Momentum Podcast: 458
Accountants Are Terrible Advisers
by Alex Charfen
One of the hardest things for people like you and I to do, is to reach out and ask for help. When you do finally ask, I want you to ask the right person, for the right kind of help.Accountants are terrible business advisers, they are not a place to ask for help. Now, you may think your accountant is the exception to the rule, they may be the one in a million, but I don’t believe it. We’re currently in that March/April time frame where a lot of people are getting in contact with their business accountants and for some reason entrepreneurs seem to have this bad habit of taking business advice from their accountants. I want you to think long and hard before you take any advice other than bookkeeping and financials from your accountant.
Full Audio Transcript
Alex Charfen: I'm Alex Charfen and this is the Momentum podcast, made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will.
Alex Charfen: We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution. And we always will be. So in this podcast, I want to share with you why you should not go to your accountant for business advice. Now, I'm going to make a lot of generalized statements about accountants and about the type of advice they give and the challenges that I've seen. And I want you to know your accountant may be the exception.
Alex Charfen: You may have the one in a million account and that is the opposite of everything I'm going to share on this podcast. But I want you to know I don't believe it. And I'm thinking that you're probably have an accountant like everybody else does. And the reason I'm doing this podcast is, because we're in that March, April timeframe where a lot of people start talking to their business accountants and for some reason entrepreneurs have this habit of taking advice, business advice from accountants and the reason I'm sharing this with you is, because I want you to think not once, not twice, but 20 or 30 times before you take any advice other than bookkeeping, or financials from your accountant, or a bookkeeping company. Here's why, I see this all the time in our coaching practice. I see this all the time working with small business owners. They need advice, they want input from somebody and they ask for the person closest to them that they think is a professional.
Alex Charfen: And often that person would be either an accountant or an attorney and in both cases you are asking the wrong person for business advice, because the challenge with being an accountant is that they know how to do accounting. Now, the active accounting has very little to do with running a business. Let's be honest. Here's what accounting is, it's add season takeaways and it's putting the books together in the right way so that you can see what happened mathematically within a business. That qualifies an accountant to give you advice about the mathematics of your business only, about what's going on financially in the business only, but if they're going to give you advice on a business model, or how to run your business, or how to spend your money, or any of those other things, you should run 90% of the time. Now again, are there exceptions out there? Yes. That's why I said 90% of the time.
Alex Charfen: The reality is, is most accountants are not really the great business owners. In fact, when you look at most accounts or bookkeepers, they don't run significant businesses of any size. So here's what I want you to think from when it comes to accountants. Accountants should give you advice about finance only, about your numbers only, about where numbers are in your business only. Other than that, you shouldn't take advice from accounts. Here's why. Bad advice, it doesn't matter who it's from, it's going to cost you. Bad advice takes a long time to figure out you got bad advice. Here's the issue, in business when you start taking time or when you take advice from the wrong person, you put it into your business, you don't get an immediate result. It may take weeks, months, or even years to know that you put the wrong process, the wrong systems, you took the wrong advice and put it into your business.
Alex Charfen: I don't want you to do that and the challenge with accountants is in general, they give terrible advice. Like, and a piece of advice that accountants give in November, December of every year is, "Hey, we're getting to the end of the year. Is there any money you need to spend? We need to spend money to bring your tax bill down." That is ridiculous. What accounts are doing in that case is they're telling you to spend a dollar to return 38 cents if you're at the maximum tax bracket. That's literally what the math is. You're going to spend a dollar to return 38 cents. If you do that all day long, you're going to go out of business. It doesn't make sense to do it. The money you should spend at the end of the year is the money you have to spend anyway and what you're really doing is just pulling forward taxes that would be in the next year anyway. So there's this constant like stream of bad advice from accountants that I want you to avoid.
Alex Charfen: Also, when you have advisors in your business, like a lawyer or an accountant, keep them in their lane. Take legal advice from your lawyer, take accounting advice from your accountant. Don't let either one of them give you business advice. They don't understand. Chances are your lawyer doesn't run a big business either, and if your accounting is running a normal accounting practice, you've probably already grown past them if you've hired them. So stop taking advice from people who aren't even as far ahead as you are. And three, look at your advisers background. Most accountants don't have a team. Most accountants haven't really built a real business, most accountants might have a small back office. The reality is they don't have the experience. They don't have the real world knowledge to be giving you advice on what decisions you should be making in your business. I bring this up because again, I watch it all the time.
