This is 2 of a 5 part series on “The Five Traps Successful Business Owners Avoid”
#2 The Talent Trap
Successful Entrepreneurs attract talent. They form a board of advisors early. These advisors can work with the business owner independently, but the real synergy happens when they also work together with each other and the entrepreneur.
When I started my first business when I was fifteen, I immediately hired a CPA that was also a business owner like me. After all, an advisor that has walked in your shoes is priceless. The first thing my new advisor told me was, “I have two hourly rates: one if you call me before you do something, and a much-much higher hourly rate if you call me and told me what you just did.”
Put simply, it costs less to prevent a problem than to fix it. A good advisor will make you money above and beyond what it costs to hire them, especially if their advice is sought before (not after) the action is taken.
The Talent Trap successful business owners avoid come in two parts:
1.) Having advisors that work together as a team
2.) Having the right advisors that specialize, not generalize
Let’s address the second point first; having advisors that specialize. It’s well known in the medical community that the family physician is the go-to doctor for most ailments. Yet the family physician has an oath to refer you to a specialist such as a heart doctor when needed. The latest statistics from 2019 show that 98% of financial advisors are employees of a bank or brokerage firm. Less than 2% of financial advisors are Registered Investment Advisors that are often small business owners as well. If you own a business, make sure your advisors walk in your shoes. Your business and your exit strategy will be the best (or worst) investment you make. Ensure the Talent Trap is avoided by hiring advisors that are business owners themselves.
Consultants that work together as a team is equally important. The pain point here is the business owner may be paying an hourly rate to two professionals at the same time. However, this synergy and coordination ensures a timely and successful implementation of a strategy that will save legal and tax costs many times over. Prevention is cheaper than a cure.
As a Certified Estate & Trust Specialist ™, I enjoy working directly with my clients and their business attorneys. I develop strategies and the attorney ensures the strategy is solidified, compliant, and contractually completed.
The same applies to taxes. As a Certified Tax Specialist ™, my counsel and values are in protecting assets and income from future taxation. My clients and I depend on the Enrolled Agent or CPA to file appropriate tax reports and returns throughout the year.
Closing thoughts- As an Entrepreneur it’s easy to find more and more reasons to coordinate and rely on your advisory board. Consider asking those specialized advisors if they would accept a flat rate per quarter for their services. Most will, as they know they will be getting ongoing work to offset the discount of not billing by the hour.
Here’s to the success of the small business entrepreneur! We all know in this stay at home economy we need to fight together as a team for survival. Take care of each other and reach out if you’d enjoy scheduling a conversation.
Next in series is #3 the Tax Trap