Who is On Your Team?: Pros you need when you start a business
Tom Brady didn’t win Super Bowls alone. Football teams are machines. Winning football teams are well-oiled machines that combine the talents of many with money and resources to ultimately make a ton of money and take home championships. At the end of the day, football teams are also businesses. So, why do so many other business owners think they have to know it all and try to run their small business alone without a team?
Every business owner, regardless of industry, should have an advisory team- specialized pros with specific domain knowledge that is useful in business. That roster should include a tax accountant, bookkeeping assistance, banker, insurance broker, financial planner, and estate attorney. As the company grows, adding other specialists like human resources specialists, legal advisors, marketing pros, CFOs, controllers, and tech pros, along with other business-specific specialists, also makes sense, but the starting team is key.
Starting with the tax advisor is important. These pros should be consulted in the formation of the business and can work with legal advisors to be sure the right entity type (S corp, LLC, sole prop) is selected. Too often, small businesses rush out and form an entity that isn’t right for them. This can cost the company financially and cause headaches in the future. Each founder’s situation is unique, and selecting the right entity type should consider the funding sources, founders’ liability exposure, estimated revenue, states where there will be nexus, estimated assets, and other tax planning implications as well as the protections an entity type or state of an organization may provide. Beyond formation, tax advisors should then stay involved and not just when it’s time to prepare taxes. Sharing information with the tax team throughout the year, consulting them before making big moves, and including them in an annual planning meeting across your team will lead to better tax outcomes and overall business success.
Your banker is also an important team member. One of the first things a small business does (or should do) is open a business bank account. This is an opportunity to start a relationship with someone who, in the future, could help you access capital, manage risk, and will work with you as your business’s financial needs evolve. They are not likely part of your annual team meeting, but they are likely someone you will interact very frequently.
Insurance is needed in nearly all businesses. Figuring out what kind of insurance you need, what a good policy looks like, how to complete an audit, and even just filling out the application can feel like a minefield. A good insurance agent will help you navigate this and not just try to upsell you. This should be a relationship that evolves with time. As your business changes the insurance broker can guide you. Again, this means you need to keep them informed about changes in your business. Find an agent that is more than a salesperson, and make sure you set up at least an annual check-in with them.
Bookkeeping assistance is also key. Even if you can’t afford regular recurring services, you can likely hire an accounting firm or individual to answer questions, look over your books regularly (even if they don’t perform a formal accounting period close), and help you troubleshoot your accounting software or strange things that come up. <Link to snow and blair monthly coaching> Your accounting data is a key component that other members of the team will rely on, so keeping it accurate and organized is important. Seek out the level of assistance your budget will allow for but add this team member early.
Business owners may feel that they are not “rich enough” to have a financial planner, but the reality is that everyone needs help planning, and there are financial planners for every budget. The role of the financial planner is to look at the bigger picture inclusive of your personal and business finances. If you have a spouse or partner, their finances could be considered as well. The financial planner should understand what your goals are. Whether you are trying to buy a home, save for retirement, build a savings cushion, raise capital for your business, anticipate a sale of an asset in the next X years, have family wealth, or simply trying to pay down debt, a financial advisor or planner can help. The financial advisor’s assistance can be exponential when they work in coordination with your tax planner. When the tax professional and financial advisor don’t coordinate, you can end up with them working against each other so be sure to put them in touch with one another and coordinate annual calls so that everyone is on the same page.
Estate attorneys are the team members most frequently omitted. Think of them like special teams. When you need them, you really want them to perform. As business owners, we have even more to consider in the event of a tragic event. Could your partner or family step into your business and bring what you bring to the table? Likely, they can’t. How would they access your assets? Can they sell the business? Who would run the operation in your absence? Do you have life insurance that would buy your family out? What is only in your name and your family or business partner might not be able to refinance or sell if you passed away? So often business owner’s wealth and assets are tied up in their business. Estate attorneys can help limit taxes, preserve value, make the transfer of assets less complicated, and generally make sure that our business has a succession plan.
Some businesses will require other specialists early on, but the lineup of the tax accountant, bookkeeper/general accounting pro, banker, insurance broker, financial advisor, and estate attorney really should be part of all organizations. Hiring them as contractors keeps this affordable. Be sure to bring them together regularly or at least share information among them so they can all work together to help you achieve your goals.
