Academic journal article Journal of Accountancy

Mom-and-Pop Shops: Here Are 15 Tips on How CPAs Can Best Serve and Engage Small Business Clients

Academic journal article Journal of Accountancy

Mom-and-Pop Shops: Here Are 15 Tips on How CPAs Can Best Serve and Engage Small Business Clients

Article excerpt

America's mom-and-pop shop owners form the core of U.S. enterprise--70% of all U.S. businesses, according to the Census Bureau--and the backbone of the small and local CPA firm market. Stresses caused by the rapidity and degree of change in the business world and the culture at large are putting pressure on them and their CPAs, who must provide an ever-more-complex range of skills and service. For instance, small businesses worried about profitability may ask their accountants to help identify and control expenses or to record and measure key returns on investment. Similarly, solutions to their customer-service and getting-new-customer concerns may involve customer-relationship-management systems, forecasting and budgeting procedures or measuring marketing effectiveness. Here are 15 pointers for improving CPA service to the mom-and-pop sector and helping practitioners build business.

INNOVATION AND ATTENTION

Small businesses range from home-based publicists to beauty shops, plumbers, real estate agents, carpenters and consultants. In fact, two are hardly alike, which means there are few fail-safe predictors of small business success. CPAs can improve service to such entities--and their client base--if they follow this advice:

Tip 1: Pick the right client. Most CPAs operate as sole practitioners (call them mom or pop shops) and relate well to small businesses. Indeed, CPA firms are among the most profitable small businesses, and according to BizStats.com of Washington, D.C., 91% of them make money. Only dentists, optometrists and land surveyors are more likely to operate in the black, which indicates opportunities for CPAs seeking profitable clients, says BizStats researcher Patrick O'Rourke, CPA. In contrast, the leading money losers are commodities brokers, computer parts makers, animal breeders and sightseeing tour operators. "Hunters and trappers came in dead last--no pun intended," says O'Rourke. (See "The Safest and Riskiest Small Businesses," page 54.)

Tip 2: Listen attentively when they talk about unusual operational issues. Joe Whitley in Montrose, Colorado, has worked both sides of the CPA fence. Until a few years ago, he was a practicing CPA. Today, as the owner of a sign-painting business, he's his own client. Recently, environmental regulations required him to spend a whole day accounting for every last bucket of paint--more government compliance than he cares for. "It's a nightmare," he says of the process. However, it highlights something he wishes he'd paid more attention to when he was a practitioner: understanding small-shop rules and regulations. "I would have liked to have had this knowledge before I went into public accounting" says Whitley, who feels it would have made him a better adviser. "In practice, I didn't always listen carefully enough to clients. Small business has operational problems I never fully considered."

Tip 3: Use tough love on mom-and-pop shops that hit financial doldrums. Says Sanford Cooper, CPA, at Cooper & Co., a two-partner firm in Burlington, Massachusetts: "When faced with a prolonged downturn, a lot of small businesses turn a blind eye to the reality of losing money or a need to change their operations. We have to sit down with them and warn the owners they might not have enough to retire on--they're going to have to go back to work." (See "Solutions for Small Businesses," page 51.)

Tip 4: Bundle traditional compliance and advanced services. Cooper says demand for basic compliance services has been tailing off as clients increasingly automate. Some CPAs have compensated by offering a preset package of services in an annual plan, for which they charge fixed fees, billed monthly. These retainer-billing plans may include tax and accounting services for routine tasks within the business as well as help with "legitimate tax planning and clear development goals," says Cooper. Bundling services requires experience with the client to gauge basic service and individualized development needs, say CPAs in the field. …

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