March 2, 2019 96
March 2, 2019 96
It is very imperative that care should be taken when selecting your business and professional advisers. How well you select your professional and business advisers will have a direct influence on the success or failure of your business.
Poor advisers or no advisers at all will almost certainly lead to your business downfall. Your main advisers are your solicitors and accountant, followed by your bank manager.
You should see at least three different people from each of these three areas, before you make your selection, as it is important to have a comparative assessment.
The following general guidelines should assist you in the careful search and selection of your adviser.
This degree of specialization may or may not be necessary for your situation. It is not uncommon in larger firms to have small business clients passed over to junior associates or students in training, while the more senior advisers handle larger clients. Small firms generally relate well to small business entrepreneurs. Selecting an adviser in a small or medium – size firm of three to ten people provides you with alternative advisers if you need them. A sole practitioner may be very busy, too generalized in his or her areas of practice, and lack the referral base within the firm.
There are basically two types of solicitors that you should consider as your adviser. The same person might be able to assume both roles.
First, you need a solicitor who specializes in small businesses. One who cares about small business clients assumes the same role and attitude towards your business health and survival that your doctor does to your physical health.
Second, you need a solicitor who specializes in contract law. You may need to have several standard contracts prepared to depend upon the type and style of business you are considering.
There will be times when you will need to have a specialized contract made up by a solicitor, or have your solicitor review and advise you on a contract that a client has prepared.
If your business solicitor is not an expert in contract law, request a referral to someone within the firm or outside who is for continuity and efficiency, you will want to maintain him or her for all matters that do not require additional expertise. You should be able to phone your solicitor as the need arises, and feel confident that the unique respects of your business are known and understood.
For your protection, it is advisable you engage a solicitor before you start up your business, as there are many legal pitfalls that can be encountered. There is a temptation to save money on legal fees in the early stages of the business when cash flow is minimal.
Some people do their own incorporation to save on initial startup expenses, but then continue the saving by never obtaining legal or accounting advice – an unfortunate example of false economy and bad judgment.
It is very important that you obtain a qualified accountant. An accountant is the other essential business adviser on the management team. A bookkeeper is not an accountant and there is no law to prevent anyone from using the name accountant and purporting to provide accounting services without any qualifications and training.
However, a chartered accountant can advise on all startup procedures for a new business, including the tax and accounting considerations of various types of business organization. An accountant will communicate with or coordinate work with your solicitor if required. The accountant considers such important matters as when your business year-end should be and what books should be kept.
An accountant can advise on all aspects of tax planning and tax-related business decisions that occur from time to time and submit your tax returns to the Inland Revenue. An accountant can also advise how to set up your office bookkeeping system. The accountant can have the bookkeeping done by someone in his firm at a negotiated fee, or you can engage an independent bookkeeper.
An accountant can advise you on preparing a business plan for a loan application. This includes recommending the type of loan you should consider and how it will be repaid. He will be required to prepare a profit and loss account, a balance sheet and a financial statement. He or she may refer you to a bank, which can have a positive effect on your loan application if the bank knows and respects the accountant.
An accountant can analyze and interpret your financial information, point out areas that need control, and recommend ways of implementing the necessary change.
Your relationship with your bank and the bank manager is your financial lifeline. The process of selecting a bank is critical and comparative shopping is necessary to obtain the best combination of personality and knowledge.
There are changes in your bank’s relationship with you. When the manager changes, there is always a period of risk and uncertainty. The new manager may not want to have any medium or high-risk loans on the books taint his or her record.
During the first three or four months after a new manager takes over, outstanding loans are received and categorized within the criteria set by the new manager. This is the time when loans can be called in, additional security requested, or interest rates raised. You should develop a personal relationship with the manager when you take out a loan.
If you hear that a new manager has taken over, make a point of introducing yourself quickly and briefly discuss your business in a positive way.
Bank policies change from time to time and your type of business could be looked upon as increasing in risk. You may have a diversified business, not just related to property, or you may have other options available that you could explain to your bank manager.
You may wish to approach a practicing consultant for advice to assist you in your business. Consultants are not restrictively licensed like other professionals. To protect yourself, you should require their expertise, qualifications, and lengths of experience; obtain references and contact them.
Apply the general criteria for adviser selection. You will want to satisfy yourself that the consultant is personally successful.
If the consultant has not been successful based on the general criteria for adviser selection, how can he possibly offer advice that will help you towards success? Be advised!
Before choosing a partner, the following questions should be completed by you about your prospective business partner. It should also be completed by your prospective business partner about you.
The next step is to exchange your answers and discuss areas where your answers conflicts or where sensitive concerns have been raised.
It is essential that you be completely candid in your responses. If you can’t resolve the outstanding issues, don’t go into business together.
Selecting your business professional advisers and partners is a very serious business and entrepreneur must know. Choosing business professional advisers and partners is like choosing a life partner; so it must be done with utmost care and consideration of many things.
All the general criteria mentioned above must be critically examined one by one, and the advice is given taken care of.
The entrepreneur should take the issue of choosing solicitors, banks, accountants, and consultants very serious because they contribute a lot to the lifeline of any business.
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