Suppose your client was this hapless donut shop owner in this The Far Side cartoon below?
If you did his business tax return, would you notice the excessively large “cost of goods sold” anomaly? If you provided attestation or bookkeeping services, would you recognize the inventory “shrinkage” or be able to connect the dots and understand where the profits were being eaten up (pun intended…)?
If not, do not expect him to remain a client for long.
Do not let these opportunities to help your client, and to stand apart from your competition pass by. There is a chasm of difference between knowing the numbers and knowing the business.
Knowing the numbers is the ante to join the game. Knowing the business is having pocket aces.
A powerful framework for helping Main Street CPA firms understand the business is the DuPont Model. The model decomposes the different drivers of financial and operational performance and enables management (and their advisors…) to identify, target, and act upon those drivers in efforts to improve the overall performance of the business. One of the best parts of the DuPont model is that the inputs are basic financial reports and metrics. Items that you and your client are already looking at, just not in the holistic format of the DuPont Model.
Main Street CPA firms would do well to adopt the DuPont Model as a standard practice in applying it to their clients and elevating their own business acumen.
Growth CPR can help you help your client’s dough and profits rise.