Protecting Your Business - Trusted Advisors - Part I

There are many ways in which you have to protect your business. Some things you can do yourself as we discussed in the last posting. Others require the help of outside experts. Often, business owners tend to want to do everything themselves. Sometimes it is because of their ego and other times it is to save money. Either way, they are making a mistake.

When you have a cavity in your tooth, you don't drill your own tooth and try to fill the cavity yourself. You go to an expert - a dentist. You need to do the same with your business.

Next to yourself, your attorney, your CPA, your banker and your business insurance agent are the most important people in helping to protect your business. Most business owners only think of the insurance agent in terms of protection. All four of these professionals protect your business. When I purchased my first business, the first four speed dial buttons on my phone were - you guessed it - my attorney, my accountant, my banker and my insurance agent.

Often, business owners wait until they have a legal problem, or until it is tax time, or they have an insurance claim, or until they are desperate for cash before they contact one of "the big four." I believe that it is important to develop a relationship with all four before you start or purchase your business. If you are in business already and don't have a good relationship with them, the time to start is NOW.

Before I go on, let me emphasize that it is extremely important to make sure that the member of "the big four" that you select is accustomed to working with your size and type of business. I don't necessarily mean that if you are a machine shop that they only work with machine shops. I do mean that they have to be familiar with machine shops. Unfortunately, I have seen business owners select an attorney for their business because the attorney handled their divorce or personal injury case. Just as your business specializes in a product or service, so do attorneys, CPAs, banks and insurance agents. An insurance agent who does a great job with your homeowner's insurance may not be the best choice for your business insurance. A CPA who specializes in auditing large, non-profit service organizations may not be the best for your business if you are a small fabricating business.

Don't be afraid to ask them about the type of clients that they have. Ask for references. Ask other business owners who you know and respect if they have anyone that they can recommend to you. In my opinion, these are four of the most important people in your business life. If they are good at what they do, they can save you both money and headaches. I have been sued for amounts in the millions, have had large insurance claims, have been audited by the IRS and the state, and have had immediate needs for short term working capital, and I can assure you that "the big four" helped me immensely to protect my business in all of these situations.

When I use the term "build a relationship" with them, I am saying that you need to tell them about every aspect of your business. A physician can only help you if he knows what is hurting you. "The big four" can only help you if they know all about your business. Make sure they are familiar with your physical facilities. Give them a tour. Demonstrate your equipment for them. Show them your products. Introduce them to your employees. Have them meet some of your customers.

Please don't think that I am saying that if you have a machine shop that your attorney needs to be able to operate a vertical boring mill. However, they do need to .........

• read your business plan.
• know your short term and long term objectives.
• have copies of financial statements.
• have copies of your employee and policy manuals.
• know BEFORE you make major decisions.
• etc. etc. etc.

Don't be protective of your business information. Tell them EVERYTHING about your business - the good points and the bad. When the doctor says, "How do you feel?" you don't say "wonderful" if you have been having chest pains. He won't be able to protect you from a heart attack.

In the next posting, I will get into the details of dealing with each of "the big four." Please remember that your comments are always welcome. If you enjoy reading this blog, please pass on the name of the site to anyone else who you feel would be interested in reading it.