Entrepreneurial companies are facing headwinds going into 2013, including fiscal cliff uncertainty, the prospect of higher taxes, more regulation and continued slow economic growth, says Tullus Miller, Bay Area partner-in-charge at Moss Adams.
“Having a trusted business adviser to help navigate these uncertainties and measure the impact on your key business decisions is most important,” he says.
Smart Business spoke with Miller about how a trusted business adviser gives you the information you need to know — not what you want to hear.
What should entrepreneurial companies consider in a trusted business adviser?
Entrepreneurial companies are very dynamic and have various business needs during their life cycle, including, but not limited to, expanding business offerings nationally or internationally, developing new revenue sources and restructuring operations. These types of activities are generally complex and require substantial capital investment, so trusted business advice can help make decisions simpler, while shortening the timeline. For example, with a growing startup company, an entrepreneur can get advice on what kind of systems to use; how many people to have in the back office; or what kind of tax structure to implement, e.g. a pass-through or corporation.
In considering a trusted business adviser, weigh a few key questions:
- Does the adviser understand your business and how the activities might fit into your long-term goals?
- Does the adviser have insight into complex areas such as tax consequences and how it affects profitability?
- Has the adviser provided sound, practical advice over time that helped the business?
- Does the adviser have your best interest at heart and tells you what you need to hear as opposed to what you want to hear?
- Does the adviser have a deep network of professionals from which to help provide you with appropriate counsel, including legal, banking, etc.?
Having appropriate business advice — based on your medium- to long-term goals and objectives — from an unbiased, trustworthy and experienced source is, and should be, an important part of any decision-making process.
What mistakes do some entrepreneurs make when seeking an adviser?
A lot of times entrepreneurs are impatient, just by nature, as they are go-getters who want things to happen. Therefore, they need to guard against not taking the appropriate time to vet the business adviser. It’s critical to talk to two or three different advisers to ensure you find the right fit, looking at your personality and their knowledge base and reputation, etc. And, then it’s going to come down to pretty much a judgment call. There’s very little science in this. It’s mostly art.
You want to get as much information, even in a dynamic environment, as possible because you must minimize capital-intensive mistakes in an entrepreneurial company.
Do you have any tips on how to organize your adviser(s)?
Depending where you are in your business life cycle, the more nascent you are, the more external advisers you want to use, while making sure you control their costs, too. As you move up the business life cycle curve to maturity — even in a high growth mode — you have to decide at some point to bring experts in-house, and there’s no bright line on how to do that.
A trusted adviser with integrity will tell you what you need to hear, even at the short-term expense of his or her own business. Someone who says, ‘It looks like you’re spending a lot of money here, and you’re starting to grow. You either need to upgrade your staffing, getting people who are more experienced, or expand the number of folks to help you do what you need to do.’
Once advisers are in place, what can be done to maximize the relationship?
Before you close a deal — even if you’re anxious to move ahead on an expansion, re-organization or a new compensation plan with more performance indicators — you allow your trusted adviser to look at the agreements being drawn up. It may not be in the adviser’s area of expertise, but he or she, or others in that firm, could see something that needs to be changed, allowing you to avoid unintended consequences.
Tullus Miller is Bay Area partner-in-charge at Moss Adams. Reach him at (415) 956-1500 or [email protected].
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