GET THE MOST FROM YOUR ADVISERS

Getting the right professional help is a powerful tool in growing your business, says Alexander Garrett.

by Alexander Garrett
Last Updated: 31 Aug 2010

Simon Confino once had an accountant who doubled in his spare time as a stand-up comedian. 'He was very young and bright,' says the co-founder of communications consultancy Brainchild, 'but I used to come out of meetings not knowing what was a joke and what wasn't.'

Nowadays, Brainchild's accounts are assembled by Jack Sugarman, a veteran of the old school, who Confino admits is 'much more than an accountant'.

He describes him as a mixture of father figure and elder statesman, explaining: 'Jack has enormous goodwill towards us, he really wants us to succeed.'

Confino also relies heavily on the guidance of life coach Paul Allsop, who, he says, provides invaluable support in the 'soft' side of running the business, such as handling difficulties with clients and colleagues. And the third member of his team of professional advisers is his relationship manager from Barclays, Andy Thorpe. 'The strange thing is that I had never met Andy,' he says. 'I could pick up the phone and get him at all hours, and if I wanted money moved internationally or to re-jig our cashflow, I knew he was there for me. But though we tried a couple of times to put a face to a voice, it never happened.'

Confino's choice of advisers may be slightly unorthodox, but among owner-managers of small businesses, his dependence on external counsel is not.

Nevertheless, not everyone is as happy with the relationships they have with the professionals. Bank managers, for example, have long been the butt of cynicism for hard-pressed entrepreneurs. And although they have improved their image since the dark days of the early 1990s, when called-in debts sent hundreds of small companies out of business, it appears that among small business owners, bank managers are only marginally more popular than VAT inspectors.

Colin Barrow, head of the enterprise group at Cranfield School of Management, says that in its survey of owner managers of 460 growing companies, 'more than half' had thought seriously about switching banks in the past three years, and one in six had actually done so. 'That doesn't suggest they provide an enormous amount of support for growing businesses,' he observes.

But then, according to Barrow, his merry band of entrepreneurs are not much more complimentary about accountants. 'They see them as doing the audit, not adding much in the way of value,' he says, 'and they don't see them as a source of serious advice and information on obtaining finance.'

It hasn't always been so. Small businesses have traditionally relied on outsiders for advice - which mostly meant the high street stalwarts of accountants, bank managers and solicitors.

'Smaller companies need external advisers because they simply don't have the breadth of experience in-house that big companies have,' says Nick Hood, senior London partner at business rescue specialists Begbies Traynor. 'Many don't even have a qualified accountant on board. So if anything unusual happens, they have to reach for their advisers.'

The accountant is arguably the most important professional counsellor for any small business. You can't really do without one, since every limited company has to produce accounts and file a return to Companies House as well as a tax return.

You also need a bank, though whether you can expect to enjoy a personal relationship with a manager these days is another matter. 'The real issue is: how on earth do you actually talk to a bank manager any more?' says Hood. 'Most of the time you have to talk to a call centre.'

And most small companies will also need to call on solicitors at some stage, though that may be less of an ongoing relationship. Messrs Sue, Grabbit & Run usually get the call when there is an urgent need, such as a property transaction, a major contract, litigation or debts to be chased.

The real change in the past couple of decades has been the proliferation of other forms of help for small businesses, ranging from self-employed consultants through Government-sponsored business support schemes and self-styled troubleshooters.

In general, they don't enjoy the obvious professional status of lawyers and accountants or the big company backing of bank managers, and for the small business owner-manager, their indeterminate status can make these some of the most difficult relationships to manage.

But while it's easy to whinge about the shortcomings of all the assorted pit-stop crews seeking to keep UK Ltd on the road, the more difficult trick is knowing how to get the best out of the men - and women - in the pinstripe suits.

CHOOSE YOUR PARTNERS

The first key step in getting on with your advisers is to pick the right ones. With banks, that is not such an issue, as capabilities, products and service levels are all pretty similar. With accountants, though, there is a vast difference between what Big Four firms and tiny one-man-band practices can offer.

'I often see companies at a very early stage and it is important to form realistic expectations about how far the business will go,' says Les Clifford, UK entrepreneurial growth markets leader at Ernst & Young.

'If it's going to be a lifestyle business, then at most they want to be with a medium-sized firm, but if they plan to grow rapidly and head for a trade sale or public markets in three to five years, then it's worth starting off with a Big Four accountancy practice and a firm of corporate lawyers who can take them all the way through.'

Clive Lewis, SME spokesman for the Institute of Chartered Accountants, adds: 'Below a certain size, businesses cannot usually afford to have a qualified accountant on board as a finance director.

'At that level, they will have a wide use for an accountancy practice, so they will need to look for someone who can do tax, payroll, VAT, advise on accountancy software and so on.'

KNOW WHEN TO SWITCH

As your business goes through its ups and downs, the adviser that was right yesterday may now be a mis-match. As Stephen Alambritis of the Federation of Small Businesses puts it: 'The main danger is that you are with an adviser whom you have now outgrown, or you may have started with them when you were sizeable and you have now downscaled and so you are paying too much.'

Either way, it is time to look around for an outfit that is better fitted to your new size and developing needs.

