How to manage your Business Advisors

Abtrac CEO Edward O’Leary gives his thoughts on How to Manage Business Advisors

Someone called into my office to see me the other day. She was quite frustrated. She knew I’d worked for an accounting firm in my past. She’s been a user of Abtrac for a long time. And she was in the neighbourhood. She’d had problems with some of the balances in her accounting system. She went to see her local accountant for help to sort things out.

The issue arose after a temp had been running the office while she was on maternity leave. The need was to process some journals to correct errors in opening balances, and sales tax payments and receipts.

The accountant appeared to not know what to do and instead advised the woman to change accounting systems from (shall we say) product Y to product X, giving assurances that such an issue wouldn’t be possible with product X.

Problem solved? Not at all!

Here’s someone in business struggling, wearing their heart on their sleeve looking for professional help. They’re wanting to do the right thing. And their trusted advisor has no more of a clue than they do. Or worse, perhaps they’re seizing in an opportunity to upsize their client and feather their own nest on top of charging a fee for the consultation.

What a fob off. What a crock. What a disgrace to the profession.

The woman left my office happier than when she arrived. She actually knew what to do but simply wanted to discuss her thoughts with someone, to verify she was processing the adjustments correctly.

Not being the first time I’d come across one of our clients receiving dubious advice from their advisor, I wonder how often bad advice is given? And worse, how often is it accepted and followed?

If you Google ‘dressed as the man from the prudential’, or ‘nobody ever got fired for buying IBM’ you’ll see how over recent decades certain types of businesses have promoted themselves as trustworthy.

It’s like, is anyone going to walk into your office and say “you shouldn’t trust me”. Yeah right that’d happen!

No doubt most advisors are well meaning, be they accountants or coaches or business growth specialists, or whatever. But how many today still rely on confidence alone in the minds of the recipients of their advice, like the man from prudential or those in the 80s who recommended IBM. How many simply get by, perhaps because “the less you know the more they know”. It’s got to be a worry.

How long would it take a new employee to learn their job in your business. In many cases the new employee will have been to university. But it might take months before you have confidence enough to let them do some aspects of their job unsupervised.

How long would it take someone to learn the ins and outs of the role of a senior manager, director or working owner of a business. There are levels of expertise one has to learn, and along with learning to manage others, and so many other internal and external matters and issues to understand.

A thought then, is how much should any third party know about your business before you follow their advice and theirs alone, without question.

Consider a sporting analogy. Is the score keeper in a game of footy the best one to coach the players? Highly unlikely. In sport, people understand the need for a team of coaches. The head coach has technical coaches, a fitness coach, a psychological coach, and more. To put together the dream team in sport, you need a team of coaches. The final score is the result of coaches and players all doing their bit, and not because the score keeper understands the value of points as they are accrued throughout the game.

Each coach has strengths. And each one is there to make up for the others’ weaknesses.

In business it’s exactly the same. Many SMEs struggle. Often managers and owners are doing everything on their own with an under-strength team and stretched funding lines. They struggle to cover all the areas that could really make the business fly. So when someone turns up and makes a seemingly valid suggestion about how to do better, most people are grateful for the input.

But my advice is don’t rely implicitly on any one advisor from outside of your business. If someone offers advice, spontaneously or on request, take it at face value. “Here’s someone with an assumed understanding of my issues, pains, and aspirations. I’ll put their advice into the mix. But I’ll bear in mind they’re unlikely to fully understand how the business itself works from one day to the next, nor what I do in it.”

Instead, surround yourself with a team of advisors. Ask any advisor to always present a minimum of two comparable options, and to back up their advice with stories you can verify. And always insist they tell you the drawbacks of following either of the options they present. If they know what they’re talking about they should be able to give you the weaknesses and well as the strengths in any advice. And while they’re doing it, keep them on track. If it’s worth giving advice, they should be able to sell it ‘fuzz free’.

Finally, if it’s something they’re selling you from a third party source, do some work of your own by contacting other parties directly.

The purpose is not to be ungrateful, nor to try to out-smart your advisor. It’s to validate their advice, most likely given in good faith, but nevertheless and no doubt, not perfect. They can walk away from their advice once they’ve dropped it on you.

You cannot.

So put them on the spot, including asking about any pecuniary or other interests they may have behind their advice being given. What’s in it for them. You may be surprised!

We all need a raft of people we can call on at various times, be they touted as advisors or otherwise. But in the end it has to be your decision based on facts you’ve validated yourself.

Are you sure you’re always being given the right advice?

What do you think?