Dear Aunty B,
Our accountant, to whom we pay a small fortune every year, has just got us into trouble with the tax department because we have been reporting something in the wrong way.
After having to recalculate, we have had to pay more and retrospectively. Of course we haven’t budgeted for this and it has been a complete stuff up and ruined the year and it is only July!
My business partner, who handles the finances amongst other things, is telling me the mistake is partly ours and that it is crazy to change accountants as they know everything about us, plus we get a good deal because the firm has looked after her family for decades. So we get good rates and I think in the early days they did look after us.
But now we have a lot of accounting stuff and how would we know we can’t get a better deal and service if we have never tendered it out? It seems like we pay them as much as a good internal accountant would cost.
I think we are past the stage of using her family accountant, but my other partner tells me to butt out as it is not my area. But my job is running the revenue, so I have to pay for that stuff up!
Enough of the ‘them’ and ‘us’ immediately. It is great you have such separate areas because that is the essence of a good partnership, but you need to work hard at your business marriage every day because a divorce is very ugly.
The answer is simple. Good governance requires that, at your stage of business, you need processes that keep up with your growth and support future growth. And that involves examining every relationship every year whether in accounting, supply chain, marketing partnerships or sales.
Every year you need to ask can we do this cheaper and better? Can we do it faster? Can we do it smarter? And, most importantly for a growing business, is this the right relationship or process that is going to support our future business?
You also need a plan. How big do you want to get? What is your framework for growth that will support that? That plan has to include looking at all service providers, because one of the biggest mistakes growing businesses can make is sticking with the family accountant or lawyer and not transitioning to professionals who have specialists in many areas and can provide you with highly skilled advice.
So, at your next board meeting, run through the plan and framework for growth and then suggest, as part of the execution strategy, that each partner reviews their area and reports back on how their staff, suppliers and partners will transition to a bigger company and be part of professionalising your business.
Your Aunty B
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