Expert Accounting can discern and address a range of common issues that are needlessly draining dealers’ coffers.
By Alan Wolf, YSN
Independent retailers by their very nature wear a multitude of hats. Merchant one minute, salesperson the next, and always the ultimate manager of their staff and stores.
Unlike big-box retail chains, most small business owners in MEGA Group, AVB’s Canadian cousin, don’t have the luxury of in-house departments to handle the many functions that go with running a dealership. As a result, juggling multiple duties, especially back-office tasks, takes time away from their core focus of buying and selling furniture and appliances.
What’s more, taking on a critical area that’s outside their core competency — like accounting — can have an adverse effect on their business. And while some MEGA members may employ an accountant or bookkeeper to mind the ledger, that individual might take ill, go on holiday, leave the business, or could be limited in the scope of financial advice they can provide a store owner, leaving considerable money on the table.
To help address the situation, MEGA formed Expert Accounting, a professional service that puts dealers on equal footing with the financial departments of their big-box competitors. Led by General Manager Ron Muller, himself a former furniture and appliance retailer, and Accountant Jason Good, a longtime business owner and retail comptroller, Expert Accounting acts as a full-time financial advisor. The team is available around-the-clock to provide accurate and timely financial reporting that runs the gamut from monthly profit & loss statements and year-end tallies, to payroll processing, rebate submissions and accounts payable reports. And all for a competitive fee that’s comparable to the cost of a full-time staffer.
The Expert Accounting team of, from left, Jason Good, Ron Muller and Katlin Hallberg.
“Expert Accounting was born out of necessity,” Muller said, citing a contingent of MEGA members that were in need of the service. “The majority of our clients appreciate the need for financial reporting but either don’t understand it or are unable to read and evaluate it.”
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Indeed, for many clients Expert Accounting’s most important role extends well beyond bookkeeper to that of consultant, mentor, comptroller and advisor. Through in-depth analyses of their operations and regular line-by-line reviews of their balance sheets, the team can discern and address a range of common issues that are draining dealers’ coffers and costing them big dollars.
As Good noted, Expert Accounting increases the profitability of its clients by an average of 2 percent – which for a $2 million business equates to a $40,000 boost to the bottom line. And in once instance, the team helped a client realize a $17,000 payday by taking advantage of early payment discounts from MEGA and its vendors.
“Many owners are preoccupied with the day-to-day and don’t have the 30,000-foot view of the situation that we have,” Muller said.
Added Good, “We’re tuned into the small-business mindset. We’ve been there and know all the ups and the downs.”
Some of the biggest problems uncovered by Expert Accounting include excessive inventory, overspending on advertising, lofty account receivables, high credit-card fees, and a sales staff whose size and/or commissions are simply too big for the revenue that’s coming in.
“Whether to take advantage of promotions or strictly out of habit, many clients are over-inventoried in major appliances, which handicaps cash flow,” Good observed. “We put them on our open-to-buy program, give them a budget based on their turns, and can get it down to the number of washers they need to keep on the floor. We’ve had success with all our clients who reduced their inventory and brought it down to a size they can handle.”
A more difficult area to address is overhead. “We examine the cost of employees as a percentage of sales,” Good continued. “We ask our clients, ‘Are your people performing as they should? Is it time for a change?’ It’s a tough call for a small, family-run business if they have to downsize, but if they’re bleeding, we have to give them our recommendation. Ultimately we want them to succeed.”
Expert Accounting’s business acumen also extends to succession planning, a growing challenge as the independent channel ages. In one instance, Muller recalled, a husband-and-wife team had been running a successful business and were ready to retire. “Their sons were working in the warehouse and were willing to carry on the business,” he said. “But their dad realized his accounting abilities were inadequate to assist the boys through the transition.”
Enter Expert Accounting. “We got involved as mentors and helped them through the process,” Muller said.
Clients vary in size from $500,000 to nearly $7 million in annual revenue, although the target range is between $2.5 and $3 million. The service generally begins with an in-store evaluation, after which Expert Accounting plugs into a business’s accounting software or can transition it to MEGA’s own point-of-sale system. The team receives invoices and vendor records, and may pull bank statements and can examine their payroll. This is followed by phone calls or additional in-store visits, where probing questions are asked to gain a complete understanding of the business and perform a comprehensive cost analysis.
“Shortcomings are often procedural, so we ask how they handle various processes,” Muller explained.
The Expert Accounting team can usually develop a game plan and provide a quote (based on the size of the business) in less than one month, although the timetable can be sped up for emergencies. “Many of clients come to us scrambling and in a panic after losing their accountant,” Good said.
The service, now entering its seventh year, has a loyal client base of a dozen dealers, who have all benefitted from Expert Accounting’s operational rigor and in-depth familiarity with the appliance, furniture and consumer tech industries.
“We save them money and also time, which frees them up to serve their customers,” Muller said.
Added Good, “We make it very easy for dealers who don’t understand accounting principles. We set goals and implement a plan. It’s a simple process.”
And one that has paid off in spades for Expert Accounting’s clients.
Mega Group is an affiliate of YSN publisher AVB Inc.