OK, yes we typically avoid articles that seem to be a sales pitch. But in this case we felt that especially entrepreneurs may not be looking at how important a good financial advisor can be, even when revenues are just revving up. And it’s true there’s nothing more exciting to us than advising founders and managers on how to run their business operations better. So, let’s just say this particular feature is win-win. Maybe we get the interesting client we love and you don’t make critical errors that can set your growth back months, or even years.
FROM FAST COMPANY / BY TOM FREILING
Here are three reasons a qualified accountant and financial planner can actually be your best friend and help you find more success as an entrepreneur.
Founders typically do not come from backgrounds in accounting or finance. Instead, they originate from diverse fields such as technology, medicine, food service, retail, or a particular trade. Before I launched my first start-up, my background was in publishing and media—I had no accounting experience whatsoever.
I was like many other founders whose mindset was focused on innovation and risk-taking rather than the meticulous detail associated with accounting or financial planning. While financial acumen is undoubtedly crucial for business success, it is often ignored or dismissed by founders.
I was fortunate enough to meet an experienced CPA and EA early on in my entrepreneurial journey. He guided me through the company’s fast growth and eventual sale to a NASDAQ-listed media company. Looking back, if I had not met him, I’m certain my company would have sunk. He helped me see my blind spots and avoid more than one catastrophe.
Many entrepreneurs run from their accountants; why don’t more seek sound financial advice? I believe it’s more than just naivety—many founders simply don’t want to hear it. We are strong-willed, stubborn, and avoid bad news like the plague. Owning a business is tough enough as it is, so when your accountant walks in with a dose of reality, the first reaction is often to pretend the problem doesn’t exist.
However, here are three reasons a qualified accountant and financial planner can actually be your best friend in business and help you find more success as an entrepreneur.
1. THEY HELP YOU MANAGE YOUR CASH FLOW
While growing revenue and staying profitable are important goals for any entrepreneur, companies are more likely to fail due to not having enough cash versus not making enough profit. The challenge is that cash can be deceptive. You may have plenty of cash in the bank, but very little of it is yours to keep. There’s a great deal that depends on billing, collections, and your business model.
Only a qualified accountant can help you monitor your cash flow. Founders owe it to themselves to have an accurate picture of how much cash they have to work with. Rather than being fooled by your bank account balance, ask your accountant to provide you with regular cash flow reports. It can not only help you make better decisions, but lessen your anxiety as well.
2. THEY HELP YOU HOLD YOURSELF ACCOUNTABLE
Entrepreneurs often possess a strong sense of autonomy and conviction in their ideas, leading them to prioritize their own instincts. At the same time, accountants usually offer conservative or risk-averse advice, which can clash with the entrepreneurial mindset. Some entrepreneurs fear that following an accountant’s advice too closely could stifle their creativity or hinder their ability to seize opportunities for growth. Maybe so, but going solo has its disadvantages as well, particularly when it comes to money.
The accountant’s role is to count the cost, literally. Sure you may have great ideas, but what if they are too ambitious for your cash position? Sometimes you need a contrarian in your life. Who better than the person who sees your bank account? You don’t have to heed their advice, but at the very least, leave room for your accountant’s opinion. They can play a crucial role in providing financial guidance to keep your company afloat. Strive for balance: Listen, learn, understand, and then go with your gut.
3. THEY ENSURE YOU STAY CLEAN WITH THE IRS
All accountants like to talk about taxes. That’s their job. But for the entrepreneur, tax planning is an endless cycle of good news and bad news. The more successful you are, the more tax you owe. One year overlaps with the next year, and so on. Naturally, you want to avoid thinking about it.
Yes, taxes are complex and time-consuming to navigate, diverting attention away from more pressing business concerns. But nothing will stop you in your tracks faster than unexpected problems with the IRS. When you confront your taxes head-on, you can put them in a box and not think about them very often. Only a qualified accountant can help you do this.
ADVICE FROM YOUR ACCOUNTANT CAN BE GOLDEN
Soon after my first company was acquired, I dove headfirst into my second start-up. My accountant handed me a blue folder with his recommendations for the future and my tax returns. I didn’t want to look. My ego told me not to. So the blue folder sat on my desk for weeks until a colleague encouraged me to open it and confront my realities. “Don’t be a humpty-dumpty,” she said.
When I finally did open the envelope, the tax news wasn’t nearly as bad as I expected it to be, and the advice turned out to be golden. If you’re a founder, do yourself a favor and open your blue folders. Be honest with your accountant and let your accountant be honest with you. Make cash your king, be accountable to yourself, and understand your tax position.