As a small business owner myself, I realize how tough it can be to spend time working on the long-term planning required for long-term success. Most of us spend much of our day putting out short-term fires, like employee issues, customer requests, vendor disputes and more. Planning seems like one of those things that we get to when we get to. And often, we don’t.

But it’s not just the short-term distractions that can keep us from planning properly. It’s also the very nature of business reporting. Unless you are more sophisticated than most, the most extensive planning you’ve done is putting together next year’s budget. And that is usually done in December of the previous year, so you may have a 13-month plan, at best. In terms of results, most likely the best you have is an income statement that measures monthly/quarterly/yearly profit. Your scorecard is the bottom line on your income statement and the cash in your bank account.

When these are the only means you have to keep score, your mindset naturally becomes one of trying to maximize short-term profit and cash. When meeting with a new prospect and discussing strategy, one question I often get is “Can you show me where to cut costs?” This is natural, because cutting costs will help increase your short-term profit and your short-term cash. Obviously those are good things, but are you doing it at the expense of long-term goals? And by long term, I mean projects that will take five to 10 years to pay off. Things such as new offerings, new territories, entirely new markets. As a business owner, you can’t trip over pennies on your way to dollars. I can’t remember who said that first, but the quote is one that holds true for all of us.

So why is a CPA talking about strategy and long-term goals? Let’s face it, accountants don’t have a reputation for being great strategic thinkers. We’re the bean counters that bug you for a receipt to document your business meal, not the consultants who help you craft a five-year strategic plan. And we have no one to blame but ourselves for this image.

However, we as accountants are in a unique position to help business owners develop strategies to grow and prosper. Consider this observation from Clayton M. Christensen and Derek van Bever from a recent article in the Harvard Business Review:

“Finance is taught independently in most business schools. Strategy is taught independently, too – as if strategy could be conceived and implemented without finance. The reality is that finance will eat strategy for breakfast any day – financial logic will overwhelm strategic imperatives – unless we can develop approaches and models that allow each discipline to bring its best attributes to cooperative investment decision making.”

I was struck by this assertion right away, because what the authors are describing is the crux of what we do for the business owners we work with. Unless a business owner is actively working to align a company’s financial and strategic initiatives, the financial pressures of today will always outweigh strategic desires. Achieving alignment starts with understanding where you are financially and then figuring out where you are trying to go. Obviously, your accounting department should be in charge of this effort by providing accurate and timely financial statements, budget-to-actual comparisons, sales reports, employee scorecards, et cetera. Once you have that, a strategy can be developed to accomplish your goals, and your CFO should play a major role in developing and executing that strategy.

Of course, some businesses don’t have the people or resources to tackle strategic planning because they lack a designated CFO or a deep accounting department. Or they might want the advice, insight and observations that an outsider can bring. We enjoy the challenge of helping small businesses look beyond the day-to-day so that they can plan for the long-term. If you’re ready to start the process, give us a call. We’d love to help.

Robert J. Rickert CPA, PC provides consulting, accounting and planning services. They manage accounting and finance departments for businesses from $1-$50 million in revenue to provide increased cash flow, more profit, and strategies for long-term growth. For more information, visit rickertcpa.com, call 910-319-9127 or email [email protected].