Modern accountants are more than just number whisperers; they're also strategists, advisors and business pros. All accountants do is listen to entrepreneurs and try to solve their problems or give them sound advice. They’ve seen it all.
They can give you an in-depth look into your company's financial performance, track your cash flow and show you potential paths for expansion — all of which will help you build your business and increase revenue.
In this blog, we’ll cover ways the right accountant can help you grow your small business and provide examples of how we’ve helped our own clients take their businesses to the next level.
- Develop a clear business strategy
- Help with tax planning
- Explore financing options
- Improve operational efficiency
- Manage risk
- Restructure and value your business
- Identify revenue streams and increase sales
- Navigate the small biz landscape
1. Develop a clear business strategy
Business owners may have an accountant, lawyer, wealth advisor and banker, but who do they rely on to create a strategic plan for their business?
CPAs are the most trusted advisors for 86% of small business owners. They have the financial expertise and experience in business to help set clear business goals and objectives.
The real magic happens when you can get your investment advisor, banker and CPA in a room together, helping you set a plan for your financial future that aligns with your personal and business goals.
Determining your long-term vision for your business is a great place to start. After hearing the full picture of what you’re working toward, a good accountant can help you build a roadmap to move you closer to your goals.
- Where do you see yourself in 10+ years? Or what’s your long-term definition of success?
- How big do you want to be?
- Who would your client be at that time?
- What is your value proposition for them?
- How much do you want to make?
- How much do you want to be working at that time?
Next, you’d describe what your life needs to look like in three years to achieve your 10-year dream life. How much is your business doing in revenue? What about profit?
And then, you can break your three-year goal into the next 12 months. For example, if your goal is to do $3 million in three years, what needs to be achieved in one year to ensure you’re on track to hit the three-year goal? Do you need a new marketing strategy to generate $100,000 a month in new business? Bring in more website leads? Focus on more profitable clients? It’s time to set some goals for the next year.
The right accountant can help a small business measure progress by linking profits and processes, making it easy to pinpoint your business’s growth and problem areas. The hardest part is determining which metrics are most important to your specific business. True North can help you create key performance indicators (KPIs) and set up reporting to help you measure your progress. We can also:
- Develop financial and productivity metrics that are leading indicators that signal whether you’re staying on track with your goals. We can set up dashboards or custom reports to track your most important metrics over time and in relation to your target. Whatever info you need to run your business, we at True North can help get that info to you when you need it.
- Benchmark against industry standards to see how you stack up with competitors. This helps you understand your market position and see how your revenues and expenses compare to similar businesses. Benchmarking can put things in perspective and give business owners confidence that they’re doing things just as well as most other companies. Or it can clearly identify areas for improvement that can be turned into goals and metrics.
- Conduct cost-benefit analyses for growth initiatives to determine their financial impact. This helps you prioritize growth initiatives based on their potential return on investment.
With a clear direction of where you want to take your business and the goals set, it's time to strategize how to achieve these results.
If it's a revenue growth goal, we’ll need to make a strategy for increasing the number, size and frequency of sales. If it’s a spending goal, we’ll help you set budgets for spending, advise on how to meet those budgets and keep you informed regularly on how you’re meeting them. And if it’s a profit or cashflow goal, in addition to the first two examples, we can analyze your pricing and profit margins for each of the services/product lines being sold.
Financial analysis is centred around two types of analyses: trend analysis (period-to-period changes) and ratio analysis (expense as a % of revenue). There’s also a break-even analysis, which shows how much the business needs in revenue to break even.
We can also help you build an all-encompassing financial plan (ideally in collaboration with your wealth advisor), which will maximize your wealth in the long term. Here are some things we can include in these financial plans:
- Debt repayment advice: Which debts should you pay down first?
- Where to invest your money to minimize tax: Debt repayment, RRSP, TFSA, RESP, FHSA, corporate stock portfolio, personal unregistered stock portfolio, real estate, insurance products, etc.
- How to obtain growth capital, and what the lenders or investors will be looking for.
The last type is benchmarking — which, until now, has only been available to the largest of businesses. True North has tools that can compare your business to similar companies in Canada to understand the competition.
One of the most powerful tools in your arsenal will be financial forecasting. Reviewing your past financial performance, your accountant can create projections to help you predict future revenues, expenses and profits. These projections can help you understand your small business’s trajectory while identifying opportunities and managing risk. Financial forecasting can help you track progress toward your growth goals and adjust your strategy if needed.
The real entrepreneurial journey can be rough, and the road can be long. Sometimes you may need to break commitments you’ve made, lay people off or go without some comforts you’ve taken for granted. Lean on True North to help you make the right decisions for your business and show you the necessary actions to make it through your small business path.
