TFYW#072: Offering Advisory Services Requires This One Secret

Jan 26, 2024

This week, we’ll get into the key adjustment you must make in order to offer high value advisory.

The Compliance Approach

My first step into advisory was with a start-up SaaS company.

At the time, my firm was brand new and I was keen to try to deliver higher-value advisory services.

The start-up had raised $1.3M with a small team. It was a perfect role to cut my teeth on.

Coming from a strictly compliance background (first audit, then bookkeeping + tax prep), I was process-focused. I was ready to execute processes to create deliverables.

Right away I started explaining what processes the company needed:

  • Cash flow projections → We needed to calculate monthly cash burn.
  • Financial Statement Review → We needed to know the expense as a % of revenue.
  • General KPI + Metric Tracking → We needed to know our current and debt-to-equity ratio.

Initially, the team was excited about the extra ‘financial visibility.’

However, after two months, I saw that most of my work and reporting offered little value.

What they wanted to know was:

  1. Monthly cash burn
  2. # of months of cash they had left.

These two metrics were easy to calculate. And although I initially thought providing those two metrics was advisory, it wasn’t.

In fact, most of the processes I thought were easily executable advisory services were only foundational stuff that needed 2 or 3 more steps to be valuable.

I was stuck. I didn’t know how to help solve their problem with my compliance tools.

From Reporting to Informing

About four months after I started, an advisor named Rick joined the team.

Rick was a successful M+A consultant. He had completed dozens of acquisitions, from start-ups to mature businesses.

He looked at my SaaS five-year cashflow projection and kindly told me it was junk.

He said the projections might be nice for the VCs and investors, but they were useless because there were no drivers in the model.

He said I’d created a projection, but not a plan.

He showed me a spreadsheet model that he had used for numerous deals.

The model had three sheets in it:

  • 1st sheet – The typical monthly cash flow projection
  • 2nd sheet – Sensitivity control to refine project assumptions based on feedback.
  • 3rd sheet – The three levels of action drivers for revenue.

He said we needed to be clear about what our priority was → Revenue from subscriptions was the problem the company was trying to solve.

The model disassembled the problem to the front-line actions needed to drive subscription revenues.

With this new model, our management discussions transitioned to be less focused on the results (1st sheet) and more focused on the controllable actions (3rd sheet) as well as the feedback we were getting from those actions (2nd sheet).

For the SaaS company, the main drivers for revenue included:

  1. # of Sales Reps
  2. # of phone calls per Rep

These were things we could control. We could add more reps, increase the number of calls or change the content of the calls.

Everything else was technically out of our control, but that’s where the feedback filters came in.

The feedback filters we included were:

  1. What size of company was most likely to respond?
  2. How many calls does it take to book a demo?
  3. What is the show up rate for the demo?
  4. How many demos does it take to lead to a trial?
  5. How many trials does it take to land a client?

The model significantly shifted how I viewed advisory.

Rick showed me that advisory is less about the goal, albeit necessary.

It’s more about helping the client move in an intentional direction with constant refinement from feedback.

The model operationalized how to track actions instead of just tabulating expenses.

Presenting a positive cash flow without any documented assumptions or connected drivers is like a coach whose detailed strategy to win is just “scoring more than the opposing team.”


If you don’t remember anything else from this week’s
newsletter, remember this:


Offering advisory starts with transitioning from reporting
expenses from actions to informing actions to drive expenses.


Application For Every Client

The same approach that Rick used with me, I’ve applied to multiple other companies.

This works to increase revenue, reduce expenses, increase efficiency, and help business owners transition out of the various roles they have in their company.

The key is to spend time in conversation with the client and pull out what they are trying to achieve. Prescribing before diagnosing is common for accountants trying to transition into advisory.

Their desired outcome and specific problems will inform how you advise them on their strategic and front-line activities.

Most business owners know what they need to do. We just need to pull it from them.

Build The Firm You Want.


P.S. Email with something that you want me to talk about. I’ll add it to the list. 

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