Small businesses cannot afford to take on an army of experts.
They do not have the need for full time top quality employees in the areas of business management,
marketing, human resources, etc. There may not even be enough work for ongoing part time help.
The business owner must understand these tasks, or identify a good professional to outsource the
tasks to. A thorough understanding of these functions is necessary in order to properly identify a good
employee or outside consultant.
Fortunately, there are numerous professionals who are eager to help you as you start or grow your
business. In this chapter I will discuss those whom I think you should consider seeing as soon as possible.
These include a CPA or other tax advisor, Accountant / Business Consultant, Marketing Specialist,
Attorney, and Insurance Agent. An investment counselor might also be of benefit.
A CPA is a good source of information and guidance on tax planning, setting up your bookkeeping system, and choosing the proper business structure for your business.
There are wide quality differences between CPA's, I have found. I was once sent into a company to do a "spot check" on in-house accounting procedures and found that they had not paid employment taxes for several years. This company
had their income taxes prepared every year by a CPA company. Their financial statements could not possibly have balanced. No one from the accounting office had ever reviewed the accounting records of this business. They merely used the figures the client had turned in.
Within an hour I found several serious problems. In a few other cases I quickly discovered embezzlement. In each case the CPA had set up a "quick and dirty" cash basis accounting system. Whatever cash came in was counted as income. In a good quality accrual system, earnings are tracked whether they have been paid or not.
This double entry system is much more accurate.
Understand that a CPA firm offers many different services. Know what to ask for. If you go merely to have your taxes done, that is all you will get.
The CPA will use your numbers to prepare the return. You have not asked for, nor paid for, a review. A CPA should be able to refer you to a good bookkeeper or business consultant who can teach you procedures, set up of accounts, etc.
A lawyer will help you decide what legal form your business should take (corporation, partnership etc.). Seek legal advice regarding any contracts you need for your business, and before you sign any contracts.
Understand your liabilities and how best to protect yourself. Understand copyright and trademark laws so that your creative work and intellectual property are protected.
Business consultants are usually not CPA's. They are people who have experience running businesses, or extensive knowledge in economics and finance.
They should be able to explain pricing, cost control, cash management, etc. Many business owners who had CPA's complained to me that they did not have the INFORMATION they needed. I looked at their financial statements and found that they were cash basis statements, which are useless as far as a business planning tool.
I changed the company over to accrual and the owner now had timely, meaningful information. As stated above, cash basis means that expenses are counted when paid and income is counted when received. This creates a problem with timing.
My cash basis client wanted to cut her advertising because she felt it was not benefiting her business. I switched her to accrual accounting and was able to show her that as her advertising costs increased (they counted when incurred, not when paid), her revenue increased (it was counted when the sale was made, not when she received payment).
Without accurate statements, she would have made an incorrect business decision.
Liability insurance, property insurance and other types of insurance need to be considered.
Marketing is different from advertising; it takes place before advertising, and is on-going. Marketing tells you whether you should develop the business or product in the first place. Who is your market? Who now controls this market?
Can you address the current market better than competitors? Will you be creating a new market?
Advertising is done once you have your product or business in place.
Marketing and advertising need not be expensive. I once paid for a booth in a trade show just to see what type of response I got for my product. I quickly found out that although everyone loved the product, they were not willing to pay the price I needed to get. Thousands of people came through the trade show, and I received all that feedback for only the price of the trade show.
I knew a man who started an auto detailing company. He left flyers on the windshields of expensive looking cars in medical facilities (targeting doctors).
His business grew quickly.