Most laundry owners use their accountants as narrowly focused clerks who turn out report cards and advice. However, with their specialized training, they can interpret your financial information in ways that you can’t.
Based on their extensive small-business experience, accountants can help you design a strategy. Because they are profit-focused, they can discipline you to think in terms of bottom-line results. Armed with such skills, an accountant can become a counselor, confidant and sounding board.
CREATING A RELATIONSHIP
When I owned a business, one of the most difficult aspects was facing things alone. I had to make decisions, sometimes involving thousands of dollars. There was no one to confide in. No book offered the answer. These decisions often overwhelmed me. I felt lonely and vulnerable, and at times, it seemed too much to bear. If only I had made my accountant a partner.
Here are some ideas that would help create such a relationship:
• Don’t keep secrets. Be honest and aboveboard. If there are questionable issues of reporting figures to the IRS, don’t hide these matters. Once you establish trust, involve your accountant in all aspects of your business. Get him/her to relish the role of partner. Seek out expertise. Listen to the accountant’s advice. Show your appreciation. Get your accountant to focus on the adviser/consultant role as well as performing the accounting function.
• Do your own bookkeeping and quarterly payroll withholdings. An accountant should oversee your recording of data, but he/she shouldn’t do the work. This is one way to lower the fee, while still retaining the professional’s services. To keep your own books, you can either employ an in-house staffer or hire a part-time bookkeeper and, if need be, add a payroll service. Now your accountant is able to use his/her time to help you manage better.
Another factor to consider is how much data you need and how often you need it. The answer should reflect how complex your business is and the level of control you desire. Reports should generate action. If they don’t force you to do something, they aren’t valuable. For instance, if you receive a report from your accountant that overhead is 10% above what it should be, but you dismiss the information, saying, “There’s nothing we can do about it,” then this information — and the report — have not helped you. Make your reports count.
FEES AND EDUCATION
Establish a reasonable annual fee. In general, the number of times your accountant comes in — monthly, bi-monthly, quarterly, etc. — determines how much you pay for accounting services. The accountant shouldn’t visit any more times than the effort provides useful, action-rendering information. The accountant shouldn’t balance the books more often than needed. Instead, sit down with your accountant and determine the optimum number of visits needed. Be sure this fee includes extra payment for the consulting contribution, but you don’t have to go overboard. Increasing the annual fee by $500 might be sufficient.
Educate your accountant about the coin laundry industry in general and your business in particular. Send informative trade journal articles to your accountant. Churn out an information stream. Have the accountant visit the business and get to know your employees, so he/she can put a face to a name when problems come up.
FOCUS ON KNOWLEDGE
Customize reports. Typically, accountants prepare information in a standard profit-and-loss format. But sometimes, this setup fails to best describe your business. Your accountant should create forms to fit your operation. For example, you would probably like to know how usage relates to your investment for different types of equipment. Another helpful report might be volume breakdowns by time of day, day of week and season. This helps you set your attendant schedule.
Use the phone or e-mail to tap into your accountant’s special knowledge. The phone is an inexpensive way to stay in touch. Make easy phone access one of your criteria for evaluating an accountant. To save time, bunch questions. One method is to slip questions into a folder, and when you have a half-dozen slips, call your accountant to discuss the issues. About the worst thing to do is pester your accountant every time you think of something. Time is valuable.
Have your accountant explain financial statements. Many of you read the financials, but don’t fully understand what they mean. For instance, you might not understand depreciation entries. Others just go directly to the bottom line, and use that figure as the benchmark. Ask questions if you don’t understand. Make the accountant an integral part of your decision process. After all, he/she has been trained to analyze data, so you get the analytical skills you might not possess. For example, your accountant can help decide how much to spend on remodeling, how to handle theft problems, and whether to buy or lease equipment. But the accountant can also help in non-financial matters, such as terminating an unsatisfactory employee or determining whether a new location is desirable.
Always ask for advice before the next fiscal year ends. Yearend decisions can make a big difference in bottom-line results, which affect taxes. If you wait until after the fiscal year, it’s often too late.
Ask what else your accountant can do for you. Besides offering accounting advice, a good accountant can help in a variety of ways. He/she might help organize a discussion group composed of non-competing laundry owners or might be capable of taking over the hiring of a prospective laundry manager. You never know unless you ask.
Let the partnership flourish.