Budgeting and benchmarking
Clients often ask whether they’re spending too much on a particular expense. This isn’t easy to answer, as each business is different, and each business owner is in a different stage.
If you plan to make a specific profit amount, and your costs are relatively predictable, accountants can help you create a budget tailored to your small business needs and goals. Budgeting can help you stay on target, meet financial obligations and allocate your financial resources to invest in growth opportunities.
Benchmarking lets you see how much you spend in certain areas compared to other businesses (for example, for payroll, ad spending, etc.).
Reviewing your budgeting and benchmarking can provide much insight during the year and help you make those big decisions. Ideally, your company’s payroll and revenue should be in lockstep; one shouldn’t increase without the other — this advice is essential for service-based businesses.
2. Help with tax planning
True North can provide your small business with the necessary expertise and guidance to help you navigate the complex world of tax planning, reduce your tax liability and grow your business.
- Develop a tax planning strategy to minimize your tax expense over the long term.
- Help you avoid costly tax penalties and fees.
- Educate on tax write-offs and the tax implications of daily business transactions.
- Evaluate tax implications of important business moves like doing business in a new province or country, bringing on debt or equity, selling assets, investing or moving into a new line of business.
- Work with your wealth advisor to ensure your money is invested in the most tax-effective ways. CPAs can run the analysis and provide options on whether a specific investment or insurance product is right for you.
3. Explore financing options
Accountants can help you obtain small business loans, grants or equity investments to support your fund expansion or other growth initiatives. True North can:
- Prepare your financial statements. Banks and lenders require these to evaluate your business's financial health and ability to repay loans.
- Analyze your financial statements and provide insights into your business's financial performance, strengths and weaknesses.
- Create a comprehensive business plan or investors deck to show your business's viability and potential for success.
- Help with loan applications to ensure all the required documents are in order and the application is accurate and complete.
- Locate grants in Alberta and Canada that can help take your business to the next level.
4. Improve operational efficiency
By offering their expertise in business processes and operations, smart accountants can help small businesses identify opportunities for improvement and enhance their operational efficiency.
True North can help evaluate and implement technology and software that streamline processes and reduce manual tasks, such as:
- Automated creation and sending of invoices
- Collecting on accounts receivable and then marking the invoice as paid, automatically
- Approving and scheduling bill payments
- Filling out, approving and using timesheets
- Quoting and pricing process and calculators
- Collecting data from various sources and using it to update dashboards/scorecards
- Automated ways to organize receipts, statements, documents and bills in the cloud
- Email inbox rules, calendar hacks, app integrations, etc.
- Do a needs assessment to determine which technology and apps would be ideal for your business. We can evaluate your current setup and identify gaps or areas of improvement.
- Evaluate technology and apps to see which are best suited for your small business. We all want to work smarter, not harder.
- Support your implementation. True North can help you with software installation, data migration and staff training. We want to ensure the technology is properly set up and integrated into your business processes.
The ways accountants can help you are expanding rapidly as AI, machine learning, open APIs, blockchain, and open banking start changing how we do business. True North will keep you on the cutting edge of these changes and help you take advantage of the benefits before the masses catch on.
5. Manage risk
True North can help you manage risk by reviewing economic fluctuations, regulatory changes and market shifts that may impact operational efficiency and your business’s ability to grow. We can also:
- Help you protect your assets and financial future with insurance and corporate structures.
- Help develop business interruption or disaster recovery plans to mitigate the loss and impact on your business if disaster strikes.
- Develop a tax strategy to minimize your tax liability over the long term so you keep more of your money.
- Implement strong internal controls to help prevent fraud and other financial losses to protect your small business from risk.
- Plan for a smooth transition for loved ones if something happens to you. Don’t leave your family and business in shambles. Take a few small actions now to save massive headaches later.
6. Restructure and value your business
Your accounting firm can assist your small business with business restructuring and valuation. Here’s how True North can help:
- Conduct a business valuation to determine your business’s current worth. This information is useful when making decisions about restructuring, selling or purchasing assets and securing financing.
- Develop a restructuring plan if needed. Based on the business valuation and financial analysis, you may need to reorganize the business structure, reduce expenses or sell assets to improve your business’s financial position.
- Provide tax advice to help you reduce your tax liability. True North can help you identify tax deductions and credits, restructure the business to take care of tax benefits and develop tax planning strategies.
- Set your business up for sale. Maximize your wealth by strategically and intentionally setting your business up for selling or succession.
