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How to Help Your Clients Future Proof Their Businesses

Published by Tom Wadelton on Oct 28, 2022 6:00:00 AM

Right now, there is a lot of talk about whether a recession is here. Business owners are wondering what their futures look like and what might happen to their business. Increasing rent or the loss of clients may be coming their way, and they want to be sure that they are ready for these potential impacts. Regardless of their specific worries, your clients will likely experience an entourage of negative thoughts flitting through their minds.

When your clients are looking for ways to navigate the potential challenges of an upcoming recession, you can be their advisor and assist them in future proofing their business. Rather than focusing on the fear of what-if scenarios, you can help your clients create plans to mitigate any unexpected challenges or even jump on future opportunitiesBusiness forecasting that may arise. After all, a recession is not only a place for problems but also a time for innovation. That’s why many businesses end up making money during a recession rather than losing it.

While that may not be the case for all of your clients, you can still send them down a path for future success. In this article, I will teach you the basics of creating an action plan for your clients and how you can be their trusted advisor through these turbulent times.

Stay Calm, Don’t Panic

As your client’s advisor, you need to guide them away from panicking and making hasty decisions. When the word “recession” begins to circulate, your clients may be tempted to make rash decisions. Don’t let them do this! Instead, your job is to help your clients plan for what is to come ahead. Below I will explain how to help your clients plan for what is to come.

Business cycles are normal. As a CPA, you know that peaks, recessions, troughs, and expansions are all parts of the economic cycle and owning a business. Helping your clients to see that a rebound is inevitable will qualm some of their unease.

Start Now, Create a Dynamic Forecast

To help your clients future-proof their business, you can begin by helping them be intentional about planning for their goals. Talk to your clients and gain perspective on what your client’s long-term goals are. Dive deep into their product line and how they sell their products. From there, you can understand how to help your clients meet their goals despite economic downturns based on their current business practices.

To meet future goals, your clients may need to make some changes. Altering product offerings, sales tactics, profit margins, marketing strategies, employee structures, and more may be necessary to change course. Creating a dynamic forecast can help clients run through scenarios and determine exactly what needs to be done to reach these goals. Help your clients create a dynamic forecast that is built and maintained using financial and non-financial key performance indicators that drive the success of their business.

Elements of Building a Dynamic Forecast


Understand your client’s long-term strategic plan.

The first step in creating a dynamic forecast is understanding your client’s long-term strategic plan. A dynamic forecast is based off this plan, and without one, the forecast won’t be very useful to your client or yourself, as their advisor. To gain an idea of your client’s goals, we have a few questions for you to ask them. What are your business and personal goals? Why do you have these goals? When do you want to hit these goals?

Once you understand the answers to these questions, you will understand where your clients are headed, and how they plan to get there. You can also begin to gain perspective on what financial and non-financial indicators need to be included in the dynamic forecast.

Learn how your clients make money.

This is an important part of the dynamic forecasting puzzle. Discovering how your clients make money will help them and your team determine what levers they can pull to change business trajectory if and when they need to. When learning how your clients make money, be sure you ask them the following questions: What do they sell? Who do they sell it to? How much do they sell it for? How does it get sold?

Learning the sales cycle for each product line will help you forecast accurately. It can also help you discover where efficiencies or improvements may need to be made within the sales cycle to improve profit margins.

Determine costs.

The next key step in drafting a forecast is determining costs. Some costs are fixed. These fixed costs are likely administrative and facility expenses. On the other hand, some costs aren’t fixed. One example of variable costs might be software, payroll, and benefits.

There may be many unnecessary costs eating at your client’s profit margin, which in times of economic difficulty, is less than ideal. A cost that might have been overlooked before needs to come into the light now and be cut if necessary. I don’t know how many times a client has been paying for a software that they forgot about and realize months later that this expense has ultimately decreased their profitability. These small expenses can add up to a large chunk of change and stunt client growth and movement towards business goals.

Create meaningful financial and non-financial drivers.

Now is your chance to review the forecast you’ve created with your client and showcase the knowledge you’ve gained. The advising can finally begin. However, there is something you need to consider first. When going through your client’s dynamic forecast, it’s important to speak in terms your clients will understand. If you tell your client that they need to reach a certain revenue number, they may have no idea what they need to do to reach it. When you use the terms they use very day like units sold, services delivered, hourly rates charged, this common language will lead to understanding and accountability.   When you tie results to non-financial indicators, they will more easily grasp what you are trying to tell them.

Playout Scenarios and See How They Would Impact Their Business

Next, you can play out scenarios using financial modeling and see how certain situations might impact your client’s business. A few common scenarios include increasing cost, loss of revenue, winning a big deal and longer time to close sales. By playing out these scenarios, your clients can begin laying plans to mitigate risks to their business. Your clients will feel much better if they have a solid plan in front of them and have a few choices to pick from rather than waiting until the impact happens.

Improve Inefficiencies

Another tactic for future proofing your client’s business is improving inefficiencies. There are a variety of inefficiencies that might be causing them a loss on their bottom line. Now is the time to support them in working on any of these problem areas.

One of the most common inefficiencies is a long accounts receivable timeline. Many companies have an AR timeline of 60 days. During times of recession or economic downturn, customers may try to push your clients to allow longer processing times. Those 60 days may turn into 70 or 80. During times of economic upheaval, having a payment span this long can negatively impact cashflow and liquidity. Creating a payment policy can make this problem go away.

Suggesting your clients decrease their average sales cycle can also improve cash flow. A tactic for doing so might be running a promotion for a 5% discount for anyone who purchases a product or service in the next week.

One last way of decreasing inefficiencies is by helping your clients to trim the fat. “Fat” is any resource that is unused or “wants” that aren’t required for business operation. Often, “fat” takes the form of unused, forgotten software. However, this might also show up in the form of premature hiring or wasted office space.

Help Your Clients Get a Handle on Their Finances

It is best for your clients to have a handle on their personal finances, especially when headed into a potential recession. Banks will often look into owners’ personal finances to determine if they are qualified for a loan. If a loan is necessary, waiting until a recession hits to clean up finances will make it harder to obtain one.

Beyond personal finances, it is best for your clients to have 10%-30% of their business revenue in a cash reserve. This reserve helps your clients weather an economic storm or can also be helpful to take advantage of certain situations such as purchasing equipment.

Your clients will also want to make their money liquid to improve cash flow. You may suggest that your clients avoid large purchases and open a line of credit if they don’t have one already. Whether it is used or not, having a line of credit easily accessible can help businesses wait out recessions until an upturn begins.

Keep Pace of What Is Happening in Your Customers’ Industries

Knowing what is happening in your client’s business helps you be an even better advisor. Your clients look to you for guidance and being aware of what is trending in their industry can help you guide them in better directions. You can pull from knowledge gained from other client stories, LinkedIn groups, networking groups, and much more. There is a wealth of knowledge at your fingertips that can be used to better inform your clients.

Bringing It All Together

When your clients need help future proofing their business, use this action plan as a way to better prepare them for what may be ahead. Whether an obstacle is in their way or they are ready for a great opportunity, you need to help them reach their end goals. First, make sure they don’t panic. Cash is king and can help your clients get where they want to be. Assist them in building a dynamic forecast with a plan to reach each of their goals. Aid them in playing out scenarios and the impact they may have on their business. Then, help your clients reduce inefficiencies that may be in the way of their success. Finally, your client will need to get a handle on their finances so they can take the steps they need to reach their future destination. As their advisor, guide them through these processes and be the lending hand they need.

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