When to Bring in a Business Advisor

Nov 19, 2018 04:59 PM
Constributing author: RoLynne Hendricks, Partner
Originally written for and published by Progressive Dairyman

“Family quarrels are bitter things.  They don’t go according to any rules.  They’re not like aches or wounds, they’re more like splits in the skin that won’t heal because there’s not enough material.”

F. Scott Fitzgerald


A family business can provide incredible opportunity to the founding generation and to successive generations.  However, in our time consulting with family owned and operated dairies, we have seen many instances where the business irreparably damaged the family relationship.  This is truly unfortunate as this does not need to be the case.  Furthermore, study conducted by the Family Business Consulting Group shows that 30% of family businesses make it through the second generation, whereas 10-15% and 3-5% make it through the third and fourth generations, respectively.  This is a difficult statistic to deal with when so much effort has been invested in making the business successful.  By understanding when to involve a business advisor you may be able to avoid damaging conflicts and maintain the familial harmony that brings so much joy to life.   

Through our experience working with dairies, we have seen many different organizations incorporating many different management styles.  Although an advisor should be consulted in many instances, we would like to highlight two critical areas where it is imperative to retain an advisor.  These are: 1) when a generation wants or needs to either join or exit the business; and 2) when there is a lack of clarity in the organization regarding the direction the organization should go and who should be in which position of leadership.     

Multi-Generational Management

Business problems tend to begin with the founder and compound through successive generations.  Entrepreneurs are risk takers, hard workers, and exhibit a disciplined dedication to all things business.  Often times they sacrificed personal comforts, wants, and desires to become successful.  When successive generations are brought into the business, they rarely have the same emotional attachment to the business or understand what the founder has seen, tried, experienced, or suffered through.  The new generations may have ideas that, they are sure, will revolutionize the business and make it modern and more profitable, while Dad, Mom, Grandpa, or Grandma may have become cautious in order to maintain what they have shed blood, sweat, and tears over to ensure they leave a legacy for generations to come.  Although both mindsets should have a place in the organization, there needs to be mutual respect and understanding between the parties.  

Passing the Baton

When bringing in a successive generation prior to the exit of another generation, personality, education, goals, aspirations, leadership capabilities, and financial expectations should be assessed to ensure the correct individual from the successor generation is stepping in to the correct area of responsibility.  The first born does not necessarily need to or often should not lead the business.  Equally, entitlement felt by successive generations should not determine either the position held or the amount received from the business.  What is good for the business needs to come before the sensitivities of family members.  

Successful businesses have very clearly defined roles and positions for each member of the organization.  Each seat on the bus is occupied by an individual with specialized skills and personality to excel at their assigned task.  While this may seem intuitive, family operated businesses have strong forces pushing against this type of management style.  Family members may feel entitled; a parent or grandparent may want to help a struggling child or grandchild; or management may not have the resolve to tell a family member that they will either not be hired, let go, or required to change positions.  An advisor will be able to assess the personalities, skills, and education of each family member and determine where they best fit for the ongoing success of the business.  

One example is of a local bike store.  The owner had five children; three boys and two girls.  Neither of the girls were interested in owning the business, however, each of the three boys expressed interest.  The oldest son was educated as a nurse, never rode a bike unless he had to, and wanted the business for the lifestyle it could provide.  The second was an avid biker, had a relevant college education and work experience, and wanted the business for all the right reasons.    The third son was too young at the time of transition to be considered.  Thankfully, the father chose to let the second son purchase the business despite strong opposition from the oldest son and his wife.  

While this is a simple example as there was only room for one son in the business, the principle applies to all organizations.  Make sure the correct family member is in the correct seat regardless of personal desires, birth order, or other arbitrary qualification.  A business advisor will be able to approach the situation objectively and provide a business based recommendation.  

Decision Execution

Unfortunately, we have seen businesses continue to struggle after retaining an advisor due to both ineffective execution and failure to execute the plans created during the consultation.  Buying a self-help book and keeping it under your pillow hoping to improve will do absolutely nothing but give you a kink in the neck and less money to spend.  An advisor should provide ongoing consultation to ensure the business effectively implements the plan.  This will provide motivation to and demand accountability from management, helping to ensure the changes decided on are actually implemented.  Make time, set aside resources, and commit the effort to execute and implement the plan correctly, otherwise, the experience will leave you frustrated and with less money to spend.  


