Typically, people who start their own
businesses have learned a trade. They
may understand the operational side of running a company, but they may be unfamiliar with the business details involved. If all
they know is the core business and they don’t
understand all the factors that impact operations, such as financing, legal, accounting, tax
and insurance liability issues, they have to
rely on professional advisers for guidance.
And, they do not always have the time to
become experts in those areas. Time
notwithstanding, they have to protect their
companies, mitigate their risks and take
advantage of opportunities. The most effective way for business owners to do that is to
form appropriate teams of advisers in both
their start-up and strategic planning periods.
Smart Business spoke with Roger
Gingerich, CPA/ABV, CVA, a principal with
Skoda Minotti, about advisory teams, who
should participate and how they can help.
Why should owners set up advisory teams?
In the short-term, it is so a business owner
can focus on the core parts of his or her business and growth early on. Long term, it is so
owners can start thinking strategically and
work with people who have ‘been there,
done that’ to help them through whatever
challenges they might face. Advisory teams
are particularly critical for business owners
who want to grow a million-dollar company
into a multibillion-dollar company. In either
case, the advisers and owners should involve
themselves in an information-sharing process that can help make sure that, as a company grows, it grows the right way.
Are there different types of teams?
There are two basic structures, the ‘blocking and tackling’ team and the strategic
planning or ‘Where are we going from here?’
team. Every small business owner should
create the first layer of advisory team. The
‘blockers and tacklers’ come into play when
a company is formed and starts to grow.
They help owners create the foundations of
their companies and drive their internal
workings once they are launched. Not every
business will need to field a strategic planning team, however.
Who are the ‘blockers and tacklers’?
Depending on the type of company, the
players might include an accountant, attorney, banker, bonding agent, financial adviser
and insurance agent. These specialists handle all facets of the business of which the
owner might not have in-depth knowledge.
The ‘blocking and tackling’ team allows owners to concentrate on their core businesses,
which is what they are really good at.
When does the strategic planning start?
The strategic planning team doesn’t enter
the game unless the ‘blocking and tackling’
team is in place. Remember, the first team
addresses the day-to-day or short-team goals
and challenges a company faces. Once that
team is in place and performing well, owners
can start thinking strategically and long term.
That is the point at which owners can form
their boards of directors or advisers.
Who plays for the strategic planning team?
The strategic planning team is a board of
advisers or directors. It is for more sophisticated businesses or companies that are looking to grow strategically. The players
might include a customer, a vendor, a specific industry leader who is very familiar
with the type of business, and someone who
has worked with a similar-sized company
and who understands all the challenges a
business owner is going to encounter to
evolve from a company that is just moving
along to one that is planning strategically for
the next four to fives years and beyond.
Who quarterbacks the advisory team?
Every team needs a quarterback. In the
business environment, it is often the accountant, since a lot of the day-to-day financial
operations impact insurance, banking and
business transactions. Or, it can be someone
internally, such as a CFO, who is working
closely with team members and knows when
or when not to bring them together.
Regardless of who the quarterback is, someone should lead the team, and that someone
should be an effective communicator. Communication is essential with an advisory
team. And, the communications should not
be merely between the client and individual
advisers. All the advisers and the business
owner have to be on the same page to prevent them from working at cross-purposes,
which requires them to communicate frequently and effectively.
What are the risks of not putting these teams
in place at any stage?
For one thing, business owners might run
into pitfalls or land mines of which they
might not be aware without having people
with specific expertise to consult. Or, they
might miss opportunities. For example,
there might be tax law changes that can
affect investments into research and development or capital improvements. If the right
advisers are not on board, owners can miss
tax-planning opportunities that involve tax
incentives for research and development or
creating jobs.
ROGER GINGERICH, CPA/ABV, CVA, is a principal with Skoda Minotti, based in Mayfield Village. Reach him at (440) 449-6800 or
[email protected].