7. Identify revenue streams and increase sales
Accountants review your income and expenses, but can they help you increase revenue and profit? You may be surprised at how a smart accountant or business advisor can help your bottom line. They can:
- Analyze your financial data and provide recommendations. True North can conduct a product line margin analysis to see which products and services contribute the most profit. We can also analyze profitability per client or per employee.
- Help you responsibly grow your business without getting into financial trouble. You don’t want to be in a situation where you must choose between profit or growth. True North can create structured milestones for hiring your next employee or buying your next piece of equipment.
- Set competitive prices for your products or services by analyzing market conditions, customer preferences and production costs. A well-designed pricing strategy can increase sales and profit margins.
- Conduct a break-even analysis
to set the minimum sales target to cover costs. This must be understood and monitored regularly for businesses struggling to get out of the red.
8. Navigate the small biz landscape
As your accountant, we can help your small business increase its resilience and ability to succeed in the turbulent decade ahead of us.
Interest rates, inflation and debt
We’ve all seen the impact changes in interest rates and prices have on business. True North can help you adapt and pivot the financial structure of your business to minimize additional costs or losses. We can help identify other potential funding sources, such as loans, grants, or investors. They can also help prepare financial projections and navigate the application process to increase the chances of obtaining financing.
Inflation increased wages so much this last year that many businesses explored hiring offshore or implementing automation to allow more productivity with fewer people.
Tax rate changes
Your accountant can help adapt to new tax incentives, credits or deductions that can help reduce your business's tax liability and free up cash flow for growth initiatives. Governments use tax rates to influence the behaviours they’d like to see, and we can help you adapt to changing tax regulations before you get burned by them.
The pace of technological advancement we’re seeing in 2023 is unprecedented. Everyone has their own ideas, hopes and fears of how these new apps are going to change the way we live, the way we work and how we do business.
When will bookkeeping become automated? We’ll let you know as soon as we see it ourselves, but we’re on it.
In the meantime, Xero is the accounting software we recommend to streamline your business’s financial management processes and help you make data-driven decisions about growth initiatives. But simplifying your business starts with the right workflows and a few simple daily habits — ask us about these!
Industries and economies in transition
True North can help you navigate the frontier of new industries and the expected decline of traditional industries. We can share the insights we’ve gathered from our other business clients. We can help you develop a business plan that outlines your growth objectives and the resources needed to achieve them. This will help your business stay focused while you expand during these uncertain 2020s!
Partners and support
We consider ourselves as partnering with our clients. At a minimum, we’re their most trusted advisor. To be more effective, we aim to build strong relationships with others that serve the same clients we do. We have a wide network of wealth advisors, lawyers, insurance brokers, bankers, IT providers and other business consultants. If you ask us, there’s a good chance we know someone that can help. Here are some of our favourite partners to help your business: accountants, bookkeepers, insurance brokers, IT providers and financial planners.
We’ve also got a list of apps, tools and templates to help you with bookkeeping, accounting and invoicing, file storage and organization, HR and payroll, security, marketing and collaboration.
Strategic services that True North can provide
Like coding or music, accounting is a language, and every business has a story to tell. A good accountant can review financial statements and draw out the story of the business's journey during its life, year or month. We can help with the following:
- Strategic planning
- Financial planning
- Tax planning
- Fractional Controller or CFO services
- Build an operating budget
- Short-term and long-term cash flow forecasts
- Business valuation
- Custom reporting on metrics, goals, and budgets
- Health check meetings
- Peace-of-mind checklist
- Custom analysis or research
- Break-even analysis
- Pricing/margin analysis
- Setting up your business for a new market (new country or province)
- Setting up a new business for success
- Employee vs. contractor analysis
- Sole proprietor vs. incorporation advice
- And more — come talk to us!
Specific client examples
We’ve helped our clients with the following:
- Shoring up their processes and acting as their fractional finance team
- Setting up their technology environment by evaluating and implementing new apps and processes
- Reviewing their app stack and made suggestions for simplification, automation and integrations
- Providing pricing analysis to increase sales and profits
- Obtaining financing for a client who has now gone national with their restaurants
- Obtaining funding for a client who had a negative profit
- Setting up a business from scratch with the optimal corporate structure and key business processes
- Conducting gross margin analysis/break-even analysis
- Creating a strategic plan for a startup that included pricing, contract terms, risk mitigation techniques and an initial app stack
- Helping negotiate hundreds of business transactions from partner buy-outs, selling businesses (retirement/succession), purchasing businesses, tax restructuring, employee stock option plans and more
As a small business owner, you’re responsible for many different aspects of your business. We’re here to help with the numbers, provide the financial guidance you need to succeed and support you as you create a growth plan. Learn more about our small business advisory services, and let us be your go-to guide.
Find more Strategic Advisory topics relevant to you and your small business.