Alex Charfen: An entrepreneur has an idea in their business, they talk to their accountant about it. Their accountant doesn't have a clue about business or anything else and they'll say, "Sure, it's a great idea." And even though it's terrible, because they've gotten some type of confirmation to go ahead and do it. I want you to avoid this massive pitfall of working with accountants. Don't take their advice. There's something odd about this whole dynamic, because accountants shouldn't be giving advice other than finance, but there's something about accountants that like in my observation, they actually like to overshare. They actually like to give advice they shouldn't be giving. I don't know if it's that they want to provide value. I don't know if it's that they want to step over the line of where they really should be, but keep them in their lane because they can hurt you if you don't.
Alex Charfen: So here's what I want you to think about when it comes to dealing with your accountant. Number one, good accountants should provide you with accurate bookkeeping and accurate books, and help you pay your taxes in a way that's not going to get you in trouble. Minimize your tax liability and pay every penny in taxes that you need to. That's it. Other than that, they shouldn't advise you on your business plan or your structure or you're hiring or who works with you or anything else, because chances are they don't have the experience, the knowledge, the understanding or the ability to give you that advice, keep them in their lane. But another reason, bad advice, like I said earlier, it takes a while to realize you might be putting bad advice in place. Moving that process forward, trying to make it work. And then you finally realize you've gone in the wrong direction. Increase your chances of getting good advice by asking the right person for the right stuff.
Alex Charfen: And then the last thing I want you to know about this is that the right advisor experience and results for your needs is exactly what you need to consider. Are you talking to someone who's done what you're trying to do? You know, one of the reasons I get so defensive about this is that I help entrepreneurs grow and scale their businesses. We help them with strategic planning. We help entrepreneurs create a communication system within their business, build out leadership teams, build out executive teams, build organizations, build empires. That is what we do and when we have to compete with that advice that an accounting is giving, it's excruciating, because we know we're competing with inexperience, unqualified advice from somebody who is an accountant and doesn't really have the right, or the ability to give advice on anything else.
Alex Charfen: We watched this all the time, so ask yourself, am I asking someone who actually has done what I'm trying to do? Am I asking someone who has real world knowledge of what I'm trying to do? Am I asking someone who actually has the ability to answer these questions? In most cases outside of finance or accounting, if you're asking your accountant, you're in the wrong place. So I want you, this is why this is so important to me. I want you to stay away from bad advice. And one of the biggest challenges that I've seen with accountants, and again, this is generalizing, are there exceptions? Of course there is, but in general, accountants will answer questions that they don't really have answers to. Accountants will try and give you advice because they're trying to be the advisor that you've hired them to be. And so if you ask them the wrong question, don't expect that they're going to say, I don't know. They might just tell you what they think and what they think isn't going to be good enough for you.
Alex Charfen: You need real advice from somebody who's experienced, who knows what they're doing, who's been there and who's done it. And so, you're getting advice that actually has a background to it, actually has a reason that it's there, actually is backed up by something other than just an opinion. Now, this might sound like this entire podcast I've spent just beating up on accountants and you know what? Honestly, I have, because in the last 20 years of working with entrepreneurs, I've seen more bad decisions and mistakes made in businesses from accountant's advice, than from any other type of advisors advice other than attorneys. Accountants and attorneys are notorious for bad business advice. The challenges entrepreneurs don't do that. They look like a person in it or don't know that, they look like a person in position of authority. You're paying them for their advice anyway, and so it spills over out of finance, out of legal, and suddenly you're getting a business advice from somebody who really isn't qualified to give it.
Alex Charfen: I want your business to grow. I want you to be safe and I want you and your team to succeed. So get advice from the right people. And if you're trying to grow and scale a business, get advice from somebody who's actually grown and scaled a business. Somebody who's helped others grow and scale a business, someone who has a proven track record of being able to give that type of advice and having people be successful with it in different types of industries, so that you know if you go and do those things, you're going to succeed. And if you're trying to grow and scale your business and you're considering options and alternatives right now, then reach out to us. Let us show you how we can help.
Alex Charfen: If you want help on how to build a strategic plan, have everyone on your team know exactly where you're going. Communicate in a way that your projects and what you're trying to get done actually gets done, and you move forward with momentum, give us a try. Go to billionairecode.com and fill out the application on the page. You'll get a chance to set up a call with a member of my team, book a momentum session, and we will go through where you want your business to go, where you are now, and we'll help you identify what's in the way of getting there and build a plan to move forward. We're excited to hear from you. Go to billionairecode.com, fill out the application and don't take bad advice from the wrong people.