Minnesota attorney Aaron Hall speaks with M.P. Singh of Prudent Accountants, a “strong team of individuals with extensive education and training as Certified Public Accountants, MBAs and IRS Enrolled Agents.”
Prudent Accountants, Inc
Phone: ( 612) 605-3178
Aaron Hall: I’m Aaron Hall, business attorney in Minneapolis. I’m here with M.P. Singh, a CPA from Prudent Accountants.
What are the common frustrations that business owners have when they come to you?
M.P. Singh: Most of business owners, when they come to us, they come with the typical “so, we’re behind on our financials, and we need those for tax purposes of our bank”. Some of those will come with tax audit, they got a letter from auditors, and they need help. Sometimes they’re trying to expand their business, and they need financials for the bank. A lot of times they want to sell their business or they want to buy business, so they want our opinion. So these are typical reasons people would come to us, but as they come in, you start having the conversations, then you realize, that’s not probably the only reason they need us.
Aaron Hall: So, let’s talk about some of those problems. A business owner has never used a CPA, their financials are a mess, and all of a sudden, they get a notice they’re being audited. What do you do when you first meet with them?
M.P. Singh: Typically, what we- We start with all the facts. Let’s put everything on the table, starting with the tax returns, and see how good the records are. And then pay attention, obviously, what [unintelligibile 01:39] now. We’d look at the facts and see what exactly we need to do right away. So we keep it pretty surgical, we don’t spend too much time, you know, going around, pretty to the point. Find the problem, attack it, and give a very valuable source to clients, so.
Aaron Hall: What about the business owner who comes in with a shoebox full of receipts and says, “Help! My business is doing great but my finances are a mess.”
M.P. Singh: That happens a lot. That happens a lot. We have, actually, the- Interestingly, we have a team which has a worked from- starting from somebody who specialize in quickbooks and doing basic bookkeeping, and it goes all the way to your professional CPAs, all the way to CFOs at controlship level individuals. So, we actually look at what their need is and we build things accordingly. What they need, so where they can get value. So, it’s pretty much focused on what the client needs.
Aaron Hall: Are there any differences if a business owner comes to you and says, “I’m looking at getting a bank loan. I need financial records and reports.” Do you have any different approach with them?
M.P. Singh: Actually, not. It’s not- The approach is basically very scientific. We frame the [unintelligible] what they need, and then we have a big firm capability as to the width of the [unintelligible] and the depth of it. We have, as I mentioned, starting from quickbooks explorers to the [unintelligible] explorers to the CFO level individuals, tax level collectors, tax individuals, so we will know exactly what they need. Somebody walks in, and then, we get to the point right away.
Aaron Hall: What advice do you have for business owners?
M.P. Singh: Business owners, well, most interesting I have seen is, most are small businesses, medium business, most entrepreneurs are very good at generating revenue. They’re really good at that. And if you look at the total business activity, you can [unintelligible] into three main categories. One is revenue generation, second is profitability, or you can say the reduce of cost structure, and third is control and [unintelligible], which means keeping everything together.
So the third component, which is very critical, to keep everything together, and growing and to stay out of trouble, whether it’s with the bank or with cash flows, or with the tax compliance, you name anything, the general legal [unintelligible] requirement, control helps you there. That’s the one area where we see most of the business owners don’t see enough value to start with, and once they get a flavor of it, and that’s what we help them, I think that’s one main area.
Aaron Hall: So they can stop having that anxiety about legal compliance and taxes and-
M.P. Singh: Right.
Aaron Hall: – focus their creative energies on growing the business and more profits.
M.P. Singh: Right. Yeap. Where they’re good at.
Aaron Hall: That makes sense.
M.P. Singh: Yeap.
Aaron Hall: Is there anything else that you would like to mention for business owners?
M.P. Singh: I would recommend when, either you’re starting a business or you’re in business for time, look at some very basic things like you’re structure, [unintelligible] vs. [unintelligible]. Look at your, uh, how well you understand your business through financials, what the facts are saying than what you perceive about your business, and the facts are generally in the financials, but a lot of business owners are not able to tell a story based on that, those.
So you need a good accountant who can tell you a story based on financials, and most the- I’ve seen some small businesses, they don’t have even, cash flow statements, part of their financial statements. Without a cash flow statement, you can’t have a story where the cash is coming, where the cash is coming from and where it’s going. And, those kind of little things I would say, business have to pay some, I would say, more attention to learning some of those things, and a lot of times, they won’t be able to do it themselves, so they need to hire bright accountants who can help them get there.
Aaron Hall: So for those business owners who are generally illiterate when it comes to financial reports, you help them understand which numbers are important and how to translate that into decisions for the business.
M.P. Singh: Why, absolutely. That is all we do. We go by the storyline approach. I do not go and present, “Okay, this is your PNL, this is the balance sheet, this is your cashflow statement.”
“I tell them a story. What these financial statements are telling a story, I translate. I translate that. A lot times- Let’s say store owner who specialize in restaurants, I tell, “Okay, this is your revenue by week, and these is where we see seasonality. And this is how she’ll look like, and you have to pay attention to your food cost. In your segment, you’re not McDonald’s or you’re not TGIFriday’s. In your specific segment, this should be the food cost. You keep that target going, and this should be front of the house, this should be back of the house. Period.”
So once you have three or four measurements in place and the businessman understands it, I think 70 percent,75 percent’s taken care of.
Aaron Hall: Interesting. And then you can project that out and see how well you’re doing.
M.P. Singh: Definitely. Yes. So we had been using [unintelligible] and KPIs, key performance indicators, a storyline approach, rather than just giving them a download of the quickbooks. “Okay this is the PNL, the balance sheet.” 90 percent of them won’t be able to make any sense. When they see, ‘okay, my janitor expenses, 20 bucks’ or ‘paper I purchased is just six bucks’. I mean, that information is too much. It’s garbage in, garbage out.
So you have to tell a story that makes sense, ’cause they don’t have too much time.
Aaron Hall: Right.
M.P. Signh: So they can stay focused on the right thing, you’ll have to get from three, four, five things. “Okay, this is what you have to focus on, that’s taken care of.”
Aaron Hall: Yeah, that’s really important. Business owners are busy, they need somebody to consolidate that and say, “here’s the story”. Now they have the information to act on it.
M.P. Singh: Right.