Tapping Your Advisors

Starting a business in any industry can be overwhelming.  From organizing start-up capital to gathering the essentials (i.e. computers, office space, etc.), there are countless steps between “I’m starting my own business” to “we’re open for business.” 

 

Unfortunately, many entrepreneurs and new business owners make the all-too-common mistake of jumping right into “we’re open for business,” leaving their new company – and in many cases, themselves – vulnerable to issues that may impact their success.

 

So what does it take to get successfully from point A to point B?  A lot depends on the type of business or even the industry, but generally speaking, a few key trusted advisors (i.e. attorneys, accountants and insurance advisors) can help any new business start out on the right foot.  Below are some questions to discuss with your advisors as you build your business:

 

1.       What are my strategic goals?  Before you even think about enlisting outside help, set tangible growth goals for your company.  Ask yourself how many employees, how much revenue or how many clients you’d like to have in five years, 10 years or 20 years.  Setting strategic goals will help you and your advisors better plan how you can get from point A to B.

 

2.       What assets do I need and how do I protect them?  It may be tempting to drain your 401(k) or ask every friend you’ve known to invest.  Before you make the rounds, though, identify and meet with a set of key advisors – including your accountant, attorney and insurance advisor – to consider your capital needs and how best to protect your assets.  Also start to make connections with a trusted banker who can provide guidance and potential access to loans.

 

3.       How do I protect my business?  Speak with an insurance agent about the various different types of insurance you may need.  Consider a Business Owner’s Policy, which bundles property, business income and general liability coverage.  Some types of coverage are required by law, such as workers’ compensation, if you have employees.  Others, such as professional liability or commercial auto, may also be required or desirable depending the on the type of business you are starting.  

 

4.       What will my employees need?  Beyond health insurance, which is usually top of mind, you may want to offer benefits, such as retirement plans and life and disability insurance, which can help to attract and retain top talent and protect their lives and livelihoods.  Voluntary, or employee-paid, benefits are often an affordable way to offer employees a competitive benefits package.

 

5.       What should I be doing now to prepare for the future?  While planning for your departure may seem premature right now, consider your business and family’s needs if you were no longer around.  Life insurance can help protect your family, and a buy-sell agreement is an important consideration if you have partners.  Consult with an attorney for advice and, while you’re at it, discuss the best structure for your company, how to draw up contracts with landlords, clients, employees, etc., and any other legal matters you need to get going.

 

6.       How do I protect my profit?  Consult an accountant about start-up tax deductions to help you to control cash flow.  Also, speak with a financial advisor about various retirement plan options that enable you to set aside funds on a pre-tax basis.  He or she can help you design a plan that can grow with your business.