Dec 19, 2016
What would you learn from 8 hours with a group of company
directors? I had that privilege a couple of weeks ago in a
programme sponsored by the Entrepreneurs Programme, part of
AusIndustry. The brief was to meet for 8 hours with a group
of company directors and discuss with them the issues that they
were confronting in their businesses and also to give them some
briefing on corporate governance issues.
I learnt plenty in getting feedback from the directors and
thought today I'd share what they said with you.
The directors represented companies that had turnovers from
$750,000 through to $29M with an average of around $4M amongst the
various companies.
The feedback that I received that I thought you might be
interested in included the following:
- Government Grants - "great idea, don't
know much about grants, who is supposed to keep us informed?"
was one of the questions. "Our accountants never seem to tell
us anything about grants!" They were particularly
interested in the Skills Development Grant and the Business
Improvement Grant. A couple of the directors also had some
interest in the Accelerating Commercialisation Grant, which is a
grant of up to $1M on a 50/50 basis for companies with turnovers up
to $20M that have developed new products, processes or
services.
- Financial Accounts - Well this created some
debate when I asked the directors to indicate how they would rate
the financial accounts that their external accountants prepare for
them relative to the type of information that is conveyed to them.
The response was "fair". It's worth thinking
about. "Fair". One main complaint was - "we run a
number of divisions or departments and yet the Profit & Loss
Account we receive back from our accountants is in one Profit &
Loss Account". "Surely we can get departmentalised
accounts?" was a question asked by a number of the
directors.
- Job Costing - the other big question related
to job costing. A number of these businesses had operations that
related to job costing, yet the directors indicated to me that a
conversation about job costing had not been raised by their
accountants. I would have thought it was one of the obvious
areas for accountants to be looking at.
- Benchmarking - we talked about benchmarking. I
was surprised that no one seemed to know anything about the role
that Benchmarking.com play and no one indicated that they were
receiving a benchmarking report. Some of the directors liked
the idea of developing a benchmarking group within similar types of
businesses in different parts of the country, but surely this is a
service that accountants should be providing to your clients.
It's quite easy to do so using the Benchmarking.com
information.
- Key Performance Indicators were discussed, but
I got the feeling that not many people were confident that they had
selected the correct KPIs or that their management team fully
understood their use.
- Portfolio Allocations - another big discussion
point was when I asked them about portfolio allocations. We
produced a list of 45 portfolios, everything ranging from who is in
charge of legal matters, insurance, registration of motor vehicles,
sales, marketing, shareholder relationships and so on. Most
of the directors indicated they looked after all of these things
themselves! I asked them whether they'd heard of delegation
and why weren't they delegating these tasks to the other members of
the management team and even some younger members of staff.
It would be a great staff training exercise for the team to learn
new skills and for senior management to be able to observe whether
some of these younger team members really had management
potential.
- Mentoring and Coaching - most of the directors
indicated that they felt very lonely in undertaking the role as a
company director. A number of them indicated that this is a very
lonely job. It is and directors do need support. When I
asked them if they had a board of advice, no one indicated that
they did and only one had an external director involved and the
board only had a meeting about once a year!
- Business Plans - about half of the directors
admitted that they had business plans, but the plans were four or
five years old. The directors admitted that the business plans were
hopelessly out of date. The others indicated that nothing was
written down, it was all in their heads.
- Research and Development - some of the
directors were undertaking research and development and doing it
very well. Others indicated they weren't quite sure what they could
claim and what they couldn't claim so they'd never worried about
it. Those people also indicated that their accountants didn't
seem to have too much interest in research and development so they
hadn't pursued it. Those directors definitely had no research
and development system; they had no idea of the forms they needed
to keep to substantiate the research and development work that
they'd undertaken.
- Succession & Exit Planning - most thought it
was a great idea. Most hadn't done anything about it. A
couple were talking about merging their businesses. Some had
vague ideas of what they might like to achieve in the next five
years, but there was a significant lack of planning in this
area.
