Advisory services in the pandemic: A mutually beneficial right thing to do
One year ago, as we all spent the summer of 2019 at backyard barbeques among friends and family, or when we were traveling to vacation spots to see far-distant places, it was hard to imagine the world we live in today. A pandemic causing suffering around the world, including more than 600,000 deaths, has led to a massive recession felt in every corner of the world. No matter how we try, there is no escaping the losses and hardship.
As we enter the sixth month of the COVID-19 pandemic, one thing has become brutally clear: The epidemic has, at an astonishing rate, hurt small business in ways unforeseen when large swathes of the country began entering lockdowns in March. The loss of small businesses could have a devastating effect on our economy as 27.9 million small businesses employ more than 49 percent of private-sector employees, according to the Small Business Administration. What’s troubling is that a recent report by The Washington Post found that hundreds of thousands of small businesses have closed due to the pandemic.
Becoming a trusted advisor
What this has meant for the tax and accounting profession is that it’s all hands on deck to help small-business clients navigate the new economic realities and guide them through the labyrinth of government loans, changing deadlines and stimulus packages. At Thomson Reuters, we’ve seen many of our customers stepping up and becoming champions of small businesses by starting to either expand, or move into, advisory services.
Becoming a trusted advisor is key to helping their small-business clients survive. Many of these small businesses don’t have the capital or business need to justify having a full-time CFO on their staff. However, having their CPA offer advisory services enables them to reach out with questions, seek advice, and help them plan the financial aspects of their business. For many small businesses, this has been key as they are trying to keep their heads above water, prevent layoffs, and stay in business. CPAs have been there to advise them on what expenses should be made or cut, whether the client should hold off on certain investments, and to help them with longer term forecasting and decision making.
CPAs have also been at the forefront of helping small businesses navigate the Small Business Administration loans, including Paycheck Protection Program loans, that so many business owners scrambled to receive so they could keep their staff employed.
It is a mutually beneficial relationship, too. Small businesses receive the benefit of having a knowledgeable CPA act as a trusted advisor, and CPAs can access a new recurring revenue stream for their business. Instead of having a business based around the seasonality of the tax filings, firms can now realize a year-round paid relationship that will help them maintain free cash flow. This enables them to become more profitable, grow their business, and achieve their goals, whether that is growing the firm or realizing personal goals.
Most importantly, in engaging in this relationship with clients, firms are doing the right thing. Time and again, we’ve heard that small businesses are the backbone of our country. And this is 100 percent true. According to the Small Business Administration, more than 58 million Americans work in small businesses. By being there for their clients, advising them on how to navigate these times financially, CPA firms are enabling these small businesses to not only survive the economic downturn of the COVID pandemic but also helping to put them in a position of strength when the inevitable recovery commences. By having a trusted advisor there, small businesses can find ways to weather the storm, save their resources, protect jobs, and put themselves in a position to thrive.
This is our moment to help one another
Almost every industry is feeling the pain of these unprecedented times, and small businesses have been hit exceptionally hard. The tax and accounting profession is uniquely situated to help their small-business clients, and by extension support the country’s economy, on the road to recovery. When we can all get the wheels of the economy rolling again, we will find ourselves in a better place, financially and ethically. Supporting our clients in the shift to a greater focus on advisory not only helps them, but benefits the profession as whole, which is good for everyone.
As we look forward to better times ahead, we can work today to lay the groundwork that will help our clients continue to thrive when the worst of the pandemic is behind us. We can not only help small businesses recover and succeed in the years to come, but in broadening and diversifying the profession with an expansion into advisory services, we can help to ensure our success in the long run.