Will you get to see business financial data by being an accountant?

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Derivative
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Will you get to see business financial data by being an accountant?

Post by Derivative » Tue Sep 12, 2017 3:43 am

Will you get to see all business financial data by being an accountant?

I am very interested on getting a job to help analyze and help businesses with their finances. What is the best job for this role? I would eventually like to own my own business and use my accounting/financial knowledge to successfully analyze business deals and potential.

I don't know of any other job that can allow you to see a wide variety of business finances openly. What are the best jobs that allow one to do this?

Please advise. Thank you.

AlohaJoe
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Re: Will you get to see business financial data by being an accountant?

Post by AlohaJoe » Tue Sep 12, 2017 4:13 am

Derivative wrote:
Tue Sep 12, 2017 3:43 am
I would eventually like to own my own business and use my accounting/financial knowledge to successfully analyze business deals and potential.
I own my own business. Being an accountant will not help you own your own business. The overwhelming majority of businesses never do a "business deal" that requires any significant level of accounting skills, so learning those skills is pretty pointless, IMHO.

If you want to own your own business, you need to find an under-served need. The way you figure out what an under-served need is, is by learning a lot about a specific business type of business and then developing a product/service to remedy the problems you see. That's why most companies are founded by people in their 30s & 40s -- that's how long it takes you to work in a field and spot the problems that become business opportunities.

None of the accountants I've ever worked with would have ever developed that in their day jobs.

Derivative
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Re: Will you get to see business financial data by being an accountant?

Post by Derivative » Tue Sep 12, 2017 4:37 am

AlohaJoe wrote:
Tue Sep 12, 2017 4:13 am
Derivative wrote:
Tue Sep 12, 2017 3:43 am
I would eventually like to own my own business and use my accounting/financial knowledge to successfully analyze business deals and potential.
I own my own business. Being an accountant will not help you own your own business. The overwhelming majority of businesses never do a "business deal" that requires any significant level of accounting skills, so learning those skills is pretty pointless, IMHO.

If you want to own your own business, you need to find an under-served need. The way you figure out what an under-served need is, is by learning a lot about a specific business type of business and then developing a product/service to remedy the problems you see. That's why most companies are founded by people in their 30s & 40s -- that's how long it takes you to work in a field and spot the problems that become business opportunities.

None of the accountants I've ever worked with would have ever developed that in their day jobs.
Thank you very much for your post.

But I think an accountant is the best way to find out:
1. How much a large variety of businesses make (e.g. many restaurants in the area, instead of just a few)
2. What their exact financial data look like

How do I get all of this data without being an accountant? I want to analyze large data so I know which business venture I should pursue.

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Re: Will you get to see business financial data by being an accountant?

Post by Daryl » Tue Sep 12, 2017 5:01 am

I'm an accountant at a large property and casualty insurance company. Over the past couple of years, I've learned a lot about the divisions I serve, our company, and industry. As far as cost structure, I know that we target a combined ratio (claims / premiums) of 90%. This isn't sufficient training to run my own insurance company. Clearly I would need the assistance of other team members (including underwriters, claims adjusters, legal, etc.)

In my spare time, I serve on the Board of Directors for a local non-profit. Several of our Board members bring with them significant business experience including decades as the President / CEO of local small/medium sized businesses. This is a fantastic networking opportunity for anyone interested in following that career path.

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Re: Will you get to see business financial data by being an accountant?

Post by oldcomputerguy » Tue Sep 12, 2017 5:15 am

Derivative wrote:
Tue Sep 12, 2017 3:43 am
I don't know of any other job that can allow you to see a wide variety of business finances openly. What are the best jobs that allow one to do this?
Not sure I'm clear on what you're asking about. If you're wanting to see the minutiae of the business' finances, you probably will never do so, most business I've dealt with or been a part of keep that data in-house and don't publish it other than what is required by statute. If, on the other hand, you're wanting to see profit-and-loss and other such information from publicly-traded companies, they post that in their SEC filings.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Re: Will you get to see business financial data by being an accountant?

Post by BHUser27 » Tue Sep 12, 2017 6:56 am

OP, it is not clear to me whether you want to work for a business and have access to that one business's financial data or if you are asking how you get financial data about a large number of businesses for comparison and analysis. Which is it?

