion and I’m sticking to it.
As accountants, I think we can bring great value with our knowledge of the numbers, but I think we risk going so far to the numbers side, that we then start to ignore all of the other things that clients are seeking.
What can often happen is we start just producing reports out of Spotlight or Fathom or whatever the software product may be, or we’re using Xero and we’re getting all these nice, pretty little graphs, numbers and reports out to the clients. Nothing else.
We’re just rehashing the information that we already have.
Our interpretation of the information is the key. But if all we’re simply doing is producing reports, and doing the same analysis, month in, month out, or quarter in, quarter out then we’re sometimes missing everything else that a business needs to know about.
Numbers are critical, but there’s 101 other things going on in their world that they want advice on.
And I think that’s the key. If you’re stuck in just that numbers mode, recognising that there’s a whole heap of other conversations that you could be having with your clients just opens up so much.
So, I wanted to explore this idea of what happens when the reports lose their shine. I’ve seen some recent comments in some of the online forums from people saying well, okay, look, our clients have turned around now and said, Look, we don’t want to do advisory anymore because we can produce those same reports out of Xero and look at them ourselves.
Now, obviously, there’s an interpretation issue there. Because it’s a bit like I can unscrew a tap, but it doesn’t necessarily mean that I know what I’m doing once I do.
Yes, I can do the physical part of it. But do I actually have the knowledge to know what’s wrong, and how to fix it. That’s the important part that sometimes business clients don’t really grasp. Google can’t solve everything.
So the key to all of this is understanding that the numbers are just a part of it. I’ll explain a few of the things that I do with clients that are outside of, and complimentary to, the numbers.
The first thing that I do in a coaching meeting with clients is go through what their wins have been and what their struggles are.
They’re just pure conversation openers for a small business. What are they winning at what’s going well. Typically, when they start talking about something that’s going well, there are things in there that we see as advisors , that maybe could make things go even better. There are things that we can challenge the client on.
Now, we haven’t even touched any numbers at this stage.
All we’ve simply done is said to the client, how’s everything going? What’s going well, what have your wins been for the last month?
Just those simple terms, get the client talking about what they’ve been up to, what they’ve been doing, what are their results saying?
Sure, you can go to the numbers and say. “Well, your sales are up by five and a half percent, and your gross margin is down by 1%, leaving you with a net profit margin of…… “
Please…….the client’s eyes have just totally glazed over. They’re not interested in that. What they are interested in, is that they just won a big contract and they’re not quite sure whether they priced it correctly or not. Or they’ve got a quote out at the moment or another prospect coming in and they’re not quite sure how they should be selling to them.
They might have poor stock turnover or a showroom that they need to revive and bring more customers in. A whole range of things that just aren’t evident from a boring discussion about the numbers.
And afgter the discussion?
Then let the numbers tell the story.
But it’s the conversation that starts and explains everything that then needs to be explored through the numbers.
So remember those few things. First of all the wins, the second is the struggles, what’s going on. What are you struggling with? What have you really found hard the last month. It could be having a key staff member leave or they’ve had a few jobs that have just gone pearshaped, maybe they have lost a couple of customers and the issue was pricing. Or service. Okay. Let’s look a little bit deeper into that.
These are conversations that are happening unrelated to the numbers directly. The numbers will show the evidence but the conversation will uncover so much more. The coaching and advisory meeting is a little bit flipped on its head. We’re talking about the specifics. The drivers of the numbers, and getting the discussion happening there. We will look at accountability. We’re not just interested in profit and loss and balance sheet stuff. We’re also interested in those key drivers that are behind it.
I recently did a 3 hr workshop for a business organisation on understanding your financials. I asked the group of about 20 business owners , “What do they measure in their business?”
Not one of them came back with profit and loss and balance sheet information. What they did come back with was a whole array of different measures specific to their business, which were their KPIs or the key drivers.
So clients are already looking at these things. They want you to be speaking their language, not simply just looking at the basic reports. And to be fair, they’re probably right.
So don’t get fooled into this software sales world saying we need the latest and greatest to produce these reports. Your ability to have conversations is more important.
So when that shine starts to go off the reporting aspect of your advisory, fall back on some basics. Fall back on having that discussion of what’s going well, what’s not going so well.
Look at the drivers behind the numbers. Because when you start to get in-depth into a few of those things, so many conversations are opened, and so many areas for additional services are also opened. It ensures you don’t get stuck in just the financials.
The financials are there to support your coaching there to give the grunt to your coaching. They’re an important piece of the puzzle, but they’re not the only parts. I really encourage you to look a bit deeper. And when the shine goes off the nice glossy reports that you can produce out of all of the software products , don’t forget the basics of human conversation and really ask your client what’s going on. And then you can use your nouse to cure and provide all of the solutions that your clients looking for. And that is where the value is.