Small and Mid-size businesses are the backbone of our economy. The owners of these operations are not only innovative, but also courageous for introducing a product or service to the market and assuming all risks.
What about understanding their basic finances and reading financial statements? A recent study of small business owners conducted by Intuit revealed that 40% of small business owners consider themselves to be financially illiterate. Talk about self awareness.
At the same time, even more troubling is the fact that 81% of small business owners are also tasked with doing their business’ finances themselves. This is not to be ignored either, estimates show that there is around 30 million small businesses in the United States alone. Factoring in these numbers means there are about 6 million businesses operating without strong financial guidance. This is where you, their trusted business advisor, enter the equation.
In our industry we must be cognizant of the propensity for business owners to lack a solid understanding of tax, pricing, and cash flow forecasting. This is not to undermine their accomplishments in any way. These owners are intelligent and have gotten this far on their own. Your job is to convince them you can propel their business to the next level by mitigating risk and maximizing ROI. One of the first steps in becoming a trusted business advisor for your clients’ may be the need to explain to them how to read a balance sheet, P&L, and cash flow statement. By avoiding coming across as a know-it-all and taking the time to educate your client, you will make them feel valued and part of the solution.
This approach will ensure your clients’ are able to withstand any downturns or threats. On the flip side, it allows your client to respond more quickly when presented with opportunities for growth. Small business owners have spoken; they need help. They just have a hard time asking for it.
Read the full article by John Milikowsky here