Any public company will post its financial reports to the public. Usually there is an "investors" link on their corporate website. You can look at quarterly and annual shareholder reports - this is all public info. There is a lot to be learned from these. Also, many industries have market research firms that collect massive amounts of data about companies in a given sector. Sometimes you can obtain samples of the reports, otherwise the reports may cost from $1000 to $5000 to receive a spreadsheet with access to all the report data.

As far as who has access to a specific private company's financials, certainly more than just an accountant does. The board of directors, executive (C-level) staff, VP's, and most mid and upper managers across functions have access to most of the financials depending on the owner.

The government also puts out various reports with generalized statistics. Check out the small business administration.
https://www.sba.gov/category/advocacy-n ... statistics

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Re: Will you get to see business financial data by being an accountant?

Post by MikeG62 » Tue Sep 12, 2017 7:13 am

OP, I spent 32 years working in finance during my career. Spent ~1/3rd of my career in public accounting (big 4 - at the time it was big 8), before transitioning to a public company where I spent the bulk of my career (working in accounting and FP&A and ultimately C-Suite level finance roles).

So I think you can learn the things you want starting in accounting. You will want to eventually transition into FP&A (Financial Planning and Analysis) as that will broaden you out and give you the kind of experiences I think you are after.

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Re: Will you get to see business financial data by being an accountant?

Post by simplesimon » Tue Sep 12, 2017 7:25 am

Public accounting, corporate banking, or private equity might be the best places to start.

AlohaJoe
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Re: Will you get to see business financial data by being an accountant?

Post by AlohaJoe » Tue Sep 12, 2017 7:28 am

MikeG62 wrote:
Tue Sep 12, 2017 7:13 am
So I think you can learn the things you want starting in accounting. You will want to eventually transition into FP&A (Financial Planning and Analysis) as that will broaden you out and give you the kind of experiences I think you are after.
I agree that someone in FP&A can run their own business. I've worked with some great FP&A people who transitioned to general manager-type roles. Or moved up to CFO and then to CEO. But that seems different from what the OP is thinking about.

They seem to be thinking: "If I become an outsourced accountant to small businesses I can see the detailed business models of dozens of companies, see which ones have the highest margin/free cash flow/annual profit/whatever and then go into that business for myself and become rich". I just don't see that as a plausible sequence of events.

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Re: Will you get to see business financial data by being an accountant?

Post by MikeG62 » Tue Sep 12, 2017 8:03 am

AlohaJoe wrote:
Tue Sep 12, 2017 7:28 am
MikeG62 wrote:
Tue Sep 12, 2017 7:13 am
So I think you can learn the things you want starting in accounting. You will want to eventually transition into FP&A (Financial Planning and Analysis) as that will broaden you out and give you the kind of experiences I think you are after.
I agree that someone in FP&A can run their own business. I've worked with some great FP&A people who transitioned to general manager-type roles. Or moved up to CFO and then to CEO. But that seems different from what the OP is thinking about.

They seem to be thinking: "If I become an outsourced accountant to small businesses I can see the detailed business models of dozens of companies, see which ones have the highest margin/free cash flow/annual profit/whatever and then go into that business for myself and become rich". I just don't see that as a plausible sequence of events.
I agree with you Joe.

If his goal is to see all business financial data, I think transitioning to FP&A is the way to go.

Whether that will give the OP the skills to run his own business one day is questionable. Very different skill set for sure. Some can do it, but probably not most. In my experience, owning/running businesses requires a more entrepreneurial mindset, one that often requires considerable risk taking. Finance folks, by their nature tend to be more risk adverse. So a difficult transition for sure.

JuniorBH
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Re: Will you get to see business financial data by being an accountant?

Post by JuniorBH » Tue Sep 12, 2017 9:13 am

Another way to see that level detail is getting into financial due diligence. I've been in diligence for 6+ years now and have seen transaction level data on every deal I've done. For example, if you were interested in a particular manufacturing industry and wanted to know what various companies spend on R&D, COGS, Labor, rent, etc, we see all that data.

Like some of the other jobs mentioned, diligence isn't something you jump right into without the proper background. I'd look into getting your CPA (along with the requisite college degree) as a starting point.

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Re: Will you get to see business financial data by being an accountant?

Post by Miakis » Tue Sep 12, 2017 9:28 am

I'm a small business CPA (most of my clients own businesses with less than $500,000 in revenue). I see all of the nitty gritty details of their finances because I generally do bookkeeping + payroll + tax returns.

