Congratulations on your start-up business! You own your company, and you have exciting times ahead. You are obviously confident of your product or service that you are selling to your customers, and I applaud your decision to go out on your own. As a three-time business owner, I would offer this advice: there are key service personnel that will prove to be extremely valuable, and could contribute greatly to your company’s success, so choose them wisely. These people are essential for running a business smoothly, no matter what industry you are in. I encourage you to conduct in-depth due diligence to make sure you have a strong partner in each category. Family and friends are always a good sounding board for your ideas, and they are often the source of initial capital, but you need unbiased providers, so do not hire them for these services:
Attorney: Your attorney is a valuable resource for ensuring that you conduct your business in the best possible manner. Just like you tell your doctor about every ache, pain and rash, no matter how embarrassing, you need to make sure your lawyer knows everything. From the very first legal documents to create your business, until the final sale or dissolution of your business, your attorney will be your advisor on all legal matters, and you should maintain a friendly, professional relationship. Ask their advice on a constant basis, such as what type of entity you should form for your business, and make sure they approve all sales contracts, vendor agreements and employee agreements. Your first discussion with your attorney about an issue should not start with, “I received this notice in the mail…” Attorneys can offer a wealth of knowledge about business based on what they have seen with their other clients. They can foresee obstacles and provide valuable insight that is hard to find elsewhere.
Bookkeeper and Accountant: Given the large difference in what each usually charges and their expertise, these should not be the same person. When you first start your company, you will want to interview a few accountants. It’s a good idea to pick one that will treat you like an important client. Choosing an accountant at a very large firm can sound appealing but may not be ideal for a start-up since you will not bring much revenue to them in the beginning, which means very little attention. Ideally, pick an accountant that has worked with start-ups and has experience working with business owners in various stages of their company’s life cycle, and it is also a plus, but not necessary, for them to have experience with clients in your industry. Like your attorney, it is important that you share everything with your accountant so that you do not find out later that you are out of money because expenses crept up on you. Your bookkeeper should be someone that you trust to input and upkeep all of your financial information and provide up-to-date tracking of your company’s financial health, while your accountant will prepare your taxes and provide high level guidance.
Banker: It is highly unlikely that you will qualify for a business loan to start your business, but you should always be planning for the time that you will. Choose a bank that has a history of lending to small businesses in your industry, and meet the bankers and work with the one that you like. Due to the common issue of bankers moving around within their own bank or to a competitor, make sure you are in contact with more than one, and always ‘replace’ the banker that leaves with another so you have two at that bank. However, stay in touch with the banker that left, for that person will be able to offer a competitive bid when you are finally ready for a bank loan. You will likely need someone at the bank to ‘champion’ your deal through the ranks, and it is helpful when they can say, “I have known John for years, ever since he started his business.”
Alternative Lender: Since banks will only lend to a business with a financial track record, it is smart to look early for an alternative lender to provide your company with the necessary working capital to grow your business. Cash is critical for any business, but especially start-ups, where there are wild and unpredictable peaks and valleys in revenue and expenses. Your lender will be able to increase the funding to your company through extreme growth and perhaps even through unprofitable times. The alternative lender is a means to get your company to the lofty plateau of sustained profitability, when a bank will likely take over your funding.
It is quite possible that these service personnel will become your top advisors, contributing their knowledge and experience to your success. Taking the time to find the right people in these key positions can pay off in many ways. Get to know and trust them, and they could help take your company to a level of success you didn’t even dream of. As Mel Brooks once said, “It’s good to be the King!” Just don’t be alone.