Charleston Regional Business Journal
Accountants Consider the Charleston Business Climate
By Dan McCue, Staff Writer
Seated around a table with a view at the Charleston Yacht Club, William Jarrard, Christopher Nowell and William Russell III don’t seem anything like the stodgy image of accountancy.
In a sunbathed room where the movers and shakers of Charleston often gather to make deals and hear, not to mention overhear, the local business news of the day, the three partners of Jarrard Nowell & Russell LLC talked nonstop in a way that made back-office efforts to balance books and assess the value of a business seem edge-of-your-seat exhilarating.
Clearly, in word and enthusiasm, they’re finding life as a one-stop shop for small and medium-sized businesses in this market to their liking.
Their efforts in the realm of corporate finance, business valuation and wealth services have also provided them with a true-to-life perspective of the Charleston business market and business owners’ needs.
“It’s no secret that this market tends to be one in which small companies, those with 15 employees or less, dominate the market,” Jarrard said. “What is interesting is how strong a market driver the business niche is here.
“I mean, think about it: While we tend to see Charleston in terms of tourism or the port–these wide swaths of enterprise–it’s actually a composite of many different business sectors, from light manufacturing to real estate to logistics to professional services and on and on.”
While businesses in all of those niches have some common needs, ranging from minimizing tax liability to advice on insurance to a simple affirmation that they are making wise decisions, Jarrard Nowell & Russell, which is almost two years old, has focused its efforts over the past year on getting business owners to recognize the value of their companies, particularly when they’re ready to get out of the day-to-day grind.
“We’re not commercial realtors, by any means, but I think advising business people on whether they should sell or not and what their reasonable expectations should be in terms of price is a natural outgrowth of the benchmarking we do for our business clients,” Nowell said.
With that, Russell recalled a client the firm had in a construction-related business who had decided to retire, but had no heirs to whom he could pass the business.
“We asked, ‘Well, did you think of selling it?’ To which he said, ‘Sell? I have nothing to sell,'” he recalled. “The reality was there was a value that had been in the business, through its client base, its reputation, its financials and the market it already had a position in.”
Using specially designed accounting software that allowed them to assess the company’s cash flow and its place in the market as compared to its competitors, the firm was able to help him set a reasonable asking price for his business.
When all was said and done, it sold for $650,000.
The program Russell used to help his client is called Profitcents, software developed by Sageworks Inc. of Raleigh, N.C.
The program allows accountants to benchmark their client’s performances against the competition in terms of sales, capital investments, annual revenues and recurring expenditures such as mortgage payments, rent or lease payments, taxes and utility costs.
“It’s really the perfect tool to assess the value of a business,” Jarrard said. “Commercial real estate is always hard to appraise because comparisons are hard to come by; this eliminates some of the speculative quality of that kind of investment because when you invest in a small to medium-size business, the value of the real estate is one thing, but equally important is the cash flow of the business.”
“A valued business is one that can show it has a history of long-term, consistent income,” Nowell said.
While business evaluations are one aspect of the company’s work, it’s far from being the only one. Jarrard Nowell & Russell also specializes in providing financial management services for businesses, captive insurance consultation and auditing, 1031 tax-free exchange services for buying and selling property and wealth management services.
They now serve their more than 950 clients from two offices, one in Charleston, the other in Summerville.
One of the factors that helps its client base grow is the continuing appeal of South Carolina’s “population belt,” a region that extends from Columbia to the coast and down to the Savannah River, Jarrard said.
“A lot of the newcomers to this region are affluent, want to get out of corporate America, but don’t necessarily want to retire,” he said.
What these individuals are looking for, Nowell said, is a business that will stimulate their minds but not demand too much of their time.
“There are some clear areas that people are not interested in,” he said. “They don’t want a restaurant and they’re very ready to pass up retail opportunities because of the demands associated with those types of businesses.”
“That’s not to say you can’t achieve a nice return from those businesses, but it’s harder to come by than other business investments,” Jarrard said.
When it comes to the decision to buy or sell a business, Russell said he always tells the participants to detach themselves as much as possible from the process.
“I always tell them this is going to take twice as long as you think it will, and there are going to be many, many pitfalls along the way,” he said.
Russell knows this first hand. Not too long ago he worked for 14 months to help a client sell his business, only to have the seller exercise the escape clause in the contract at the last minute and stay in business.
“It was an object lesson in how unpredictable the business world can be,” he said with a smile.
“Which brings to mind an old joke,” Jarrard interjected. “The best way to make a small fortune in business is to start with a larger fortune.”