Monthly Archives: May 2013

Team Resource – Your Business Consultant

Business Star 3-13You may be thinking you know everything you need to know to operate your business, so you can get by without a business or marketing consultant.  You probably could, if you truly do know everything you need to know about your business and feel an independent, third party perspective is unnecessary.

Let’s do a little test of your understanding up front:

  • What is your operating profit margin?
  • What systems are in place to avoid employee theft?
  • How many of your customers made repeat purchases in the last year?
  • What kind of impact will the federal health care system have on your business?
  • How current is your unemployment insurance coverage?

These are questions you should be able to answer without much thought, although the larger concern is how well you are able to stay on top of this information and the related implications … and keep all your other tasks under control, too.

Your profit margin is a bellwether of how well you are doing.  Grocery stores operate on a much smaller margin than jewelry stores.  Your accountant can help you figure out your margins if you’re unsure how to calculate cost of goods sold and other variables.

A five here or a twenty that fails to make it into the cash drawer may seem inconsequential in the big picture, but nickels and dimes add up over time.  Tills should balance at the end of shifts, and since cash is a measure of your success, you need controls in place to monitor your capital, even if you trust your employees completely.

Knowing your customers and their buying habits is market research, and it’s customer relations.  You and your staff should be able to greet returning customers by name when they come back to your store.  Their return is an indication you’re doing things the right way … for them.  Or else they’ve got complaints, which means you need to get on top of those and solve them promptly or they could have a negative impact.

The new federal health care regulations and your unemployment compensation insurance are difficult matters to monitor on a consistent basis.  Your insurance agent is trained to stay abreast of changes in laws and can be an asset to your business, managing your risk, saving you money, and covering your assets.

You have employee issues, inventory concerns, sales numbers and projections, customer service situations, payroll, taxes, marketing, production, and whatever else you have to deal with every day.  Oh, yes, how much time do you take for yourself every week?

Your business consultant is a resource that is valuable to your business in many ways, from helping you manage potential threats and viable risks to staying focused on your mission and key objectives and guiding you in growing the business.  If you avoid using a consultant because of the cost factor, demolish that thought process and look at it, instead, in terms of how that expense should manifest itself in double, triple, or even larger growth for your business.  Round out your team with strong, professional advice.  Your consultant should also become an advocate for your business and hold you accountable for prioritizing the work you must do to make the right decisions.

Team Resource – Your Insurance Agent

What in the world does an insurance agent have to do with managing your business and being part of your non-staff management team?  Your agent is worth far more than you may want to believe.

Let’s start off by covering your most vital employee – besides yourself.  Think for a minute who that person might be.  Let’s assume it’s your sales manager and that she has been driving your bottom line for five years already.  Do you have “Key Man” insurance to cover your company if something should happen to her?  Your insurance agent can help you put together coverage to protect you and to encourage her to stay on board for the benefit that policy can offer.Insurance Umbrella

In another scenario, let’s talk about you and your relationship to your business and your employees when you are the office manager, sales person, production manager, human resource director, marketing vice president, and president of the company.  Oh, and you travel a lot to trade shows or client meetings.  Are you covered adequately if you’re involved in an accident and are unable to work for a month or two?  There are important considerations, such as who will run the operation while you’re incapacitated, but more essential is where are the funds going to come from to keep the operation afloat while you’re out of commission?

Talk to your insurance agent about these concerns.  At least once a year you should meet with your agent and do an insurance review.  Ask if you have enough liability coverage for customers or employees getting hurt in your place of business.  Talk to her about the changes in national health care laws and what your position should be on providing coverage for your employees.  Do you have enough, and the right type of, life insurance on your life to take care of your family and the business?

Like your team’s legal counsel, your insurance agent is there to help you minimize the risks that can put you out of business.  Yes, there are costs incurred with insurance policies, but consider the cost should a catastrophe occur and wipe out your place of business with inadequate insurance coverage to get you right back in operation.

Talk to your insurance agent about any concern you may have.  Do you need product liability coverage?  Does your facility lie within a flood plain?  Are you planning a remodeling project, and do you need coverage for the contractor’s faults?  Is your worker’s compensation coverage adequate?  What about potential damage to your intellectual property rights?  Some of these may be a stretch, but the point is that your insurance agent is a valuable member of your team and can give you answers to these and other insurance-related questions.

