Since many new entrepreneurial ventures are often started on a shoestring budget, where you spend your financial resources can be a prickly situation. Far too often, I see new business owners who in some sense are really penny wise but pound foolish as the old adage goes. When is the right time to get yourself legal help? Do you really need an outside person to do your books or can you do it yourself? Does it merit having a financial person talk to about entity planning and business structure? Can’t you just figure this stuff out yourself?
Even with many years of corporate experience, I faced these same questions when I opened my business. The costs for some of these professional feels like a waste of money when you need those precious resources for things like marketing, staffing, and technology. However, I will tell you that a big mistake in any of the areas below can be a brutal blow in the speed of how fast your business grows. Here are a few areas I would not go without in your new business.
- Legal – I have worked with over 1,000 business owners in my career. Many of them still remain unprotected in areas of their business because they didn’t spend the money to get the right kind of legal help. If you are creating products or services (including blogs) that need trademarks, patents, or copyrights, you need to get your hands on the money to protect what you are building. In addition, a good lawyer can help you with your employment contracts, non-competes, or non-disclosure agreements as you hire new employees and pitch your ideas. If you have any notions of tying employees in with stock options, a legal advisor can be even more important as a first year consultant in your business.
- Financial/Accounting Help –Based upon whether your business is more capital or service intensive, a good financial advisor and/or accountant can help you determine the right structure/entity for your business. If you set up the business incorrectly, it could cost you thousands of dollars in missed tax opportunities. You should get someone to handle your books as the banks today will really want to see you have all of your ducks in a row when you come asking for money (or refinancing debt) down the road. These professionals may also be able to help you with your pro forma, overall company forecasting, and/or shopping bills in your business to get the best deal.
- HR –Most entrepreneurs open a business and hope to get away from the human resources department they knew at the ‘big’ corporation. Since each state varies in its laws, policies, and a procedure, having a human resources consultant is critical so you can learn the dos and don’ts about your work place environment. They can help you set an initial policy handbook for new employees that you bring aboard or advise you about what you need to have in place if you hire a bunch of independent contractors. The last thing you want in your first year in business is a lawsuit from a terminated employee.
This is part five of a ten part series on entrepreneurship. Spending $5,000 or $10,000 for these type of consultants feels painful when you become a new entrepreneur. It will always seem like these people are overpaid and underworked when you stroke the checks. However, it is a necessary evil to get these people in place to protect you as you grow the business.
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Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS® Co-CEO and Founder oXYGen Financial, Inc. Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), Member FINRA/SIPC. Oxygen Financial is not affiliated with NFPAS.