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Reader-to-reader advice.

The Perfect CPA
We've had to switch accountants a few times, and now we use a major international firm. It's hard to trust anyone with confidential financial information, so how do you know when you've made the right choice? What criteria do you use?

John Hogenson

Executive Vice-President

Grand River Interiors

Grand Rapids

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If your latest accounting firm specializes in the fiscal areas that concern you most, and if it proactively helps you set and reach your goals, you're probably safe. A company that is burned by (or outgrows) its CPA should look elsewhere, but trading one firm for another with a fancy name is myopic. The shared trust you want, after all, often takes years of working side by side. We're crossing our fingers that you've assessed your needs. Now it's time for a postmortem.

Take a look at what keeps you awake nights. If, say, compensation issues are your foremost worry, pick a firm with a benefits expert. If you want better banking relationships, choose one with strong bank ties. (One with a senior staffer on the board of a reputable bank will do.) Andrew Lewis, CEO of DayStar Digital, in Flowery Branch, Ga., knew he had picked a winner when his Big Six accountant found DayStar a chief financial officer specializing in growing high-tech companies like his. The Big Sixer reorganized and updated DayStar's procedures and helped make decisions that will continue to pay off after the company goes public.

Another key test: how good are your accountants' diagnostic skills? Do they talk about trends and provide charts showing how you stack up? "Listen for things like 'Gross profit is down by half a point' or 'Operating costs are higher than the industry norm," advises Jerry Atkinson of the American Institute of Certified Public Accountants (AICPA), in New York City. Bill Morgan, CFO of oil-reclamation company Noble Oil Services, in Sanford, N.C., was sold on his accountants' competence when they evaluated the company's human-resource needs, analyzed its corporate policies, provided computer consulting, and answered every question.

It's also smart to see if all the doors at the firm truly are open. Make sure you're not denied access to top managers and hired guns. Noble Oil's Morgan wanted a take-charge firm that catered to growing companies like his. "We also wanted a friendly partnership like the one we have with our bankers," he says. Morgan had candidates visit his company so he could judge them as individuals on his own turf. And he gave them every opportunity to get to know him.

It never hurts to get an outsider's opinion, either, so see if your accounting firm participates in the AICPA's private-company monitoring program, by calling 800-272-3476. Banks and bonding firms look favorably on that audit.

Coffee Clutch
My specialty-coffee company ships to small accounts and a growing number of larger ones. How do you decide which size account to go after?

Name Withheld

* * *

Position yourself in the niche most compatible with your personality and long-term goals. Do you want to run a one-person show or build a company? Do you want to stay local or go national? And how much time and money are you really willing to invest? "If you're a passionate bean lover looking for steady income, target smaller accounts; if you're willing to risk taking on volume and would prefer building business skills, go for the mass market," advises Jay Endres, owner of Roastery Development, in San Mateo, Calif.

Though seductive in their promise of heftier returns, large accounts often demand price concessions; flawless execution of volume orders; and support for merchandising, installation, and maintenance. To accommodate them, you'll need to hire people with operational and organizational skills, computerize your records, and buy industrial-size equipment. But if you play it smart, says Endres, "every penny spent to attract big players means real dollars for you." Dennis Boyer, CEO of Gourmet Coffees of America, in Boca Raton, Fla., would agree. His fully automated 350-employee company grows 50% annually by serving large accounts.

The thought of tracking the needs of hundreds of small customers at once can be dizzying, but if you want only to serve your region's bean lovers and feel comfortable with your current small accounts, stick with them and take on new ones cautiously. That's the approach at Uncommon Grounds Coffee. Fully 60% of its 300 accounts are small, and because no one account makes up more than 10% of the Berkeley, Calif., company's sales, losing one doesn't hurt cash flow. "They keep us in business," explains Uncommon Grounds' partner Orrel Lanter, "by allowing us to be more flexible." Selling those accounts variety -- for example, a high-end product that doesn't appeal to the masses -- has increased Lanter's margins.

For more information, join the Specialty Coffee Association of America (SCAA; 310-983-8090; annual dues start at $100) for starter subscriptions to Tea & Coffee Trade Journal , World Coffee & Tea , and The Gourmet Retailer . The SCAA also offers educational programs and "Avenues for Growth," a report ($100 for members) on trends in the specialty-coffee market.

Partner Power
Forging alliances is a way of life out here in Silicon Valley, but is this management strategy just as hot in other corners of the country? Could you recommend books or organizations that teach companies how to forge mutually beneficial alliances so they can ultimately become "network companies"?

Judith Cadigan

President

Judith Cadigan & Associates

Palo Alto, Calif.

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Pick up the Wall Street Journal . Chances are, you'll find plenty of announcements of link-ups between companies of every shape and size, and in every corner of the country. The Corporation for Enterprise Development (202-408-9788), a policy consultancy, spearheads the research on who's forming what kinds of alliances where. And its enlightening reports on industry-specific networking, legislative initiatives, and rural perspectives show that the phenomenon isn't just bicoastal. "Everyone's doing it," says Joe Mancuso, president of the Center for Entrepreneurial Management, in New York City. "And they're doing it everywhere."

Read more:

Meet the New Masters of Cash Flow

When It's OK to Ignore Costs

Why You Should Pay More Taxes

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