When Business Owners And Service Providers Work Together, Everybody Wins
I constantly hear people talk about adding value to a business – but what does that really mean? To me, that means improving the business’ ability to be successful as defined in its mission statement. Simple enough, but how do we do that? Well, from my perspective, we can do this by taking the expertise of those around you and fitting the ideas they bring to the table into your own operation.
In construction & real estate, collaboration is a constant theme. Whether you’re a developer or a contractor, you must work with a large number of other parties to see a project through and achieve a satisfactory return for your work.
The most successful developers and contractors I know remain extremely driven and competitive, yet are transparent and fair in dealing with other parties in the food chain of a project (i.e. owners, other sub-contractors, etc.). Their projects rarely have the problems of those that act as adversaries. And when they do experience difficulty on a project or job, the outcomes are universally better. The same should hold true for your advisory partners.
Just as each contractor or developer has a particular area of expertise, so do third party advisors. As a CPAs and consultants, we have a vested interest in helping our clients be successful. Yet we continue to see some in the industry view their CPA (or bank or insurance & surety provider) as nothing more than a necessary evil to whom they have to pay a fee. If this sounds like the relationship you have your service providers, it’s probably time to move on. If your CPA, banker, insurance agent, surety provider, etc., isn’t taking the time to talk to you about your business and what they can do to help you be successful, they aren’t doing their job.
Listen to episode 56, “Keep Your Business Healthy, Conduct A Yearly Business Physical,” on unsuitable on Rea Radio, featuring Alan Hill.
Having spent nearly 30 years in accounting and finance and having been exposed to several hundred operators, I’ve picked up on the good, the bad and the ugly. Mostly because I’m fairly inquisitive by nature and enjoy learning how a contractor operates or what makes a developer embark on a particular project. I want to share a few key pieces of information that I’ve picked up over the years with you. …
As a professional in your industry, you have a lot of great expertise and experience to share. Likewise, the bank (or other financing provider) and insurance & surety provider also bring a lot of valuable knowledge and expertise to the table. Therefore, simply viewing the relationships you have with your service providers as a transaction (trading a product for a fee) is short-sighted and you’ll suffer in the long run. Instead, try this:
At least once a year, hold a joint meeting with your key third party partners – CPA, bank, insurance, surety, attorney, etc. Consider conducting it at one of their offices and, perhaps, make it a working breakfast or lunch. You’ll be amazed at the ideas and knowledge that will come out of these meetings. This type of meeting will allow each party to share their expertise in the context of helping you, their client, achieve your business goals.
For example, a technical accounting change (such as the new lease accounting guidelines) can have a significant impact on working capital – thus affecting bank covenants, surety credit, valuation, etc. During this type of meeting, you can use the knowledge of all parties to potentially re-think your operations or structure a particular deal to create a competitive advantage?
Believe me, if all parties are communicating together rather than operating in their own individual silos, everyone ends up being more efficient and more informed – thus bringing more potential value to everyone involved. Compartmentalizing your CPA, financing provider, insurance, surety, etc. creates the likelihood for miscommunication about your overall needs and goals. Most importantly, a collaborative effort brings forth the best ideas and makes for more enjoyable professional relationships.
If your providers aren’t doing this, give me a call at 614.314.5937 to discuss.
By Doug Houser, CPA, MBA, CEPA, principal & director of construction & real estate services