Clear and effective communication takes both a speaker and a listener, and each, individually, need to perform both functions.  Emma Thompson once stated: “any problem, big or small, within a family, always seems to start with bad communication.  Someone isn’t listening.”  Bringing in a business advisor provides the business the opportunity to have all opinions and viewpoints expressed.  This brings clarity to the goals and aspirations of all generations, paving the way for a comprehensive plan that will help the business operate healthily and smoothly.  This process incorporates the caution and desire to provide of the older generation with newer technologies and operational efficiencies that the newer generations want to implement.  

If a business doesn’t evolve with a changing environment, it will become stagnant and die.  However, evolving too quickly or without adequate restraint will kill a business just as quickly, if not more so.  A business adviser will be able to bring clarity to an organization by saying what needs to be said to help each generation understand what is best for the business.  Focusing efforts and resources, making sure leadership is pulling together and in the same direction, and setting forth a comprehensive plan that takes the business from the start-up, first generation stage into a sustainable business model.


Working with family is not easy, and many organizations put family sensitivities before the business, ultimately damaging both the business and the family relationships.  However, if managed correctly and guided by an outside adviser when bringing in successive generations or when clarity is needed, a family business can provide incredible fulfillment and satisfaction.  More importantly, ensuring your business has good leadership and an actionable development and succession plan that will actually be followed will help ensure your business does not become a statistic.        

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AI and Automated Bookkeeping

Oct 12, 2018 01:10 PM

When someone mentions AI, minds in the dairy business immediately think about artificial insemination. However, this article will focus on a different type of AI.  Regardless of our personal views on the issue, Artificial Intelligence (“AI”) technology is here to stay and should not be ignored.  Maintaining a competitive advantage in any industry requires that we continually look for and implement changes that will increase efficiency and decrease operating expenses.  AI arguably is, and will continue to be, at the forefront of efficiency innovation. 


One area where AI is effecting automation and operational efficiency is bookkeeping.  In this article I will be providing a general overview of the AI technology used in bookkeeping platforms, discussing the benefits of implementing automated bookkeeping technology, and how AI should change your relationship with your accountant.  The bottomline is it is time to embrace the possibilities of AI and what it can do for your business.




The AI currently in use in the accounting industry should be enthusiastically welcomed.  It is designed to automate the mundane and redundant tasks that occupy much of the time or resources of business owners that could be spent on higher value activities.  Just as the advent of automated milking machines and electronic monitoring devices have improved dairy operation, accounting AI promises similar results.  


There are currently two AI technologies of note in use in the accounting industry.  These are 1) bank feed technology, and 2) Optical Character Recognition (“OCR”). 


Bank feed technology is not new and is likely currently being used by your business.  This technology connects to a bank account through “Read-Only” access.  It permits downloading of transactional history, check images, and statements automatically rather than requiring a visit to the institution’s website to initiate a download.  To illustrate, QuickBooks users have the ability to connect bank accounts and have transaction information pulled directly into QuickBooks to be accepted and categorized.  Also, rules may be written so that reoccurring transactions are automatically classified. 


OCR scans and analyzes printed text or numbers and converts it to a form a computer can recognize and process.  This eliminates the need to retype the material in order to include it in your accounting software.  Although extremely efficient, this process is far from perfect.  At this stage of AI evolution, accountants typically verify the imported information and ensure the OCR operated correctly, fixing any mistakes they may find.  Even with this secondary human review, the cost is a fraction of employing a bookkeeper or having an accountant be the bookkeeper.  However, please remember the adage, garbage in equals garbage out.  The higher the quality of information submitted to the system, the more effective and efficient the process will be.  I.e., if a check is written without a description, or the document is in an unusual font, then a human must intervene to ensure accurate recording of the information.  While many OCR systems can handle a wide variety of fonts, it performs best when a font is one that is widely used. 