BE CLEAR WHAT YOU WANT

Small businesses are particularly bad at briefing consultants, says Hood.

'There's a company I've been working with that has seen three different sales and marketing consultants in as many months. They've briefed each of them completely differently and failed to take the advice given by any of them. Then they complain they can't find anyone decent.'

When consultants are called in for a specific assignment, he says, it is vital not only to define a clear brief, but also to put in place milestones and reporting so that accountability exists. 'There is a tendency to let the consultant go running off without a brief or even to let the consultant set the brief. A few months down the line, someone usually asks: What's this bloke actually doing here?'

The same applies to ongoing work such as accounting. The more precise you are in what you ask for, the likelier you are to get it. So if your accountant is only showing you the basic numbers and you want more detailed information, say so. The right data can give you valuable insights into your business, but even someone with a great head for figures can't read your mind.

Be aware of potential expectation gaps between yourself and your advisers.

Jim Redman, senior policy and research adviser at the Forum of Private Business, says: 'Perception of exactly what a service should provide is often a problem. Banks fail to think like businesses and vice versa.'

WALKING THE TALK

'There are plenty of consultants who will go into a business, write a report and then go away,' says Chris Betson, chairman of the Institute of Business Advisers. 'But what small businesses often want is someone who can actually help them do it.'

Five years ago, he was called in to a factory restoring old Spitfires and tasked with finding the company a new general manager. Instead, he found himself doing the job, and stayed there for three years. It's not unreasonable to say that owners of small businesses have more respect for people who have run one of their own, hence the growing appeal of entrepreneurs' networks as a source of advice.

INVEST IN RELATIONSHIPS

In any relationship with professional advisers, one of the dangers is that you talk only when there is a problem, or bad news to break. 'You should keep your advisers informed of your plans and strategies,' says Barrow. 'It's important to have points of contact at other times than when you need something. Keep them informed when things are going well, and then if something goes badly, they're halfway onside already.'

Adds Lewis: 'You should be talking to your accountancy practice at least once a quarter, or better, your accountant should be ringing you.'

Nurturing relationships takes time and money, but can pay off. Recalls Barrow: 'I worked with a guy who wanted to raise his first big slug of venture capital money. He targeted three VC companies and then invited them to come and sit in on a development programme for his top team, so they could get to know the company before they made any decision.'

BE OPEN AND HONEST

What every kind of adviser hates most is not being given the full picture.

'I can't give you the best advice unless I know the facts,' says Clifford.

There may be a temptation, particularly where banks are concerned, to be economical with the actualite, on the grounds that bad news may be used against you. But Clifford says: 'Most advisers hate surprises coming out of the blue. If you share the small issues, then when the big issues come along, they are likely to be supportive.'

BE ASSERTIVE

The relationship between women entrepreneurs and professional advisers - mostly male - has not always been covered in glory.

Tricia Dinan, chair of Prowess (Promotion of Women's Enterprise Support Services) says bank managers in particular have a tendency to ask women starting businesses if they couldn't get the money from their father or husband. 'We try to give women the confidence to be very clear about what they need when they go to see advisers, and also to challenge any inappropriate comments,' says Dinan. Female owner-managers are likely to be less bullish in raising capital but more likely to seek advice, she adds.

ADVISERS ARE SUPPLIERS TOO

Accountants and lawyers are becoming much more aware of the need to market themselves, but that also means that they can be kept on their toes. Talk to their competitors, or even use a second law firm or accountant for specific tasks. There's no reason why you can't meet once a year for an appraisal of their service (although the bank manager may be more tricky). Don't pay upfront fees before you have even received a service, and think instead how you could link their fees to performance.

KEEP IT PROFESSIONAL

Playing a round of golf with your bank manager, your accountant and your solicitor once a week sounds harmless enough. But the fallout from Enron and tighter standards of corporate governance in the big business world mean that advisers have to beware of getting too matey with their clients.

Under money-laundering legislation, they would have to shop you if they discovered anything dodgy about your dealings. And Nick Hood points out: 'If that round of golf makes them less willing to point out to you that your idiot son is screwing up the business, it probably isn't a great idea.'

FINDING GOOD ADVISERS

1. Pick on someone your own size. Big professional firms aren't geared up to small business and will charge fancy prices (banks are different).

2. Ask for recommendations from business contacts, trade associations and other trusted advisers.

3. Ask for business references, and follow them up.

4. Find out if they have experience that reflects your needs.

5. Ask yourself if they empathise with your business.

6. Get written commitments on who will handle your account.

TELL-TALE SIGNS THAT YOUR RELATIONSHIP IS ON THE ROCKS

- Your calls go unanswered.

- You're put through to a junior rather than the senior partner you usually deal with.

- Your work seems to be at the back of the queue.

- Deadlines are missed and nobody seems bothered.

- You don't get their invite to the Rotary Club dinner.

THE COACH

Paul Allsop - invaluable support on the 'soft' side of the business

THE BANKER

Andy Thorpe, relationship manager who is 'always there for me'

THE MAIN MAN

Simon Confino, co-founder of Brainchild, works with an unorthodox but happy choice of advisers

THE ACCOUNTANT

Jack Sugarman , veteran of the old school: father figure and elder statesman.

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