Tens of thousands of CPAs make a living doing returns for small-business clients. They're missing a great opportunity.
I wasn't surprised that a lot of accountants took offense at my June column. A nursery owner had been advised by his accountant to hang on for a couple more years in hopes that the real estate market would turn around and give his business a boost. I had noted that accountants are basically historians and shouldn't be relied on for business advice.
Understand, I did not mean it as an insult. You need to know that history to make sense of what has really happened in a business. Yet the history is a mystery to most entrepreneurs, because they don't understand the numbers. That's asking for trouble, because--as I've noted many times--numbers run businesses.
So I was intrigued by an email I received from a CPA named Kevin McCoy. "I almost took offense to your comment," he wrote, "but then I realized you are right. Accountants have become historians, content to file our clients' tax returns or prepare financial statements that will surely be thrown in a drawer and disappear forever. How can we change that? I have a few ideas but would love to hear your thoughts." When we later spoke, Kevin told me that he was part of a group of CPAs that advocated going beyond the usual compliance work and trying to help business people understand the numbers of their businesses so that they can use them as a guide in shaping their plans for the future.
This was music to my ears. The people in the best position to teach entrepreneurs how to read the numbers are, obviously, their accountants. Unfortunately, very few of them do it. Let me be clear: I'm not suggesting that accountants provide advice on how to run businesses. They understand the numbers, but few have experience in weighing risks against potential rewards, taking into account all the operational, market, and financial factors unique to a particular type of business.
I can already hear the protests. But the best accountants I know agree with me. They also understand that what I'm saying in no way diminishes their value. Small-business accountants have a vital role to play that goes far beyond preparing tax returns. I just hope more of them, like Kevin McCoy, start playing it.