How CPAs help clients reinvent struggling businesses during COVID-19
As the COVID-19 pandemic has changed the business environment, clients have turned to their CPAs for help keeping their businesses afloat. CPAs who offer client advisory services have been well positioned to help struggling clients stabilize and reposition their businesses. Here’s how three CPAs working with clients in heavily affected sectors have used client advisory services to enable their clients to reimagine what’s possible:
About 75% of the clients of Nick Swedberg, CPA, partner at 75-employee Boyum Barenscheer in Bloomington, Minn., are restaurants and small craft breweries in Minnesota. These types of businesses have been “some of the hardest-hit” during the pandemic shutdowns, he said. They continue to struggle even though the state had permitted some limited reopening until a recent rise in COVID-19 cases. Minnesota updated its restrictions Nov. 18 and banned any on-premises service in restaurants from Nov. 20 through Dec. 18.
To help his clients stay in business, Swedberg offered them advice on a wide variety of solutions, such as implementing to-go sales and deliveries. For planned deliveries, that meant addressing questions about the profitability and feasibility of the move, including analyses of employee compensation, car insurance, and handling tips, which are highly regulated in his state. He has been able to do that with Excel, “setting up some advanced formulas so there are just a few key metrics” he needs to adjust to test possible outcomes for different scenarios, he said.
Swedberg also helped clients approach local government leaders about obtaining temporary exemptions from regulations. For instance, some of his restaurant owner clients obtained permission from their towns to expand outdoors. One town let a restaurant take over a municipal parking lot, while another shut down its main street to allow for outdoor dining. When a brewery owner client asked the local board of health if beer delivery could be legalized, the board worked with the business to make it possible.
Swedberg assisted with this process by quantifying how the special permissions that clients were seeking could save their restaurants and their employees’ jobs, helping them to make a compelling case to local government.
As clients get more creative, Swedberg helps them work through their ideas. For example, a Mexican restaurant owner is considering turning some of his space into a market where customers can buy salsa, meats, and other ingredients that they can use to make meals at home. Another owner imagines turning his space into a home for four different types of restaurant. Are the ideas workable?
“My job is to get them to organize their thoughts, and then we can make a true financial projection” to see if the plan is viable, Swedberg said. “Remember in math when you had to turn a word problem into an equation? That’s what I do.”
Sandy Shecter, CPA, CGMA, is firmwide director of Rehmann Solutions at 900-person Rehmann, which has offices in three states. Shecter, who is located in Detroit, has among her clients physicians, dentists, and surgical centers that range in size from one physician to more than 350. Their ability to open, as well as their patient volume, was affected when the state of Michigan ordered shutdowns in March. Shecter stepped in to help clients apply for the Paycheck Protection Program and other loans or grants. Her firm also works with them to provide data and projections for decision-making on management issues, such as employee furloughs; on envisioning new ways to work with patients, such as telemedicine; and on addressing critical issues, such as cybersecurity or the full outsourcing of a client’s IT department.
Her firm also assists with a variety of outsourced services, including HR advice on cutting employee costs, technology expertise that would make telemedicine possible, and outsourced bookkeeping and accounting. “Providing these services on an outsourcing basis enables clients to adjust their usage up or down as needed,” she said.
By late September, most of Shecter’s service-related practice clients were back to nearly pre-pandemic patient levels, but she predicts lasting change. Her strategic planning with clients has covered options such as greater use of patient portals to communicate and switching to off-site locations for back-office staff.
She advises CPAs to think beyond compliance and focus on giving clients more in terms of business advice. “The pandemic has underscored the value that clients place on real-time information they can use to manage their businesses,” she said. “That’s truly critical.” Her clients, for instance, often seek her help with cash flow management, accounts receivable aging analysis, and the recalculation and monitoring of budgets.
As rental income declined during the pandemic, Brandon Hall, CPA, serving as his clients’ outsourced CFO, did real estate portfolio analyses for real estate investor clients to determine how they might improve performance. He also developed tax-minimization and cost-segregation strategies to help them enhance cash flow.
Hall, CEO of 17-employee firm The Real Estate CPA in Raleigh, N.C., builds customized dashboards for clients using Google Sheets, spreadsheets that allow for easy access and collaboration for both him and his clients. It’s possible to feed the client’s QuickBooks Online accounting data live into that dashboard. “The dashboard will track what’s important to the client,” Hall said, which is typically information on occupancy levels, budget-to-costs, rehab costs, cash income earned on a cash property investment, return on equity, and internal rate of return.
Hall, a sole practitioner, was initially worried about the economic uncertainty the pandemic caused since he had not experienced a similar disruption in his career. His business coach offered advice that he uses with his own clients and recommends for other practitioners: Create a financial plan for the coming 12 months that is split into one- to two-month tranches, and set expected financial performance metrics for each tranche. If you hit the metrics, keep doing what you’re doing. Also, decide what actions you should take if you miss your metrics by 10%, 20%, and so on. Those actions could include cutting back on staff or on identified expenses.
Just having a plan that envisions what to do in good outcomes and bad can reduce stress and improve your response to setbacks, Hall said. “You can’t control the economy, but you can control how you react to it,” he said.
While businesses struggle with the ongoing effects of the pandemic, CPAs can help by identifying clients’ needs based on their existing knowledge of their businesses. “Understand the client’s pain points, and see what you can take off their plate,” Shecter advised.
Hall likewise recommends being proactive, understanding the evolving impact that the pandemic is having, and being ready to offer or create the services clients need. “CPAs are in a great position to help clients right now,” Hall said, with so many seeking not only tax and accounting help but also overall business advice in uncertain times.
— Anita Dennis is a New Jersey-based freelance writer. To comment on this article or to suggest an idea for another article, contact Courtney Vien, a JofA senior editor, at Courtney.Vien@aicpa-cima.com.
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