Smaller businesses are sometimes unsure of their requirements when it comes to accountants. An Experian survey found that 59% of directors of start-ups had no previous experience running a company. This can result in a lot of learning on the job, and the stress that goes with it.
This is one of the reasons why accountants with sector-specific expertise can be enormously helpful, offering professional support with varying levels of engagement, depending on individual requirements.
However, when it comes to the later stages of a business, when the owner wants to sell, are accountants best positioned to add value when it is most needed?
“Accountants can become trusted business advisors,” Paul Dodgshon of Uscita Solutions explains, “because they bring clarity and expertise to situations where, sometimes, people can be otherwise floundering.”
This professional guidance includes critical things like budgeting, cash flow and tax. Accountants may also find themselves playing a strategic role, looking at profits and balance sheets, and giving the business owner space to focus on development and marketing.
This is where Paul adds a note of caution: “These roles may become quite firmly established, which is fine until there is a requirement for change,” he points out. “Specifically, when the owner wants to sell.”
Adding Value for Exit
The reason for this is that selling a business requires the right timing and, crucially, that the business is of sufficient value. Furthermore, value building requires preparation in advance of sale, and often involves structural changes and marketing approaches beyond the accountant’s remit.
“Typically, there are several key drivers for adding value to a business in preparation for exit, and while these include financial performance, they also involve structural issues and how the marketing works to position the business”
In other words, value building taken as a total concept is distinct from accountancy.
“Value building is a specific discipline,” Paul states, “and while it overlaps into areas such as finance and marketing, it requires an overview of the bigger picture to provide the right degree of clarity.”
The solution is for accountants to be able to add value to their services by outsourcing value building to help them prepare their clients’ businesses for sale. Paul sees this as very much a collaborative process.
“It’s about providing accountants with the right resources to enhance what they are offering their business clients,” he summarises. “They might be in at the start of an enterprise, so they should be there when it comes to selling it on. What we want to do is provide them with the right support to do this.”