A tale of two incompetents-The Oscars

I’ve told this to many of my clients and potential clients, but I’ve never had a “public” example to refer to. Just because you work for a big 4 Accounting firm or large Fortune 500 company does not mean you are competent. Throughout my career in private accounting where I’ve worked at some large companies, there was never a shortage of ill-qualified managers or so-called experts. Instead when I pulled back the covers on their ascent to these roles, more often than not there were social or organizational connections that helped them attain these posts.

I also found that Managers that were appointed based on their connections instead of their merit, tended to propagate the pattern. They would hire subordinates that posed no threat to their dominance in the company or more specifically their department. It would make these Managers seem all-knowing and indispensable by their own doing.

We need to get back to hiring the best people period. Forget about equal opportunity or quotas Mr. Trudeau, these just create tensions among those that are much more qualified and have more experience.

As for the two Accountants who didn’t do the one job they were hired for, please resign from your position and go back to your cubicles where you belong, not the corner office. You embarrass the rest of us.

Rick Barbosa

 

 

 

 

Why I’m pulling the plug on Social Media advertising

Referrals

 

Like any other business I have to balance the need for attracting new clients with our ability to service existing ones. I don’t like to overextend my resources to sacrifice service to long-standing clients. During the past year I actively pursued adding 2-3 more clients and possibly adding staff to handle them. You may ask yourself only 2 or 3? The reason for such a conservative goal is that each client is different and can  eat up a lot of support time either on the phone or in person. I like to over deliver and under promise to keep satisfaction levels high. Besides tax season, the past 10 years has seen a new client added about every 18 months, and I’m ok with that. Most of these add-ons were from tax work that progressed into part-time accounts and some even full-time.

Fast forward to 2015. I started advertising on Twitter, Bing, and Google with a modest yet effective budget designed to deliver new leads. What I experienced from SEO, Display and Search ads was a lot of noise and window shopping.  The new clients that I did add were from the QuickBooks Partner program which is free and another referral which was from some previous tax work done in the past. So taking my own example and data into consideration, I’ve decided to end my experiment. All the time and effort I put into designing ads, managing different platforms, choosing keywords and ad text, can now be spent on my current clientele. I’ll probably wind up spending more time with my family and get  more referrals as a result.

Bottom line is don’t believe the hype. Be your own judge and make sure the cost/benefit is in your favour, not Google’s, Instagram’s, Twitter’s or Facebook’s.

Likes are not sales nor leads.

‘Till next time

Rick

 

 

What are the signs you need a new Accountant?

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Accountants like other professionals are subject to regulations and ethical behaviour when practicing. But what separates “average accountants” from “Great Accountants”? Surprisingly it’s not the level of their education or which firm they work for, but it’s how they relate to you, their client.

A Great Accountant will bring the following elements to the table:

  1. Trust (without it there is nothing else!)
  2. Establish Goals and Timelines
  3. Straightforward advice
  4. Timely and on-going communication
  5. Progress reviews and client feedback
  6. Updates on pending changes to the Tax Act or Legislation
  7. Market trends
  8. Competitive research
  9. Proactive opportunities for growth or expansion
  10. Estate or Succession planning

If your not getting what you bargained for then it maybe time to start looking for another firm or person that can offer you more than just “doing the books”.

 

‘Till Next Time

Rick Barbosa

Small Business Excellence: Profits over Sales

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Growing a business can be difficult, especially if your business is price sensitive. Many a competitor will try to undercut prices and take a loss in the hopes of winning customers. This “loss leader” strategy works against them in the future as they try to re-coup losses by raising prices anyway. Consumers and clients who play this never ending game are not ones that you want to attract and do business with.

Focusing your attention on maximizing profits based on sustainable relationships is key to enabling moderate and realistic growth well into the future. Top line sales numbers grab attention, but it is profitability that pays the bills and provides cash flow to sustain your operation. I often ask owners and managers what would they rather have, 5 clients and good profitability or 500 clients and breaking even?

We must remember why we got into business in the first place, to make money. If you are working like a dog just to turn a small profit, then your time would be better spent on investing the capital you have in your business.  A good rule of thumb is 7-10% profit before tax. The rate of inflation is roughly 2% and the market historically returns 5-7% per year. If you are not making more than the market + inflation then you need to consider changing your focus or staying in business altogether.

The Discipline of Profit needs to be engrained in every relationship and in every process that is present in your operation. Without that discipline, that focus, you are just turning money over and not improving your life and the lives of those that depend on you and your company.

