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The Most Important Skill of a Strategic Advisor Isn’t What You Think It Is

[fa icon="calendar"] Fri, Jan 29, 2021 / by Kathy Gregory

Asking the right questions

Building your advisory practice is a journey. You may still be trying to find ways to charge for advice that you’ve been offering so far for free, or you may be selling bundled, fixed fee advisory services now. Either way, at this time, the demands being placed on you and the work that you’re doing in response, is new and unique.

As I write this there’s another tax season looming, in the midst of a very long global pandemic. There’s also another round of small business protection funding to interpret.

You know the tax code, you’ve studied the legislation, you care about your clients’ success. But are those skills enough for this work?

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The most important skill of a strategic advisor

When you think about what’s most important for small business advising, these probably come to mind:

  • Knowing small business regulations
  • Knowing the current tax code and legislation
  • Applying accounting principles correctly
  • Providing data and reporting in a timely manner
  • Making yourself available to meet

Of course the rules and codes and accounting principles matter, but in order to apply those to your advising services and successfully help your clients, you’ll need to do more.

The most important skill to hone to be a successful strategic advisor is knowing how to ask the right questions. You need to be able to dig into the minds of your clients and uncover the information that matters to build and maintain the best forecast, and ultimately move their business forward.

Uncover information that mattersTo do your work well, you’ll need to clearly represent and explain the opportunities, limitations, and goals of the business. That information is living inside the mind of the small business owner. Your number one job as an advisor is to dig it out!

You have to do more than hear your clients. You need to engage and ask questions that will uncover the right problems to solve and the nuggets that will inform the creation of a better forecast. Questions that will help move them toward their goals.

What questions should you ask your clients?

You may be wondering what these questions sound like, and how this might be different from the work you already do. It can be helpful to illustrate it in terms of an example.

Imagine your typical small business client and their business. You may know financial facts about the recent state of their business. These facts could be big things, like lower than usual profit, or dips in cash. Or they could be smaller elements, like their accounts receivable balance being higher than usual, or low revenues. You can see these on their monthly reports. You may also know certain tax implications that will affect them or modifications they can make to maximize tax savings.

All of these are important elements to be aware of so that your clients can better understand their current situation. As you know, these insights come from financial and accounting information that’s in the past. But you’ll need to move a step beyond that. To truly advise your clients, you need to build a roadmap to move them forward. And to do that you'll need to know what their expectations, goals, and initiatives are for the next week, month, year, and beyond.

Use conversation to guide your questions

You shouldn't expect to run through only a few questions with your clients and get results. You need to orient them to their results first. To do this, start with a deeper than usual conversation about their accounting and financial results — the numbers to date. From our example, this would include understanding more about what contributed to the changes in profit, and cash. What happened in their business during the last month that was different in areas related to those figures?

After you understand what happened, ask what they are doing now to change it. Then talk about next steps. What have they considered trying, what are they open to trying, what are their limitations, and how does all of that line up with their overall business goals? Dig in. Keep asking until you arrive at answers that help you build solutions — these become new objectives and financial goals.

Develop the forecast

Once you arrive at the goals part of the conversation, it’s time to turn your attention to planning ahead by forecasting. By knowing what’s going on with their business, you can interpret those elements to better craft your estimates.

Be sure to continue asking clarifying questions section by section. Start with revenue and sales, and address any questions about specific line items. The questions here are about opportunities and limitations.

  • What are their real sales possibilities?
  • What are their expense limitations and can they be pushed?
  • Are there opportunities that are not yet realized?
  • What would be too much, too little?
  • What would be beyond their capacity?
  • You can even talk about capacity, and how it affects their ability to meet goals.

Think of it like you’re painting a picture of their business, but with numbers and financial statements. The forecasted statements should tell a story. What will the projected profit be in 6, 9, 18 months? What will the projected cash and equity be?

Those elements comprise the financial story of the business. Your job as strategic advisor is to capture them, make them visible and bring them to life! And the conversations with your clients help you paint the picture.

Never stop asking questions

Be unafraid to ask questions quoteTrue “advising” is actually not in the giving of advice. It’s in the questions: your ability to listen and probe — to dig into the mess and make sense of it. And to be unafraid to keep asking your questions in new and different ways.

Your ability to get to the bottom of why something happened will help you lay out a plan to change it. But you’ll never know why until you ask, and you’ll have to ask in different ways until you arrive at an answer that can initiate change.

Small business owners are busy. They’re relying on you to guide them, and part of that guidance is in your ability to hold time and space for these conversations. It can be hard to hold their attention in the beginning but don’t be deterred. These conversations are at the core of your work. And at the end of the day, no matter how hard it can be, your clients are counting on your guidance.

Your clients don’t want just reports and data. They can’t do much with those things. They need your guidance to analyze the information and uncover why the numbers are what they are, and then explore what they can do differently to make them better.

You have the power to help them change their course, and not just survive, but thrive. The accounting profession can even change the health of the entire small business economy! And it all starts with the right questions.

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Kathy Gregory

Kathy Gregory

Kathy Gregory has over 20 years of experience in business development, including: financial forecasting, strategic planning, process development, project management, and mergers and acquisitions. She has worked in public and private, small to mid-size organizations doing business development, and strategic planning and implementation, working with executives, boards and their investors. At LivePlan Kathy runs the specialized program for Strategic Advisors. She is a graduate of the University of Oregon.

Topics: Working with Clients , Advice for Your Practice

Content, tips and best practice for accountants, CPAs and bookkeepers who offer Strategic Advising Services to small business clients.

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