These technologies are merely two forms currently used by AI.  Technology firms continue to innovate in order to improve the function, accuracy, and efficiency of these technologies as well as develop additional technologies to perform more complex tax and accounting functions.  If embraced and used correctly, AI technology will be a game changer for small businesses.




Replacing or supplementing the human element of bookkeeping with AI will eliminate most of the mistakes made during data entry, provide more time for higher value activities, provide reports on a timely basis, and allow advisers to provide better advice based on operations. 


Whether an accountant or a member of the business performs the data entry duties for a business, that task is prone to error and disproportionately costs more than other higher value added activities.  Unfortunately, inaccuracy in bookkeeping and data entry ends up costing the business much more when tax returns are prepared due to time spent correcting mistakes before the return can be begun.  AI virtually eliminates data entry errors through internal checks, subsequently reducing both bookkeeping and tax return preparation costs as well as streamlining financial statement preparation 


Every quarter our firm prepares financial statements for our dairy clients.  Preparation of financial statements is expensive and time consuming, however, financial institutions require these on a quarterly basis as part of loan covenants.  Bookly,, a leader in automated bookkeeping platforms, has a real-time financial statement creation and viewing option.  Were our clients on this platform, or one similar to it, the cost to prepare financial statements would decrease exponentially and turnaround time would improve significantly.  Another benefit is a business may know its cash position at any point in time.  This insight will be invaluable when making financial decisions and consulting with an advisor.


Tax planning and tax return preparation are not the activities of choice for many accountants.  True fulfillment comes when clients seek advice regarding streamlining business operations, analyzing an expansion or a sale, or other projects that improve the business and increase profits.  Unfortunately, this is often more of the exception than the rule, especially when the client’s budget is spent on tax returns and tax planning.  With reliable and useable information available in real-time, more time should be spent with clients learning their business needs and goals and devising ways and means to accomplish them.  With AI this is all possible.  It is incredibly exciting to think of the prospect of being a true business advisor rather than primarily a tax return preparer.


While AI will inevitably shift priorities of accounting firms from tax and audit work to advising, it promises to provide business owners with more discretionary time and operating capital.  Without the time and financial constraints associated with the repetitive tasks required for business operation, a business owner can shift that time and those resources to higher value activities.  Zach Olson, CEO of Bookly stated: “[o]ur focus has been to reimagine how cutting-edge technology can improve the lives of business owners – no matter their area of expertise.  It is almost impossible to quantify what extra time would be worth to a business owner.  Whether that time is spent developing a new product or service line, investing in new equipment, spending more time with family, or another activity of interest, AI has the potential to make it possible. 




Innovation drives growth and distinguishes the leaders from the followers.  Often, it is asked if the accounting industry fears the advent of AI.  The answer has been and should continue to be a resounding ‘NO.”  AI promotes innovation and efficiency and should change your relationship with your accountant for the better by: 1) Reducing the amount of time spent on traditional accounting functions; and 2) Increasing the time spent advising on business operations. 


It is not unreasonable to anticipate AI replacing the bookkeeping, accounting, and tax functions performed by an accountant.  Therefore choose an accountant that has the capability to become more of a financial advisor.  This is not to say the accountant should be completely removed from the traditional accounting processes.  They will still play a very important role in reviewing the information created by the AI to ensure compliance with tax code and optimization in accordance with client specific situations and scenarios.  However, these tasks should take a mere fraction of the time now spent.  These saved funds should then be funneled into consulting and advising services to improve your business operations. 


Actionable data is the catalyst for innovation.  Some may think their accountant and financial advisor are the same person, but this is not always the case.  An accountant analyzes financial information in order to build a picture of what happened to a business in the past.  A financial advisor needs to be able to read your history, extrapolate trends, and formulate a financial strategy for future operation and growth.  Actively seek to build this type of relationship with your accountant.


While it may be disconcerting to rely on AI to perform financial functions, the benefits far outweigh the potential downsides. When fully understood how beneficial automated bookkeeping can be for your business by freeing capital and human resources for more valuable work, making the switch to a reputable automated system should not be difficult.  Please evaluate automated bookkeeping as you would evaluate any other new technology you have implemented in your operations.      


Originally written for Progressive Dairyman Magazine. Learn more about the author, Mark Fetzer, JD, MBA, here.

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