But for analyzing business deals - selling or buying businesses is really as far as that goes. I do advise on profitability, budgets, cash flows. You'd need to go bigger to get access to real business deals. However, the bigger you go, the less likely you are to be able to see the big picture of financial data - instead you'll often end up focusing on one narrow aspect of financial data, while other members of your team look at other aspects.

You might consider going into Finance/Accounting and trying to get into a venture capitalist firm.

As for analyzing data so you can see what firms are most profitable - in the small-business sector, service-based, low-overhead businesses are always the most profitable.

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Re: Will you get to see business financial data by being an accountant?

Post by JBTX » Tue Sep 12, 2017 9:29 am

I too am struggling a bit with the OP's question.

I have worked in corporate finance and accounting for nearly 30 years. While one could parlay such a background into running your own business, it isn't the most typical way. However, having at least a decent understanding of financial statements and flows work will help you succeed. We aren't talking high finance here. For small business, it is about cash flow and down the road profitability. Can you read a P&L and understand what it says? Do you have enough knowledge to look at your balance sheet to see whether you have sufficient cash, whether or not your receivables are getting paid on time, your payables are not building up, and you are managing your debt load?

As one of the other posters said, the key to succeeding is having some expertise in an underserved market. That is your starting point, and you aren't going to get that working in finance and accounting. One you have that, then having enough finance knowledge (and support) to manage your finances as you (hopefully ) grow. Many potentially successful business die because they can't manage the cash flow - when young business successfully grow, it can be a drain on cash, and even though your profit and loss shows a profit, you run out of money because you aren't managing your receivables, and you haven't set up ample debt capacity to handle your growth.

My wife, also an accountant, works for a small business that was started by a friend. He had expertise in a specific area, but no financial background at all. He got some major clients and grew the business, but without my wife's help managing the cash flow he probably would have failed. Now 10-15 years later they are spitting off a healthy income and cash flow.

As to people in FP&A and accounting going out on their own, it isn't the typical path, but I have seen that happen on some occasions by some of the more entrepreneurial minded.

Derivative
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Re: Will you get to see business financial data by being an accountant?

Post by Derivative » Tue Sep 12, 2017 12:03 pm

Thank you guys so much for your posts. They are all so very informative. :)

I've looked at indeed.com for FP&A job roles and I think they are in-line with what I am looking to become an expert in. What type of education do venture capitalists need? Wouldn't a FP&A background be the most beneficial to being a venture capitalist and knowing how to analyze business deals and your own business after you start it?

Wouldn't you consider FP&A knowledge to be essential for a successful business owner who owns and invests in multiple businesses?

Also, what is the best way for someone with a Bachelor's in Biology (pre-med) to transition to this job?
What FP&A contributes to [Company Name]
Financial Planning & Analysis is responsible for being objective and strategic financial partners, leading collaborative cross-functional effort to drive relevant, flexible and efficient financial planning and analysis that supports our key business decisions.
  • Analyzes business trends; leads and aligns financial forecasts and long range planning processes with our business leaders. Drives business value by providing financial and analytical counsel to facilitate decision-marking around strategic business initiatives.
  • Prepares monthly financial reporting including variance and financial statement analysis. Able to clearly communicate a cohesive and concise story around business drivers behind financial data and potential implications on future results.
  • Creates financial models and scenarios as a key input for business planning decisions in areas such as capital deployment, sourcing, product development, marketing strategies, and acquisitions.
  • Manages annual budget processes, incorporating business initiatives, economic trends and operational effectiveness. Aligns budget to business strategies and gains alignment from business partners.
  • Performs customer and product profitability analysis and makes investment and pricing decisions. Identifies opportunities to drive revenue growth, margin expansion and a more favorable mix (i.e., driving preferred products and services).
  • Understands market dynamics and competitors. Conducts complex analysis, synthesizes and summarizes implications to business, influencing business partners using analytics and business understanding.
  • Identifies and executes upon process improvement opportunities. Demonstrates proficiency of technical tools and financial systems.
  • Serves as an objective financial steward with an enterprise perspective, safeguarding our company's assets. Ensures strong controls are in place and the company's intellectual property is protected.

bigred77
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Re: Will you get to see business financial data by being an accountant?

