-of owning and operating a business
by Scott Gaudin
Baton Rouge Market President at The First, a National Banking Association.
Do you know your ABCs? No, not the ABCs you learned way back in kindergarten. But, the ABCs of owning or operating a business. As long ago as kindergarten might be for some of us, establishing these “business” ABCs should be “learned” early in our respective business operations, as was learning our letters in early childhood.
What do I mean by “Business ABCs?” Three of the most important people, who can help make or break the success of your business are; your Attorney, your Banker, and your CPA. Thus, the acronym “ABC.” If you don’t know these folks intimately, you should.
Who are your trusted advisors for your small business? If they aren’t the “ABCs” I just spoke of, then you might want to reevaluate your approach. You should have them saved under your iPhone’s favorites. While the people who make up these “Business ABC’s” might all sell a suite of different products and services, they can offer so much more than just a tangible product for a fee. In fact, they want to act as your trusted advisor and be part of your fold. In my experience, the majority of business owners only think of their bankers when they need to borrow money, only call their CPAs near tax time and only contact their attorney if they have a serious legal matter. Each of these “ABCs” should serve as a trusted advisor on a more frequent basis, and building a relationship with each one has the potential to be a valuable source when your company most needs it.
“A” is for Attorney
While there are some legal matters on which you might not necessarily need an attorney, many businesses only seek out an attorney in legal situations that have already become both time sensitive and complicated. Most of the time it centers on litigation. IE, either someone has threatened to file a lawsuit against you, or you’re having problems collecting on a stale invoice and the offender is no longer taking or even returning your calls. However, an experienced attorney can also serve as an excellent source of advice on what kind of legal support you need now and could need in the future. Even in situations such as taking on new debt or new business partners, the input of an attorney who understands your type of business can be very valuable. You should consider your attorney one the cornerstone’s to your “Business ABCs”, who can serve as an advisor to guide you through legal processes. More importantly, helping you make key decisions that could affect the path of potential legal contingencies, and perhaps help avoid heartburn as it relates to your business in the future.
“B” is for Banker
I ask lots of business owners and decision makers who their banker is. Would you be surprised if I told you most say, “I bank with XYZ Bank.”? But I don’t mean which bank holds or lends them money. I mean which banker, as in “who”. If they don’t have direct contact with a specific individual, then that’s a problem. The ultimate compliment to a banker takes place when money is in motion, and they are thought of first.
Even in the cases when your business might not have a need or even qualify to borrow money, maintaining a dialogue is extremely valuable. Why? Well, what kind of fees is your account being charged? None you say? How do you know? Have you looked? Have you asked?
On the subject of borrowing money, no banker likes saying “no”. Their compensation simply isn’t designed to do so. However, a talented banker will help keep your business in good shape, help explain what it takes to be “bankable”, make recommendations to improve your business, and advise you on alternative sources if and when you need them. It’s beneficial to keep in mind that your banker can be more of an advisor for your business and not just a source for a loan when you need to borrow money.
“C” is for CPA
Be sure to meet with your CPA more than just during tax season. Especially considering not only the rapidly changing federal tax code, but even more so if your business has a sales tax component. Spend more time meeting with your CPA, and they will become an informed advisor to your business. In addition to preparing your taxes and balancing your books, your accountant can help you better plan for growth. They can even offer advice toward subjects such as cash flow management, as well as know a thing or two regarding estate planning and strategies that could lessen your tax burden. If your business is very new, you may find that your personal finances are comingled with your brand new business’s finances. Your accountant can be a resource to help keep the two as separate as possible, while managing both. Not every business can afford a Chief Financial Officer. A talented CPA can act as an outsourced solution, with far less a cost.
Who are the right “ABCs” for my business?
When choosing a partner as it relates to your particular “Business ABCs”, look for a partner who not only has experience in a particular industry and can meet all of your needs; but also comprehends why your company has certain approaches or philosophies. Sometimes the “why” is just as, or even more important, than the “what.” The professionals in your “ABC” model can offer advice on your business’s strategic plan, legal structure, and financial products and services. They might even suggest additional services or make referrals you haven’t thought of or even realize you might need. More crucial than any of these other factors, is to find professionals who are looking to build a mutually beneficial relationship with your business. Not just execute a transaction and disappear, to surface only when it’s time for the next transaction or payday on their behalf. It is vital to cultivate these adversarial type of relationships by offering consistent, open and honest dialogue with one another. If you’re experiencing hard times or turbulence in your company, say so. Perhaps they can suggest pulling certain levers or initiate some changes, which could alleviate some of the duress.
At each stage of your business’s growth, making changes is inevitable. Even a decision as major as having to find a new vendor, supplier or bank. By maintaining a relationship with your attorney, banker and CPA, you can be more confident that they have the knowledge to help your company reach its full potential and the desire to help your business succeed.