What CPAs Can Learn About Advisory from Donuts, Do-Nots and DuPont

by Peter Mares, CPA, Growth CPR | October 23, 2020

Would you notice it if a donut shop client of yours had tax returns showing excessively large “cost of goods sold?” If you also provided attestation or bookkeeping services, would you recognize the inventory “shrinkage” or be able to connect the dots and understand where the profits were being eaten up (pun intended…) if the owner’s employees were taking one too many liberties with the donuts while working? If not, do not expect him or her to remain a client for long.

Do not let these opportunities to help your client and stand apart from your competition pass by. And do not only know the numbers. That’s the ante to join the game, but knowing the business is having aces in the hole.

The DuPont Model

A powerful framework for helping Main Street CPA firms understand the business is the DuPont Model. CPAs would do well to adopt the DuPont Model as a standard practice in applying it to their clients and elevating their own business acumen.

The model decomposes the different drivers of financial and operational performance and enables management (and their advisors) to identify, target and act upon those drivers in efforts to improve the overall performance of the business. One of the best parts of the DuPont Model is that the inputs are basic financial reports and metrics — items that you and your client are already looking at.

Here’s how it works:

Dupont analysis

Source: MyAccountingCourse.com

Main Street CPA firms are in a privileged position to deliver impactful advice to help their clients do more than survive – to help them thrive. Within the present turmoil and uncertainty lies the seeds of opportunity and latent growth. It may seem counterintuitive to be preaching the opportunity of growth in a rapid economic contraction. However, with the right tools, frameworks and perspectives, new businesses will be established, and the engine of innovation will continue creating forward momentum amid the present destruction.

Now is not the time for Main Street CPA firms to blend in; now is the time for them to stand out. 

Peter J. Mares

Peter J. Mares

Peter J. Mares, CPA, MBA, is co-founder of Growth CPR, which is focused on helping Main Street CPAs grow their advisory practices.

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