37. Three Questions Business Owners Should Ask Their Accountant
Are Your Financial Reports Holding Your Company Back
You can learn a lot from your accountant but are you asking the right questions?
In this video, I discuss a simple framework to get more from your end of year visit to the accountant.
What do you ask your accountant at the end of the year?
So today, I've got a great topic for our small business owners, and it's three questions you should ask your accountant at the end of the year, when you get your financials done. So, many times, business owners will go and get their, go in to sign their financials, but they don't know what to ask their accountant. And many times, the accountant doesn't know what the business owner needs to know, to help them move forward, as well. And so, you get that awkwardness, and the business owner walks away none the wiser.
1. How is my business going now?
But here are three questions to help you when you come to the end of the year. So, the first question, is a now question. So ask, out of one to ten, how is my business rating? How do I compare to other businesses in my field? How is my business going?
And then drill the answer. What are the critical numbers like? So, what's my GP percentage? Or what's my net profit percentage? Or my wages percentage to sales? Well those critical numbers that you have to get right in your business. And how are they going? And how do they compare to other businesses?
Thirdly is balance sheet strength. So how strong is my balance sheet? What's it looking like? Are there, what are areas that are the issues, and what areas that are good in my balance sheet? What about cash flow? What does my cash flow look like? What are the areas that I can improve on my cash flow?
And lastly is, what is the value of my business based on this year's profit and loss? So this way, you can track each year, whether the value of your business is going up or down. If you just set a metric that you're gonna use to keep consistent, it's not gonna be exact because the value of the business is what someone's willing to pay for it. But it also gives you that long-term goal, as well as a short-term goal of profit and loss. But it gives you the long-term goal of increasing the value of business.
Where is the business going next year?
Secondly, is a where question. So tell the accountant, Next year, I want to increase sales by ten percent, or I want to reduce the number of hours that I'm doing, so I want to employ someone. So what are the financial risks if I do these things? What are the tax issues? Are there any regulations coming in? If I plan to do these sort of things.
So see, giving the accountant where you wanna be next year, so the whole focus of the interview is not just around what's happened last year. But you're focusing on the year to come.
How can I get there?
And thirdly is how to get there. What should I stop doing? What am I doing that -- What am I getting wrong that I need to stop? Or what should I start doing? And thirdly, what should I continue doing? What are the things that I'm doing right from a financial perspective? So hopefully this'll give you a bit more context, and then give you a template or a model to follow when you go and talk to your accountant the next time you do your financials for your end of year. Thank you very much.