- Vision - we then discussed the five year
vision and all of the directors thought that this was a great idea,
but then they all indicated they needed assistance from various
people to make this come to fruition. The directors named the
people they would like to assist them:
- their accountant - they'd like to have their accountant more
involved in the development of a five year vision
- but also some other people - some mentors in the community that
they like and trust.
- Human Resources and Fair work Australia issues
- I asked them whether they had any type of external
advisers; whether it's their accountants, lawyers or a specialised
human resources organisation. Three of the directors did; they were
using a human resource organisation who are quite expert in dealing
with Fair Work Australia issues, but the others had nothing and in
this day and age I think for growing companies, that's probably
dangerous.
- We also discussed Fair Work Australia in detail and how people
deal with Fair Work Australia. It was then very obvious that
companies and directors need advice from people who understand how
that organisation works.
- Workplace Health & Safety was another issue
where only a few of the directors had a formal approach and had an
external organisation that was monitoring what they were doing and
was conducting audits on, at least, an annual basis and was writing
reports to the directors and senior management on the results of
those audits so that the directors could then ensure that
appropriate policies were implemented.
- Accountants - Only one of these directors'
companies had a full time accountant working for them, the rest
were totally reliant on external accounting businesses. When I
asked them what their accountants did for them the unanimous answer
was "taxation". We then discussed what else accountants could
do and the majority of directors indicated that they would like
their accountant to be undertaking additional work for them, but;
and here was the big BUT; the directors thought their accountants
were too busy doing taxation to have the time to help them in
developing their business vision.
What accountants need to do is to make an appointment and sit
down and have a conversation with your clients because that was
what I had to do following this 8 hour seminar. My contract
then said that I had to have a telephone conversation with each of
those directors. The contract said for 30-minutes, but I can
assure you it took a lot longer, but it was amazing what the
feedback was confirming the issues that I've discussed with you
today.
My suggestion is that you think about having a conversation with
your clients; not a 5-minute conversation but a 45-minute to
60-minute conversation. You could use the SME Needs' Analysis
that ESS BIZTOOLS has developed to guide you through that
conversation and out of that conversation I'm certain that you'll
identify issues that your clients are looking for assistance on
because they certainly told me in the seminar and in the follow up
telephone conversations that I had with them. You can then
submit a proposal - this is what you indicated you wanted
assistance in; this is what we can do for you; this is the
timing and, very importantly, this is our quotation for assistance
in doing this work for you and our billing schedule is as
follows. So spell it all out so there is no
misunderstanding. I think the majority of the directors who
were participating in the seminar would accept a reasonable
proposal if their accountants had submitted it to them and then
it's up to you to make sure you can deliver in a timely manner the
services that your clients are asking you to provide and pay you
for doing so.
So that's the result of my 8 hours with a group of company
directors and the subsequent follow up telephone conversation with
each of them. The directors were not unduly complaining, but
they were quite strong in their comments that they thought there
was a lot more work that their external accountants could do for
them to assist them in building value in their businesses.
The directors were very sure of those comments when we looked at
what chief financial officers in listed public companies do for
their CEOs.
They're the thoughts that I want to leave you with today.
ESS BIZTOOLS can assist you to deliver every service that I've
talked about with you today. If you want to find out more
details, please go to www.essbiztools.com.au where
you can sign on for a 30-day no obligation guest login to have a
good look at the system.
If you would be interested in subscribing to an individual
package you can go to www.essbasip.com.au where you can
read the overviews on the individual product packages and you can
subscribe to a product at a time which suits your internal work
levels within your accountancy business.
If you have any questions, please don't hesitate to send me an
email - peter@essbiztools.com.au.
Have a wonderful day.
Peter Towers
MANAGING DIRECTOR – ESS BIZTOOLS PTY LTD
+61 7 4724 1118 | 1800 232 088
peter@essbiztools.com.au
www.essbiztools.com.au
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