Discussing finances with a professional isn’t like pulling out teeth, if you do it right
No franchisor or franchisee should feel like talking with their accountants is a pain. Your accountant will, or at least should, be a very important member of your extended business team, providing much more than just your profit and loss account and balance sheet. In order to give sound advice, they must fully understand your business model and have a proper handle on your personal situation.
Take the time to meet and explain your personal goals and business objectives so that you’re all moving in the same direction. For example, you may wish to show high profits because you want to borrow more to help the business grow or because you want to sell the franchise and achieve the highest possible price.
Alternatively, you may wish to show low profits because you desire to minimise your tax. If your accountant has a full understanding of what you’re trying to achieve you’ll have a much better chance of accomplishing your aims.
Remember, business is not simply about money. It’s also about people – employing and motivating staff – it’s about sales and marketing, delivering your service or product and providing superior customer service. A good accountant should be much more than a financial record keeper. They should know or acquire some industry knowledge of franchising and your own particular sector, they should research the basic benchmark ratios so they can help you identify what’s good and what could be improved within your business. They should also be identifying trends and discussing the potential impact of these on your business performance.
We suggest you hold regular review meetings together, perhaps examining management accounts on a quarterly basis. Certainly, don’t wait until you get your year-end accounts otherwise it could be far too late. Ensure you know how much this enhanced service is going to cost you. Consider the best way for you to pay. Ask yourself – would it be better to pay monthly or at the end of the financial year and then negotiate accordingly.
It also makes sense for your business accountant to help look after your personal tax affairs too as they can maximise your tax efficiency across the board.
You can browse the British Franchise Association’s website affiliate section when researching accountants and take comfort from the knowledge a set industry standard is being maintained by affiliated firms. Ultimately, it should feel as though your accountant is part of your team, not that an upcoming meeting is like going to the dentist or the doctor.
My final piece of advice is probably the most important. Whilst you don't necessarily need to produce your own accounts, you most certainly do need to understand them, after all it’s your business. It’s worthwhile therefore investing some time and money in yourself to ensure you do. You wouldn’t start driving a car without studying the Highway Code, would you? So why run a business without understanding at least the theory of business finance and accounts? I can assure you it will pay dividends in the end, quite literally.