The transformation imperative: Innovation required

By Gary M. Bolinger, CAE

The past couple of years has presented challenges in our business and personal life that were  unimaginable not so long ago. The pandemic, social unrest and political discord all contribute to these challenges.

No one was prepared for the challenges we have faced.  Remote workers. Face to face meetings have pivoted to seemingly endless on-line meetings.  Business processes have been re-tooled on the fly to respond to environmental changes from every perspective.  We became a society of “shut-ins” dramatically altering our personal lives. Many have had to learn how to be teachers.  Supply chains have been upended.  Consumer buying habits have been altered in many ways.

We all want to get back to “normal”.  But we don’t even know what that is anymore.  As we emerge slowly from  2020 and focus on the future, some of the behaviors we have been forced to adopt will not revert to the prior “normal”.  We will be cautious in our personal and business lives.  We are concerned about what next set of events will upset our daily routine.

Your clients’ businesses and your firm will begin a transformation process to support your future success.  A significant part of that transformation process for your firm is all about a new focus on advisory services for your clients.

Clients will be experiencing PPS (Post Pandemic Stress)for some time to come.  Those clients need help beyond, PPP, lines of credit, renegotiated leases, etc. They need help beyond all that accounting “stuff”.  Many clients need help to assess objectives, redefine preferred outcomes, and generally understand the emerging landscape.  Many clients will be trying to run the same business in a totally new and strange environment.  But running the same business isn’t a reality for many.  Customers have changed.  Employees have changed.  Supply chains have been rocked. Some clients may need to redefine their business model.  We will not see a return to “normal” as it was in 2019 for a long time, if ever.

According to Deloitte (in their publication COVID-19: Accounting Considerations) “... issues impacting businesses in almost every market sector include market volatility and erosion of market value, deteriorating credit, liquidity, further increases in government intervention, increasing unemployment, broad declines in consumer discretionary spending, increasing inventory levels, reductions in production because of decreased demand and supply constraints, layoffs, and furloughs.  Businesses should also consider how recent events may affect financial reporting as this environment may require a business to convey all material current or potential effects of the COVID-19 pandemic.”

That’s a lot of “stuff." But small businesses have numerous non-accounting issues.  And that is where they need your advisory services.  Not advisory as in tax planning.  Not so much in estate planning.  These small business owners need someone to talk to.  They need guidance on issues that help them navigate out of this into the next normal.

Transformation for your clients

Clients need help in innovation.  They may need assistance in the redevelopment of business processes.  They need help in a wide variety of human resource issues(training, evaluation, SOP manuals).  Clients may need to re-evaluate their location needs (office, warehouse, manufacturing building, etc.).  They should revisit risk management and disaster planning.  Does your client need to innovate new product and/or service lines?  This list could go on.  Some items on the list may be client specific and other on the list will have broad application to all clients.

Have a conversation WITHOUT any of the accounting stuff that is top of mind for you.  Some basic questions will give you plenty of insight as to where you can help.  How does the client feel about their prospects post pandemic (or during the coming months of transition to the next normal)? Is their supply chain in good shape or does a plan need to be developed?  Has the current environment impacted their personal life?  If so, in what ways (college funding, lifestyle adjustments, etc.)  How are they feeling over-all (mental health).  This list could and should go on.  You can develop a good list of issues to talk about.

Transformation for your firm

After you have secured some of that background, it’s time to get advisory into full gear.  It’s time to develop a solid plan for the foreseeable future.  Develop a repeatable methodology for use with clients.  That methodology needs to include a series of client questions and a method to record and analyze  answers.  As you advise clients, issues to discuss could include what have you done to survive up to this time, what opportunities has this environment caused you to think about in terms of increased on-line sales (if possible)?  Are there innovations in business process that should be implemented?  Can you think of issues related to business process that could be changed?  Are there human resource issues that should be considered?

You know that many of your clients will see that their business needs to change in some way – big or small – if they hope to be successful and prepare for potential future events. And keep in mind that success in the future may need to be defined differently than it was in the past. As you go through this process, plan to institutionalize innovation and agility in your clients’ business and in your firm.  Innovation and agility need to be a core part of your culture.  Helping your client through this environment and transforming the business to the next normal will position you well for advisory services on an ongoing basis.

Gary Bolinger, CAE, is vice president of client relations for Oodles, a VSCPA Center for Innovation partner.