The 4 Factors of Small Business Success

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I wrote about this topic in a post a couple of years ago, where I was pushing back against the “experts” who say accountants need to be more “proactive” in working with clients.

One of my frustrations with the whole “proactive” thing is, while I agree in spirit with the idea of being “proactive,” it’s really hard to implement in the real world because 1) clients have to be active participants and they usually don’t want to be (they want magic-wand solutions from the accountant instead) and 2) there are many factors outside the control of the accountant.

Let’s talk about the second point today.

The 4 Factors of Success for a Small Business

In my experience, there are 4 things that determine if a small business will survive. Those factors are:

  1. Offering a product or service the marketplace wants or needs
  2. The ability to effectively sell or market that product or service to the marketplace
  3. The ability to efficiently deliver the product or service to the marketplace
  4. The ability to manage the business

One and two are related, as are three and four. Let’s look at these factors within the framework of A) what I mean, and B) how accountants play in.

ONE and TWO: These two are pretty self-explanatory. If a business is offering something that the marketplace doesn’t want or need, or if the business is unable to effectively market the product or service, the business is doomed.

THREE and FOUR: These are closely related and could probably be combined them into one item. A successful small business needs a system in place for delivering their product or service to its customers. And then the business owner needs to be invested in MANAGING the business — not just doing the work but actually managing the goings-on of the business.

How Does an Accountant Play In?

According to the “experts,” we as accountants and tax preparers are supposed to be “proactive” and in some cases “save” struggling businesses. I have read articles in which the author has stated that accountants should be able to help struggling businesses stay alive. I’ve had clients of my own who have had similar expectations of me.

But really, what can an accountant do to help “save” a struggling business? The business either has a product or service the marketplace wants or needs … or they don’t have such a product or service. There’s nothing an accountant can do if the client is trying to sell the marketplace something that there’s no demand for.

Same thing with #2, marketing. That’s out of an accountant’s control.

Accountants can help with numbers 3 and 4 … but there’s so many other factors that come into play. Like, I can help a business with budgeting and managing cash flow. I can help analyze financial statements and possibly glean useful insight to pass along to the business owner. I can also help with office procedures as far as financial management (designation of duties, for example), which can help with efficiency.

But I can’t help the client with actually delivering their product or service effectively. Joe the Window Washer is an expert on washing windows — if he’s not effectively delivering his service to his clients, I can’t help him with that because I’m not an expert on washing windows.

Accountants Should Help Where They Can

Of course an accountant should help where he or she can. I certainly don’t dispute that. We should make ourselves available to help our clients, and we should help with the things we are qualified to help with.

I help my clients as best as I can — and I think most reputable accountants and tax preparers do, too — but I don’t work in the client’s business every day and I can’t control what the client does or doesn’t do. (I wrote more about that struggle in this post.)

As I have shouted from the rooftops many times, and will do so again here: the ball is always really in the CLIENT’S court on all of this stuff. Accountants and tax preparers can help but we can’t work miracles, we can’t make a client do something, and there are many factors outside of the accountant’s control.