As we have seen with all the activity surrounding the Paycheck Protection Program, now is a perfect time for CPAs to show value when working with clients who own small businesses. However, it is important to know the right questions to ask to bring into focus the areas where you can be most beneficial. To figure out what to ask, including whether or not your client has ever dealt with adversity, we spoke with Bryce Sanders, president of Perceptive Business Solutions Inc.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor

Podcast Transcript

As has been established by the continuing flurry of activity surrounding the Paycheck Protection Program, now is a time when CPAs are vital to their small-business-owning clients. But what are the questions that CPAs and CPA firms should be asking these clients in order to identify the areas where they need the most focused assistance? To find out the answers, today we are talking to Bryce Sanders, president of Perceptive Business Solutions Inc.

Bryce, I wonder, could you tell us a little bit about your background just so people listening have a little bit of context?

[Sanders] Well, you know through the way that we got together and met that I write for accountingweb.com, but however I'm not an accountant. My background is different. I was a financial advisor with one of the big Wall Street firms for about 14 years, followed by being about six years in management. There are similarities between the two fields of financial services and accounting. You work with individuals and businesses, and financial advisors also do too, however you are also invested in the success of the people who you work with because you would like their business to succeed, much like a financial advisor hopes that their clients make money.

But the second point is both professions need to find clients. Therefore, that's where I'm able to bring some additional information into the equation of how can you have some tactful ways of being able to find clients? In this way, things we're talking about today, this is more about how do you actually establish your value with a client, which builds loyalty and also brings in ancillary business.

The topic we are talking about today is questions CPAs should ask their clients who own small businesses, as I said in the intro. That's based on a blog you authored for AccountingWEB, so we always appreciate that. Before we get into the actual questions, can you address simply how much of an opportunity is there right now for CPAs when it comes to working with small businesses?

[Sanders] Well, let us start with some assumptions and let's work under the thought that accountants have got individual clients and they've also got local businesses as clients, because we're thinking now with people who are neighborhood accountants. You may provide tax-filing services, maybe you do recordkeeping services, but you could also help them with advisory services. Now, this is really overused right now but we are in unprecedented times. Imagine that you have got a restaurant owner as a client, and restaurants if they're lucky are allowed to operate at 25 to 50% capacity. The New Jersey restaurants, I think, have just now been allowed to do indoor seating.

These restaurant owners have got a huge problem. There is no standing at the bar. Some of these restaurants just are not going to reopen. However, landlords still want rent. You've got lots of small-business owners who are trying to keep their business afloat but they don't know where to turn for help. They don't see you in the context of being the problem solver but now this is where the accountant who knows their business as well if not better than they do can suddenly turn up and literally be creating value-added services for them.

What are some of the issues unique to small businesses that CPAs are most positioned to help with?

[Sanders] Let us think about that in terms of two categories. First, you got the traditional categories that small-business owners associate accountants with. Filing taxes, making them aware of programs that can help them, maybe they are also helping with payroll too, or reducing expenses or being able to counsel them on what bills need to be paid and in what order, and also helping them get overdue customers to pay their bills. Those are the kind of the things you sort of associate with them. But now you start to get into the forest through the trees. Because of advisory services you can be the benevolent uncle who has been in the same business as they have and can offer advice.

The difference between you and the uncle is at some point you would like them to pay for that advice. When you think of it, they've been dealt a hand of cards, and got five cards; what is the best hand that I can play in this game? What you are doing is you are helping them say, "These are the cards you have been dealt." For example, one of those cards is they have loyal customers and you can talk to them about how can they communicate with those loyal customers and how can you get them back? You've got the traditional ways you can help them, but also the "I'm going to be your business advisor" type of help.

Let's talk about some other questions CPAs should be asking their small-business clients. Why should a CPA know why an individual started their business in the first place?

[Sanders] Years ago, when I was a financial advisor, one of the things that I had heard someone say is, if you ever want to get a small-business owner started talking, just say, "How did you start your business?" They really get into telling that story. What you want to do in this case is, there was once a dream. Now short-term they are losing sleep, they are wondering how they're going to pay their bills, they are probably having nightmares. But back years ago they started the business because they saw an opportunity and you need them to bring that up again so you can ask, "Is that opportunity still there? Is that opportunity even better?" You want to get them excited again about what it is that they do by reminding them about why they got into the business in the first place.

As you say in your AccountingWEB blog, small businesses can tend to think a little more short-term than larger ones, probably out of necessity really. Why is it important to know where they see their business in five years?

