CPA James Heyward tells the story of how his experience as a DJ running a vinyl record store taught him to take a more personal, holistic approach to being an accountant for small businesses.
When I tell the story of how someone with a bachelor's degree in Sociology became a CPA, I usually refer back to my first client - ME. I started my first business while still in school as a DJ on campus, which in turn helped me launch a campus radio show, a promotion company and a record store.
I started Madd Waxx Records to sell vinyl records to DJs in the area; we had a niche, name recognition and plenty of enthusiasm. The store did well for its first few years, but eventually technology began to change and business began to dwindle. As the son of an accountant, I started spending time in QuickBooks reviewing our numbers to try to get a picture of what was happening. Over time, I found myself becoming more interested in the QuickBooks file than in managing the store. Sales were declining, but I could see the end coming because of how well I knew the financial workings of the business.
It became clear to me that I was either going to have to close the store or acquire and then expend a massive amount of capital to keep it open. After closing on my first house, I decided that I needed a more stable career and less debt to manage, so I took my father's advice and began the process of becoming a CPA.
I carried the Madd Waxx experience with me through the CPA training and certification process. As I learned more about accounting, I realized that I could have used my own services while the store was still open. When I opened Madd Waxx, I didn't do so with a good financial business planin place. I knew that the concept would work, but I never mapped out any financial goals or milestones to reach. I never set a sales goal, I didn't plan initial inventory levels - basically, I never looked at my store as an enterprise.
More Than Just a 'Numbers Guy'
The decisions I made were short-term decisions that ensured the survival of the store, rather than laying the groundwork for success and a profitable future exit. Recognizing that my business's financial problems weren't purely financial helped me determine that I didn't want to be just a "numbers guy" for my future clients. Instead, I wanted combine my business experience with my academic training to help business owners navigate the sometimes choppy waters of entrepreneurship.
The mistakes I made with my business are ones that I still see with some of my clients, particularly short-term thinking and a tendency to ignore financial matters until there's a problem.
When new business clients contact me for a consultation, many of them express embarrassment about not having a good set of books, not filing taxes by the due date, or not responding to IRS notices in a timely manner.
At the onset of our consultation, the conversation can become overwhelming because, after all, these are people people who were able to devise and execute a plan to start a company. Now they are facing hardship or the prospect of failure because of accounting, and they can be too stubborn to admit an error or too overwhelmed to takes steps to "right the ship".
Enter the "trusted advisor." The term has become something of a catchphrase as accountants and CPAs look to use our skills and experience to address our clients' needs in areas that extend beyond "number crunching."
At Heyward CPA, we are called upon to wear many hats, often serving as therapists, interpreters, and/or motivators for our clients.
Our firm provides the same accounting services many other firms do - we generate financials and tax returns, process payroll and represent clients before the IRS.
We also try to act as true advisors, which often starts with active listening and providing counsel. When someone panics, they have a tendency to do things impulsively or become bogged down by guilt, neither of which are conducive to problem solving.
The first thing we do for our clients is to reassure them that they are not alone in making mistakes and make sure they know that we aren't here to make moral judgements, but to help them solve problems.
Once the business person relaxes and focuses on resolution, we can explain what happened and interpret the events in a way the client understands. Understanding their problems allows business owners to create safeguards to prevent them from repeating the same mistake in the future. Clients may also gain insights that leave their business on a stronger footing, a goal shared by most entrepreneurs.
Motivating Small Business Owners
Finally, I try to motivate my small business clients. I understand how lonely running a business can be and how everyone looks to you for motivation, guidance and answers.
Many small business owners work long, hard hours surrounded by people who, while supportive, don't necessarily understand what it's like to be an entrepreneur. We try to provide that understanding while keeping business owners focused on their goals and objectives. This can take several forms, including reminding them of previous successes or helping them recognize that situations are not as bad as they seem.
Our trusted advisor approach creates wonderful business and personal relationships because the client feels like they have someone who looks at their business and sees more than a balance sheet.
It is our mission to combine consideration of our clients' financials with knowledge of their goals and their current and desired lifestyle to determine what is best and advise them accordingly. Our clients may not always follow our advice, but if that leads to an error, they know that we will be there to help them through the next challenge!