“You’re only as good as the people around you.” I constantly heard this phrase from my parents and teachers. Now as an entrepreneur, I can confidently say that the phrase’s meaning resonates more deeply. When looking at the people that surround me, I realize that this saying is the principle I apply when building my advisory team.
Entrepreneurs are sometimes described as people who will work 80 hours a week to avoid working 40. As a whole, entrepreneurs are passionate and hard-working individuals. Many also have the “entrepreneur syndrome” in which they want to do everything themselves because they are afraid to give up control.
Starting your own business comes with so many ups and downs. You’re excited about what the future will bring, but you’re are also worried about what happens when it actually arrives. Success comes with many responsibilities and having this team by your side will help you tackle many of the unknowns that entrepreneurship brings.
Evaluate your needs
Creating financial security requires systems to plan for, obtain, accumulate, organize, manage, and preserve wealth. Your money team will be a small group of professionals that advise you on your business and personal financial decisions. Ideally, these advisors should work as a team to help you achieve your financial objectives.
Cost-conscious entrepreneurs might only identify one professional as their advisor for all things. Asking an accountant to be a legal advisor, and vice versa, is not the best course of action because each one would be operating outside their core area of expertise. Knowing enough to be dangerous is not the right answer. Your dream team should be more extensive because as your business grows, so do your financial needs.
Many small businesses should have these 5 advisors for their financial team:
- Insurance Advisor
- Financial Advisor
Your personal dream team will help you navigate the harsh waters of what is entrepreneurship, where you don’t know what you don’t know.
To assemble your strong team of advisers, try these tips:
- Evaluate your needs – Understand your goals and your financial requirements. What do you want to do? What might you be doing better?
- Use Referrals – Talk to your current circle of entrepreneurs and network to ask for referrals
- Find someone who thinks like a business owner – If you want someone to help you grow your business, make sure that someone thinks like a business owner and understands your goals
- Trust your gut – Choosing an advisor should be a slow process because of the importance of the decision. Make sure that the person you choose aligns with your brand and your philosophy. Don’t be afraid to “shop” around.
- Fire when necessary – “Hire slowly, fire quickly.” You should build a strong relationship with your advisors, but when someone doesn’t cut it, don’t be afraid to fire them. You all need to be on the same page.
Think of it this way, you love you family doctor but you need knee surgery. You wouldn’t ask your family doctor to operate on you. You would go to a specialist to get the best results. Your advisory team is here to do the same thing. This group of specialists will help you get the best results all around and improve the health of your business and will permit you to more strongly build your foundation. Let the professionals do their job and you do what you do best.
“Do you want a piece of paper, or peace of mind?”
The temptation to use online legal documents can be strongest for the DIY entrepreneur. Most times, the online documents are generic and are only as good as the data that goes into them. A worse situation is downloading a document that was made several years ago and filed with a government agency. The information in that document may look very “legal”, but is likely completely out-of-date. Doing it the DIY way may also get you into trouble or you may run into compliance issues. Working with an experienced business attorney will often benefit your company over the long run.
When you start a business, you are managing risk every day. Having a strong legal team will help you identify vulnerabilities as well as address legal needs that you didn’t know existed. Among other things, your legal team should help you with the following:
- Choosing business structure
- Licensing and complying with regulations
- Drafting legal documents
- Resolving disputes
- Business succession plans
- Ending business
- Implement tax saving strategies with the help of your accountant
“Go Beyond the Numbers”
Most businesses, as they are starting up, only hire a bookkeeper or they use an online software to do it themselves.
Talking with your accountant once per year, around tax time, is not enough. Accountants are trained in managing finances, keeping your business organized, and performing strategic financial planning. An accountant should be able to see your financial history, handle your business’ taxes, help with your payroll as your company expands, and implement tax saving strategies for your business.
A good accountant will help you maximize your exemptions and deductions that you could be leaving on the table by doing it yourself. Remember, online software is only as good as the numbers and categories entered. A great accountant will help you forecast and innovate through financial analysis.
Thinking about succession planning or selling out? There is no way you will be able to correctly value your business without your accountant’s help.
However, not all accountants are created equal, and it’s important to find an accountant that has experience helping businesses like yours launch and grow successfully. Just by switching from a CPA that does tax magic to a CPA that also provides strategic planning could save you tens of thousands of dollars a year.
“More than just property and casualty coverage”
Many people talk to us about asset protection. They ask about Nevada corporations, Wyoming LLCs, South Dakota trusts, and the ever-popular question “what about offshore?” These advanced strategies may have their places in your business plan. But, the first line of protection for assets is insurance.
Getting the right insurance could mean the difference between success and failure of your business. Choosing the right insurance coverage will help you manage and reduce potential risks. A knowledgeable insurance advisor can save you hundreds of dollars on your premiums as well as save you thousands of dollars on potential risk. Qualified brokers understand the insurance market and can negotiate competitive policies on your behalf. They can put together a comprehensive and cost-effective insurance package for your business.
What insurance is right for you?
- If you’re a professional (e.g. attorney or physician) you’ll want to carry malpractice coverage
- If you operate a business with equipment or that serves the public, you’ll want to have general liability coverage.
- If you are your business – do you have disability or key person coverage?
- If you support your family with your business income, are you properly covered for life insurance?
These are just some of the coverages available. Insurance can protect against many risks. No insurance agent can sell someone an unwanted policy. Are you covered?
“Grow What You Have”
If accounting is all about financial operations, then financial planning is all about investments. But, just like your accountant does more than just your taxes, your financial advisor can do more than just invest your money. Financial advisors and accountants have many overlapping areas of knowledge and share similar goals of increasing or preserving your income. While an accountant will look for ways to reduce your tax liability, a financial advisor will consider opportunities to grow your wealth through equity and debt investment strategies. Your financial advisor will develop an investment and financial plan to help you accumulate wealth.
Your financial advisor will also be able to look at the big picture of your finances and will then help you invest strategically while setting financial goals and priorities for your business. By collecting detailed information about your financial health, your financial advisor will be able to provide you with advice and help develop financial strategies on investing, retirement planning, succession planning, risk management, insurance, and taxes.
The difference between business success and failure is the company’s ability to anticipate upcoming trends, develop a long-term financial plan, and be ready to invest in new funding opportunities. This is why it is important that your financial advisor be able to help you look into the future and build real business models you can follow in scenarios that could occur in the future. They should also be able to project your company’s value earnings and costs, gather market intelligence, project your sales, and use these predictions to build financial models that will stabilize the future of your company.
Keep your Financial Pipes Moving
In the course of starting your business, you will most likely open a business checking account, apply for a business credit card, and apply for financing through your local bank. Establishing and building a relationship with your banker will be beneficial to your business banking needs. Bankers are able to offer advice on a range of banking products and help solve financial problems related to cash flow. Your banker is the frontline to helping you obtain financing through your current institution and helping you with your business needs. They get to grow with your business and see firsthand how your finances are doing. It is important to establish open communication so that your banker can assist in making the banking process seamless.
Not only can your business banker assist you in the loan application for financing or help you optimize your banking experience through products that can benefit your business, they can also be a source of networking. Business bankers work and network with a variety of business owners and professionals. This can be very helpful and a valuable resource as your banker can help connect you with prospective vendors and partners. From CPA’s to insurance advisors, a great banker works with a handful of advisors on the daily and this can be your first source of referrals to building your money team too.
This advisory team should complement each other’s work. All should have the goal of helping you build. Whom you choose as an advisor will affect the advice you receive; as well as, how your team works together.