[Sanders] Well, there's a few answers that you would have to something like that. One of them is every so often they might say, "Why am I doing this?" Because they're going into work and they may be doing the same thing day after day. Remember when you went to college you would be going to class day after day, you would be studying, but you had a goal. There was going to be graduation, you were going to qualify for your certifications. You were then going to wind up getting a good job or setting up your own firm. That was the goal that kept you going.

Now, you need to think with having a plan, what's the client's end game? Is it going to be they've got to sell the business to someone else? Then, they better start working toward getting their numbers up. Maybe they're planning to pass it on to the next generation. Well, they’ve got to get their kids into the store waiting on customers so that they pass on the same passion where you are able to pass the passion on to them. Are they thinking maybe of expanding the business or franchising it? Well, they've got to have a look down the road, maybe five years down the road, and what they need is a roadmap and pretty much where you want to go is the goal.

What does a CPA need to know about their client's current business plan and why do they need to know that?

[Sanders] Well, you just brought up the words “business plan,” in fact the roadmap. Ever hear the saying “a goal without a plan is just a dream?” How are you going to get to the end game? If you want to lose weight, you need a plan of diet and exercise to do it. You need a trainer to do it pretty much, otherwise you're going to wind up reinventing the wheel and you're going to fall off track. In business, you as their accountant and also their business advisor can be that trainer. Now here's another point: if the goal requires more money now because they're going to need to take some action to take advantage of an opportunity and they're going to go talk to a bank about getting money, the bank is going to want to see a plan. Therefore, for their own sake and for the sake of the people who they might be borrowing money from, they need to have a roadmap of where they want to go and how they intend to get there.

You say it's important to ask a business whether they've been through adversity before. Why is that, especially right now?

[Sanders] One of the things we have to bear in mind is people have short memories. It has been said that the four most dangerous words on Wall Street is, "This time, it's different." Think, for instance, if your client's business has been around for about 20 years or so, during the real estate crash around 2008, the economy went through huge problems. If your client was in business at that time, they somehow managed to muddle through and get through that period. They survived. You need to get them remembering tough times they've been through before that they have been able to come out stronger or better from, because you want to get them into the mindset of, "We have gone through this before. We can go through it again."

I imagine it could be tough to be focused on growth in economic times that have to be called uncertain. But one of the things you would have CPAs and CPA firms asking their clients is if they have thought about buying out a competitor. Why is the timing possibly right for that discussion?

[Sanders] Buying out a competitor could mean a lot of things, but we are talking about short memories and things like that. Remember back, it was around February/beginning of March of this year, the stock market literally fell off a cliff and then it recovered. Investors might say, looking back in May and June, "I wish I bought when stocks were cheap." Instead, they sat tight and hopefully didn't sell out and managed to ride through this. Let's assume your client knows that they are going to survive: some competitors won't, especially if they are highly leveraged.

Let us assume that you've got a client who owns a restaurant. They were thinking of remodeling because their restaurant is tired, but that was going to be expensive and the pandemic put that on hold because there was no commercial construction for quite a period of time. Now, the restaurants around the corner, some of them are going out of business and they're selling chairs, tables, fixtures, the equipment they've got, the refrigerators. This stuff would probably be a lot cheaper than it would be buying it new. Therefore, you've got to think for those, "Can I buy out some of my competitors in terms of stuff, the ones that are selling, going out of business, or are going to be selling?"

It also winds up being the idea of, "Can you actually buy into the business itself or merge?" It also means too that if we forget that there was the tightest labor market in a long time back in December, and, all of a sudden – I think it's about eight and a half percent unemployment right now on the latest numbers that have come out – there are probably some enormously qualified staff out there that do not have jobs and, if you have a growth plan for your business and it needs certain skills, this may be the moment to be getting them pretty much. Therefore, when I'm talking about buying out the competition, this could be in fixtures, it could be at hiring people who are available in the market, or it actually could be buying another business and merging it into your own.

Why is it vital to keep clients focused on places where they may be able to find money?

[Sanders] One of the problems that you run into with a business is having good credit lines or being able to get a hold of money. Now, your client probably knows some of this stuff because they've heard from a friend of a friend or they've seen something on the internet is available, but they're looking at this thing at ground level. You, on the other hand, number one, are a professional. Number two, you are looking over the city that you were in, you are looking over the industry that they are in, and you're the 30,000 foot level.

You know what programs the state has available, you know what programs the federal government has available, whether they're executing them through the local banks, what the qualifiers are on getting that kind of money. You're actually able to sit down and let them know what is available out there. This is where you can also add some value on letting them know if they are short of cash or if they think they need cash to expand their business, what kind of money is actually out there that they would have a shot at being able to access and what it would cost.