Post by bigred77 » Tue Sep 12, 2017 12:09 pm

Derivative wrote:
Tue Sep 12, 2017 12:03 pm
Thank you guys so much for your posts. They are all so very informative. :)

I've looked at indeed.com for FP&A job roles and I think they are in-line with what I am looking to become an expert in. What type of education do venture capitalists need? Wouldn't a FP&A background be the most beneficial to being a venture capitalist and knowing how to analyze business deals and your own business after you start it?

Also, what is the best way for someone with a Bachelor's in Biology (pre-med) to transition to this job?
What FP&A contributes to XXXXXXX
Financial Planning & Analysis is responsible for being objective and strategic financial partners, leading collaborative cross-functional effort to drive relevant, flexible and efficient financial planning and analysis that supports our key business decisions.
  • Analyzes business trends; leads and aligns financial forecasts and long range planning processes with our business leaders. Drives business value by providing financial and analytical counsel to facilitate decision-marking around strategic business initiatives.
  • Prepares monthly financial reporting including variance and financial statement analysis. Able to clearly communicate a cohesive and concise story around business drivers behind financial data and potential implications on future results.
    Creates financial models and scenarios as a key input for business planning decisions in areas such as capital deployment, sourcing, product development, marketing strategies, and acquisitions.
    Manages annual budget processes, incorporating business initiatives, economic trends and operational effectiveness. Aligns budget to business strategies and gains alignment from business partners.
    Performs customer and product profitability analysis and makes investment and pricing decisions. Identifies opportunities to drive revenue growth, margin expansion and a more favorable mix (i.e., driving preferred products and services).
    Understands market dynamics and competitors. Conducts complex analysis, synthesizes and summarizes implications to business, influencing business partners using analytics and business understanding.
    Identifies and executes upon process improvement opportunities. Demonstrates proficiency of technical tools and financial systems.
    Serves as an objective financial steward with an enterprise perspective, safeguarding our company's assets. Ensures strong controls are in place and the company's intellectual property is protected.
Well Venture Capital is EXTREMELY tough to break into. It's not really something you can just "transition into".

FP&A would be easier to break into. Probably the best advice I would give would be to look into a MBA program or a 1 year MS in finance or Accounting. Then you can target FP&A roles within the healthcare, pharma, or other industries where you can spin your pre-med Biology degree as complimentary to your position.

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Re: Will you get to see business financial data by being an accountant?

Post by celia » Tue Sep 12, 2017 12:13 pm

Derivative wrote:
Tue Sep 12, 2017 4:37 am
But I think an accountant is the best way to find out:
1. How much a large variety of businesses make (e.g. many restaurants in the area, instead of just a few)
2. What their exact financial data look like

How do I get all of this data without being an accountant? I want to analyze large data so I know which business venture I should pursue.
Most small businesses are privately owned or only have a few investors or loans. Their data is not available to outsiders.

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Re: Will you get to see business financial data by being an accountant?

Post by AlohaJoe » Tue Sep 12, 2017 12:42 pm

Derivative wrote:
Tue Sep 12, 2017 12:03 pm
What type of education do venture capitalists need?
Venture capitalists don't need any education. They just need to be extremely rich. Basketball players are venture capitalists & they are generally do not have accounting degrees.
Wouldn't a FP&A background be the most beneficial to being a venture capitalist and knowing how to analyze business deals and your own business after you start it?
No, it has no relationship to being a venture capitalist. Understanding a term sheet is not that complicated. Venture capitalists need to have the experience to help a startup CEO grow their company.
Wouldn't you consider FP&A knowledge to be essential for a successful business owner who owns and invests in multiple businesses?
No, it isn't essential. It wouldn't even be in my Top 50 list of important things.
Also, what is the best way for someone with a Bachelor's in Biology (pre-med) to transition to this job?
There are lots of resources you can google about how to become an accountant or FP&A professional.

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simplesimon
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Re: Will you get to see business financial data by being an accountant?

Post by simplesimon » Tue Sep 12, 2017 3:25 pm

Derivative wrote:
Tue Sep 12, 2017 12:03 pm
Thank you guys so much for your posts. They are all so very informative. :)

I've looked at indeed.com for FP&A job roles and I think they are in-line with what I am looking to become an expert in. What type of education do venture capitalists need? Wouldn't a FP&A background be the most beneficial to being a venture capitalist and knowing how to analyze business deals and your own business after you start it?

