Many small business surveys reveal that an attorney and an accountant are the two most trusted business advisors a small business owner has. Unfortunately many accountants miss a big opportunity to help their clients by not demanding that their client setup business projections, also known as a budget.
It isn’t that they most accountants don’t know how to create a realistic small business budget. Instead, many CPA’s and accountants I know of, fail to appreciate how much their client desperately needs this outside guidance. If accounting and bookkeeping is a history book, outlining where the small business has been, then the budget is a roadmap to where the business needs to be, and where it’s trying to end up (also known as the goal).
A respectable small business roadmap should include both short and long term goals, an expense budget, a cash flow forecast, and lots of knockdown, drag out debate as the business owner and accountant argue over what’s realistic. For instance, everyone knows that a goal should be specific and attainable. It’s the accountant’s job to make sure the economic drivers of the business can, through detailed analysis, produce sufficient momentum to reach the goals. In other words, this process should never be a one-sided discussion.
If your accountant has never suggested putting your 1-3 year projections down on paper, or if they have, but the process was more like a waitress taking your order, then it’s time to start looking for a new advisor.