NOT ALL ADVISORS ARE CREATED EQUALLY
by Gavin King CA
Over the years, I have countlessly witnessed firsthand the damage that can be caused when someone gets the wrong advisor to help them fix the problems with their business. Yes, the scenarios may vary, and a few details may be different but the story is pretty much the same. This usually happens when the advisor tries to twist a problem and force it into something that would fit their understanding and expertise – I understand this but regrettably, this doesn’t always work. They spend too much time and energy heading down the wrong path which ironically just leads to creating more problems.
I have handled numerous engagements from a large number of solicitors and accountants over the course of my professional career. I found that the best type of advisors that any business could have are those who have a clear understanding of their limitations and possess the ability to recognise expert advice from others. To put it simply, you wouldn’t go see a vet to get a diagnosis on your health problem, you would go to your GP. One would then expect your GP to send you to see a specialist depending on the nature of the issue – business is no different.
The ugly truth is that not all professionals and advisors work this way. It can be the case that the “professional” is just looking to make a dollar by retaining a client they should have passed on to an Expert a few problems ago. This course of action benefits only the advisor and does the exact opposite for the client because when the funds dry up, they dump the client and quickly move on to the next. They basically leave the former client with no money and no chance of survival. The crux of the matter is, if the client had the right advice from the beginning, the funds could have been better utilised coming to some arrangement with the other party or used to restructure the business.
The most common example of this type of behaviour is dealing with the Australian Taxation Office (ATO) in relation to Director Penalty Notices (DPN) and personal liabilities of directors when businesses are in trouble. Regrettably, not all professional advisors know the ins and outs of these problems – the smart ones would give an insolvency practitioner a call before launching into a legal battle with the ATO. Without the right advice, you could be paying hefty and yet unnecessary fees to an advisor which you could’ve used to reduce your debt.
The key takeaway here is, fight the right battles from a position of strength. Remember that knowledge and expertise are powerful tools. Also, picking the battles you can win is an essential ingredient for the survival of your business. So, don’t waste your time and efforts on the wrong cause and in the wrong fights when there may be better solutions available after speaking to a true expert. Picking the wrong battle or even the wrong front for a battle can result in delay, uncertainty, and additional costs. But what also needs to be weighed in, is time – the time in dealing with your lawyers, the time spent thinking about the issue, and all the other times that are essentially taken away by dealing with the problem rather than focusing on working the business.
Remember, not all professionals are created equally and these days, it is easy to do some internet research before engaging them. Look up their areas of expertise on their website and consider if they’re appropriate to your needs.