Sunday, August 17, 2014

Are Your Business Advisors Telling You All You Need To Know To Keep You Safe?

Small business owners face many challenges when running their day-to-day operations.

Being profitable, of course, is the objective in delivering their goods and services and businesses have a range of costs associated with the running of that business.

Some expenses that businesses need to cover are easy to see - things like rent and plant and equipment, wages for employees, costs for utilities, fuel and vehicles etc. The list seems to go on and on.

These costs are a basic part of running a business. Other costs are less easy to see the value in but are necessary for the business to go. Insurances, professional fees, payments to advisors and external service providers, and marketing.

To look for ways to not spend the money on them would be like buying a car ... but not being willing to pay for fuel to make the car go.

What is often less well appreciated is the cost that businesses can face if they miss out on keeping their compliance obligations met and up-to-date.

While many businesses may have an attitude that desires the business to be a safe workplace, many small businesses particularly, are not well organised when it comes to documenting the procedures and policies they need to make a standard part of "how we work".

These procedures can seem like an unnecessary complication for businesses which don't have staff allocated or even the skills and time necessary to undertake this role. And very few businesses have even assigned set roles and responsibilities in a formal way, detailing all the tasks that are carried out in the business.

If there is no guide to tasks, it follows there is no procedure for them and no training standard for that task... no documented safety protocols for all the jobs that get done.

This is problematic in several ways.

Firstly, without accounting for every task, new staff can be left without a concise standard to use when carrying out their work.  Which means that the owner of the business can be left dissatisfied with their performance.

These gaps in documented procedures mean that there is potential for gaps in training. That can lead to gaps in safety protocols being maintained. This lack of standard in how work gets done may go on without a problem for a long time. When they show up typically, is when there is an accident.

When that happens, the business faces two problems: The accident itself and all of the repercussions that flow from this; and no way to prove that the business was aware of and followed good safety practices.

Secondly the business can be exposed to financial penalties, increases in workers compensation costs and legal action from the person injured.

This is an issue that is as much risk management responsibility, as it is a potential threat to the profitability of the business,

Getting caught up in such an incident on the job can affect the bottom-line of the business,  the reputation of the business and open up the business to months or years of disruption and stress for the business owner and the injured employee.

Another aspect of this lack of documented procedures and standards is that the business may be locked our of opportunities to bid for work that they could do profitably, but are unable to tender for because they don't meet the requirements for the job due to their lack of procedural documentation and systems for the workplace.

This can be a handbrake on the progress the business could be making and costing the business significant profit not realized.

Advisors - Your Duty Of Care 

 One would hope that Accountants working with small businesses would be making clients aware of their obligations around these issues and reviewing the needs of the business regularly to ensure that they were not exposing the business to unnecessary risk.

Unfortunately this doesn't always happen.

For those who are working with small businesses part of our role should be to ensure that any issues we notice may not be happening in the business, should be made clear to the client.  If the small business owner chooses to ignore that information then that is up to them, to accept that risk.

When we work with businesses and fail to communicate the issues that we see are a problem, we let our clients down.  They often believe that if there is something amiss in the business, that their advisors will surely let them know. They are well entitled to think that would be the case. Sadly, it often is not.

If the client buys a website they should be able to assume that the website is capable of doing the thing they bought it to do. Many, many don't.

If the client has an accountant who sees that there is insufficient money being allocated for fundamental expenses, they would draw attention to this. Many, many don't.

Those professionals who do work with small business need to have a selection of good people around them who are committed to serving the client with all care and due diligence in their dealings and who can do what they profess to do, in getting the client into the best position possible for that area of their business.

Accountants can be directing small business clients to help with accessing industry standard procedures that can be customised for the business, help with promoting the business and providing good strategy for marketing, and so on and so forth, for all the different segments of the business.

The Good News For Accountants Is Good News For Business Too

When working with businesses actively and showing the care and attention to detail that you would want in your own business, you become a value to the business, not a cost. And in so doing, assist your business clients to avoid unnecessary costs, be able to access good opportunities and grow the business in a sustainable way, while developing the business as an asset that is optimal for pricing when the time comes that they might want to sell.

 Accountants - If you don't have a plan to make a strong network of associates to whom you can actively refer, then this is a good time to develop this as a strategy as part of your business plan. Just "anyone" won't do. Without driving it, that network just won't work. Hire someone to drive it for you as their primary objective.

Business owners - Review the service that you get from your business advisors and service providers. Are they proactive in letting you know what you need? Are they giving you the quality attention you need to make the best you can from your business?

We put our heart and soul into building a business - and our financial security too.  That's a huge commitment and we need all the help we can get. Make sure you are surrounding yourself with service providers who take an interest in your success and the health of your business too.

Not all businesses work from the same ethical perspective. Some advisors just want to be in a transactional relationship with clients, just do the thing they do now and not stretch themselves to be of more value to clients. In the workforce, this is known as "presenteeism" - unlike absenteeism, the employee is at work, even if they are not doing much more than they absolutely have to, to keep their job.  So too it is with service providers.

When you have identified your trusted advisors for your business, it is up to you as the business owner with the wellbeing of the business in mind, to listen to their advice and act on recommendations that keep your business safe. Whether that be safety procedures or other risk management issues, or business development processes.

We must choose the kind of business we want to work with, and the kind of business we want to either be... or become.

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