Wouldn't you consider FP&A knowledge to be essential for a successful business owner who owns and invests in multiple businesses?

Also, what is the best way for someone with a Bachelor's in Biology (pre-med) to transition to this job?
What FP&A contributes to [Company Name]
Financial Planning & Analysis is responsible for being objective and strategic financial partners, leading collaborative cross-functional effort to drive relevant, flexible and efficient financial planning and analysis that supports our key business decisions.
  • Analyzes business trends; leads and aligns financial forecasts and long range planning processes with our business leaders. Drives business value by providing financial and analytical counsel to facilitate decision-marking around strategic business initiatives.
  • Prepares monthly financial reporting including variance and financial statement analysis. Able to clearly communicate a cohesive and concise story around business drivers behind financial data and potential implications on future results.
  • Creates financial models and scenarios as a key input for business planning decisions in areas such as capital deployment, sourcing, product development, marketing strategies, and acquisitions.
  • Manages annual budget processes, incorporating business initiatives, economic trends and operational effectiveness. Aligns budget to business strategies and gains alignment from business partners.
  • Performs customer and product profitability analysis and makes investment and pricing decisions. Identifies opportunities to drive revenue growth, margin expansion and a more favorable mix (i.e., driving preferred products and services).
  • Understands market dynamics and competitors. Conducts complex analysis, synthesizes and summarizes implications to business, influencing business partners using analytics and business understanding.
  • Identifies and executes upon process improvement opportunities. Demonstrates proficiency of technical tools and financial systems.
  • Serves as an objective financial steward with an enterprise perspective, safeguarding our company's assets. Ensures strong controls are in place and the company's intellectual property is protected.
Yikes.

So assuming you have a biology degree and no business background, you will have almost zero chance of getting an FP&A job. If you want to start your own business and need to learn about financial accounting and management, take a few courses at a community college. You just need to know the basics. The more important thing to having a successful business is having a good product or service. Focus on that.

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Re: Will you get to see business financial data by being an accountant?

Post by nedsaid » Tue Sep 12, 2017 7:43 pm

Derivative wrote:
Tue Sep 12, 2017 3:43 am
Will you get to see all business financial data by being an accountant?

I am very interested on getting a job to help analyze and help businesses with their finances. What is the best job for this role? I would eventually like to own my own business and use my accounting/financial knowledge to successfully analyze business deals and potential.

I don't know of any other job that can allow you to see a wide variety of business finances openly. What are the best jobs that allow one to do this?

Please advise. Thank you.
Pretty much, this is a big part of what a Certified Public Accountant does, helping businesses with their accounting and giving advice based upon the financial reports. There are people who are business consultants.

It seems like accounting is more about data now. You need to be able to use Excel and Database programs to analyze larger sets of data. Get a good knowledge of what ERP (Enterprise Resource Planning) systems do, pretty much these are multi-module systems that handle General Ledger, Accounts Payable, Purchasing, Inventory, Payroll, Human Resources, etc. You would need actual experience with these systems. Quite often, there are subsidiary systems that feed into the ERP system as no system does all things well. Most places you will see various things cobbled together. Having the skills to move data from one system to another is a valuable skill. ERP systems and their subsidiary systems are pretty much complex databases with advance query and reporting features.

So to do what you want, you need to be skilled with GAAP, be an accounting geek, a bit of a computer systems geek, understand databases and the analysis of large amounts of data. That takes a lot of skills but accountants who work their way up to Financial Analysts will have many of these skills. Writing financial reports is another vital skill. It seems employers ask for Masters' Degrees more too, a graduate degree in Business would help. Certified Public Accountant and Certified Management Accountant designations.

It was interesting that our General Ledger Accounting group used to get questions about our computer systems, since Accountants work with many computer programs, they get to know a lot about how this computer geeky stuff works.

You would want to work for a larger firm to get the experience working with the larger ERP systems, QuickBooks is technically an ERP system but you want to work with "industrial grade" software like Oracle or SAP or something like that.

At some point, with enough skills, hopefully you could sell your skills as a consultant.

Another great way to get these skills would be working for one of the Big 4 Accounting Firms, but that takes nearly straight A's and the willingness to work long hours. Auditing is a great way to learn the things I have discussed.
A fool and his money are good for business.

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