You should get to know your agent so you can call him whenever you have a question.  You know you have the right agent when you do call, he asks more questions than you thought needed to be asked, and then either tells you you’re covered or you probably don’t need that kind of coverage.  That tells you there’s a trustworthy relationship between the two of you, and that’s good.

Team Resource – Your Accountant

Now that the tax season has passed, most business owners have a tendency to forget about their accountants.  This can be a costly mistake.

CPA Logo

Your accountant – preferably a Certified Public Accountant (CPA) or Enrolled Agent (EA) – is a vital member of your management team if you’re operating a business and don’t have an accountant on staff.  A trustworthy accountant can prevent what you may read about in the news every so often, embezzlement from the company by a key employee who “intended” to pay the money back or had a gambling problem or …

Your accountant is more than that, though.  They are there to prepare and review your financial statements, including balance sheets, profit-and-loss statements, and cash flow, among others.  We advocate you meet with your accountant at least quarterly, but preferably on a monthly basis to stay abreast of your company’s financial status and cash flow.  They can identify issues of concern and advise you what to watch for when you review your own statements.  They should also offer suggestions about ways to control expenditures – the decision is ultimately yours – and may even provide insight on how to increase revenues.

They can reconcile your bank statements, handle your payroll, and prepare your quarterly payroll statements and keep you from incurring penalties on your tax obligations.  Obviously, there will be fees associated with the services you choose to have your accountant perform for your company, but keep in mind that the cost should be more than offset by the money they save you and help you make in exchange for their professional guidance.

An example:  A tavern owner was working with an accountant (not a CPA) who was letting the owner pay both the company’s share of FICA and other taxes as well as the employee’s share.  In essence, the owner was giving his employees a bonus and incurring additional taxes for them because the accountant overlooked the problem.  A CPA would have been obligated to advise the tavern owner against that practice and saved a lot of headaches, penalties, and money as a result.

Think of your accountant as a valued advisor.  They are likely to know bankers who may invest in your business, or investment representatives who can build your retirement fund, and other professionals who can contribute to your team and grow your business.


Team Resource – Your Legal Counsel

If you have thought that the only time you need an attorney for your business is when you get in trouble, it’s time to eliminate that mindset.  Professional legal counsel should be viewed as an essential member of your management team, especially if your firm lacks the size to have full-time corporate counsel on staff.

Scales of Justice

The problem is that most business owners wait until they are sued to seek out and use legal counsel, instead of preventing lawsuits by the wise and judicious use of a lawyer.

The first step is finding an attorney you trust.  Talk to one you already know for advice and a referral to the correct barrister to fit your needs.  Keep in mind it might be the lawyer you ask for the reference from who becomes your counsel.  Knowing whether you can afford their services is less important than knowing they are able to protect your assets and save you money by avoiding legal action.

The second step is understanding what you need your legal counsel to do for your business. They can draft and review employee agreements and assist in handling employee grievances and complaints.  They should draft and monitor your non-compete, non-disclosure, and confidentiality documents and insist that you use them diligently to maintain your intellectual property rights. Any contracts, leases, or other obligations you are considering should be reviewed by your legal counsel.  Add in corporate by-laws, employee manual review, incorporation, operating agreements, and other legal advice and it becomes quite clear how essential your lawyer is to your management team.

Third, be clear on the role you want an attorney to play on your team.  Discover their areas of expertise and their willingness to learn.  If you plan on franchising your business, look for counsel with franchise experience or allow them time to study up on what is required.  Their knowledge and experience obviously comes with a price, so that clarity is important and has value to your checkbook.

As you get to know your lawyer, make sure you tell them to let you know when you’re on the clock since most of them bill by the hour.  Find out when the clock is ticking for such things as a 10-minute phone call or if they are responding to your E-mail so there are few surprises when the invoice arrives.

Fourth, talk to your lawyer about the steps you can take to avoid litigation in the first place, including proper treatment of employees, return policies, guarantees, product liability, vendor agreements, and any other aspect of your business that exposes your company to legal action.

Remember, your legal counsel is a vital member of your team and can be, must be, trusted to protect your assets.  Take the time to interview several to find the right one to take care of you and your business.  It could be the most important decision you make.