It’s easy to overlook our accounting clients’ human issues, yet emotions like worry and fear can permeate their businesses, keeping them from focusing on the big picture and long-term success. Many of our clients struggle with a “chronic poverty” mindset, in which cash flow problems are a part of day-to-day life.
Ingrid Edstrom will present the session, Taking a Consultative Approach to Your Clients’ Chronic Poverty Mindset, at Accountex USA 2017.
Reactive, immediate relief from these pressures, such as borrowing money or throwing a clearance sale to pull together cash for payroll and rent, do not solve the long-term problem; they can actually worsen the situation by encouraging short-term solutions that perpetuate the downward spiral.
What can you do in a consultative capacity to help? In order for accounting professionals to be effective “trusted advisors” we must develop skills in assisting our clients through some of these mental roadblocks, particularly as they pertain to money.
Keep reading to learn how to recognize your clients’ chronic poverty mindset issues — and how to address them at their source. Discover how to help banish toxic thinking and formulate business development discussions that empower your clients to succeed.
Poverty in Business
It used to be that a business owner would come to me seeking relief from what they saw as an immediate, critical problem. I have learned over the years that the problems small business owners face typically run deeper than day-to-day bookkeeping and tax compliance tasks.
A small business that needs a brief influx of cash in order to make payroll is the equivalent of the high-school girl who fainted in class because she hasn’t eaten today. Getting food in her now may get her back into class, but it is a poor bandage for the eating disorder that is not being addressed.
These chronic issues, and the limiting beliefs they stem from, are rooted in a poverty mindset. Relief is not going to bring long-term success to the business that cannot get ahead. I call these limiting beliefs “money blocks.” These beliefs can be difficult to overcome.
7 Symptoms of a Poverty Mindset
Here are some key indicators to keep an eye out for in your clients. If you notice any of these beliefs, it may be time to have a conversation to assist them in realigning their mindset to be on a path to success. Doing so will improve their company health, which, in turn, improves your relationship with them, resulting in higher revenues for your firm.
#1 Profit is Evil
Money and profit are not good or bad. They are neutral. They are whatever we choose to use them for. Money is the tangible and quantifiable energy that we use to manifest the things we want and need in our lives. Profit is the battery that we use to power those wants and needs at a later date. The most important thing to keep in mind is why you are doing what you are doing. What dream are you working to fulfill?
Lack-mentality is especially common among nonprofit clients. The board of directors feels a responsibility to guard the money that isn’t theirs, or worse, to budget every last penny to be spent on their chosen charity, leaving nothing to run the business the following year. These are clients for whom demonstrating the idea of Return on Investment (ROI) is very important. By showing them how strategic spending can bring more revenue in turn, we can shift their perspective from lack to abundance.
#3 Entrepreneurship Requires Self-Sacrifice
Many people think that in order to create an effective business, they need to nearly martyr themselves in the process. As a result, they barely live off the scraps of the cash-eating monster of a business they have created. It is important for business owners to recognize their essential and valuable role in their company. It’s important for them to understand their cash flow and set aside funds for their own pay as well as for their company’s profit.
The common myth that “We need to spend money to make money” leads business owners to believe that in order to succeed they need to “plow back” all of their earnings into the business. Creating an intentional cash-flow system that includes regular payments to the company owner actually helps create companies that are healthy and sustainable.
Some of you are going to disagree with me on this. There are a lot of business advisors who feel that competition is healthy, normal, and even essential in business. They see competition like natural selection, where only the strongest will survive.
However, the sick and the weak are going to die anyway. There is no need to compete with them. Meanwhile, the strongest don’t compete — they specialize. Competition in business stems from a belief that there is limited opportunity or that there might not be enough for everyone. This is actually a specific kind of lack-mentality.
#5 Getting a Fair Share
Are your clients waiting for their day to come, when that perfect opportunity is going to fall into their lap? Do they keep wondering why some people around them seem to have all the luck, while they are getting passed up again?
This attitude of entitlement is the flip side of the martyrdom scenario in #3. The best remedies are gratitude and generosity. By recognizing the amazing gifts we have and sharing them with others, we in turn welcome more abundance into our lives.
Good fortune doesn’t just fall into our laps — we have to work for it. That work can be great fun, doing exactly what we love every day. We have all seen this phenomenon to greater or lesser degrees.
#6 Belief in a Zero-Sum Game
Many of us feel like there is a finite amount of pie, and that if we’re going to get a slice we need to fight for it. This is not true. There is plenty of pie, and we can always make more.
Zero-sum game thinking is the idea that if somebody wins, somebody else loses. Many of our clients can be suspicious and defensive, thinking that everyone is out to take advantage of them — even their accountant.
It is our job to show them the value of our services, and to ensure that the value we offer always exceeds the price. Every transaction has the potential of being a win-win so long as both sides are open to the possibility.
#7 Penny-Rich, Pound-Poor or Penny-Wise, Pound-Foolish
Do you have a client who will drive miles out of their way for a gallon of gas that is a penny cheaper? How about one who will purchase things they don’t need just because it’s a good deal? These habits invariably end up biting our clients in the pocketbook. Where they think they are being thrifty, they are actually wasting a lot of time, money, and energy.
This is another area where demonstrating the ROI of their decisions, or lack thereof, can go a long way. We don’t need to go over every instance or scenario. Just choosing a few clear examples on which to run some cost-benefit analysis can really enlighten them on how their spending choices may not be serving their higher intentions.
What We Can Do About It
When we, as accountants, provide reactive relief to a chronic situation, it keeps the power in our hands instead of empowering the people we are trying to help. The focus remains on our resources and what we can bring to the table, rather than on their resources and strengths.
In order to truly help people in chronic poverty mindset situations, we need to shift our focus from being reactive to being proactive. Rather than providing relief, we need to provide tools for them to develop their own strengths and resources.
Re-Frame the Story
As accountants, we need to put less focus on delivering data, and more energy into developing real connections with our clients. Each of us has our own unique communication style, and we will each communicate at different levels of effectiveness with different clients. To make your product or service stand out from the rest, create and tell your story. Stories connect people. They elicit emotions, and positive emotions drive sales.
Have an open discussion with your clients about their money blocks, and relate to them. Being their accountant does not mean that you have to be perfect, infallible, or have all the answers. In fact, they will trust you more and find more value in your relationship if you don’t.
Empowering Our Clients
As accountants, we often feel under-qualified to assist our clients with deeper mindset issues. With time and practice I’ve learned that we do not need a degree in psychology to show compassion to another human. Too often we hide our deeper selves behind a wall of professionalism, not wanting the relationship to get too personal. As a result, we miss the opportunity for real connection, learning, and growth on both sides. That is also rooted in a poverty mindset. We can choose another way.
This, right here, is why accounting professionals will never be made obsolete by artificial intelligence. A machine cannot do this. This is the evolution of our profession.