Till next time

 

Rick Barbosa

 

 

 

Get your “Shoebox” in order to save money

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Tax time is almost here and now is as good a time as any to get your “stuff” in order to lower your tax bill with your accountant.  The awful truth is that most accountants don’t care about how organized you are because they can use your lack of preparedness to increase the amount they bill you. I can’t do that. My job is to educate and advise my client’s. Part of that advice includes how to organize your finances to :

  1. Understand them
  2. Lower your year end tax bill

Once client`s understand that the more work that I need to do translates into the more they pay, then they usually change their habits. Although, truth be told, there are some that  accept this and are OK with a higher bill.

How to get prepared

  1. Make sure you wait to get all your T4`s, T5`s, T3`s , and RRSP slips. This cuts down on filing amended returns.
  2. Find all relevant receipts (hopefully they are easy to get at) if not there are usually on-line records that you can access
  3. Sort by type of receipt (Medical, travel, meals, donations, vehicle, entertainment, cell phone, etc.)
  4. Add all receipts up with a calculator (buy a calculator with a print feature) then print tab and circle total amount
  5. Paper clip or bind these receipts with tab on top
  6. Present them in one docket or file to your accountant

This eliminates 80% of what accountants do. From here, the accountant should spot check and verify amounts for eligibility and weed out duplicates. This should result in your accountant lowering your tax bill. If it doesn`t then you need to ask yourself if  you are using the right accountant.

Hope this helps,

 

Your friend,

 

Rick Barbosa

Morality and Business-Why your business needs strong Moral values

Full disclosure, I am Catholic, but this will not be a sermon or call to convert. I have the greatest respect for all religions that have a strong ethical and principled basis. Being involved in the business world I have come across many situations that were difficult for me personally as well as spiritually. I often had to carry out restructuring initiatives and projects that would “make us more competitive” only to see the lasting and damaging impacts on the communities and families in the area. When I first started out, I did not question or dig into the rationale or true cost of many of these decisions. Whether it was my naïve mindset at the time, or just my desire to drink the cool-aid and not rock the boat to keep my job, I wasn’t sure.

With age comes wisdom and the confidence to start asking questions. My Brother-in-Law was studying philosophy at the time when we were discussing the turmoil in Europe and America. He pointed out that no country or business is an island. What we do for the “good” of the business impacts everyone and has a profound impact on the rest of society. This is especially true today in the interconnected world we live in. Greed and the ever mounting pressure on companies to grow their businesses at any cost and at unreasonable and unsustainable metrics, has led to the turmoil we see today.  The great surge in outsourcing in the 90’s has led the U.S Economy to be primarily a buyer of goods, rather than a maker. The enormous displacement of workers has left cities, people and countries reeling in the aftermath.  Those very companies became hated,  former employees and vendors negatively impacted the very brand image and products that were being made by them. Some were vilified to the point of closing and never opening again. The “smart guys” are not always so smart.

What is the real cost of saving 50 cents per piece or increasing your margins by 5%, when the outcome could be unsafe product or terrible customer service that will impact the very people you displaced? I am not suggesting that we all become tree-hugging socialists and don’t make any money or reward ourselves for the risks we take. I am simply advocating that we take into account all parties including employees, customers and our communities at large when we make business decisions. These qualitative numbers are often the most overlooked numbers when analyzing business decisions. Great accountants take these into consideration as well.

Remember, what goes around comes around!

Your friend,

Rick Barbosa

Unfortunately, the trend is not our friend-The awful truth

Many potential clients start a conversation with me  like this, ” My last accountant/bookkeeper didn’t know a damn thing and was never available.” My first question usually is where did you find them? 9 times out of 10 it was a referral from a family friend or someone they knew. The other question is how much are you paying them? This is where the conversation takes an awkward turn. When they realize they never took the time or effort to look at what they needed and skill set required , coupled with their unwillingness to pay more than a basic wage, then they usually get what they pay for.

Most small business bookkeepers tend to be glorified data entry clerks that know how to work a program. Accountants are professionals who dig deeper, prepare adequate and detailed documentation, and make sure the books are balanced and make sense. Many times the awful truth is that business owners don’t want someone who knows or is willing to enforce  ASPE/US GAAP/IFRS and CRA rulings. So they hire a bookkeeper who doesn’t ask questions. Little does that bookkeeper know that any information that is not in compliance with CRA policy gets linked to them and recorded in CRA’s database for follow up.

The moral of the story is, make sure you find the right accountant. They may cost more, but in the end they will do a better job and let you sleep at night.

 

Your Friend,

Rick Barbosa