a business plan as there are advisers. Note also that you may alter your basic business plan depending on the reader. For example, a bank may be interested in very different information than a key employee. When preparing your business plan for a certain audience, make sure you have ascertained what type of information they require and what is most important to them. For example, as outlined above, investors will want information on their return on investment. Bankers will want information on insolvency. Be prepared to tailor your plan to different groups of readers.
At first, the sheer volume of the information required for this document may overwhelm you, but take it one piece at a time. All of this information should be thought about and planned out before you open your doors. It may take several months for you to gather the information and do your planning. However, the more up-front planning you do, the greater your probability of success.
Consider Your Exit Strategy
As you’re starting up your bookkeeping practice, the last thing you want to think about is ending it, just like it’s never any fun to think about funerals or estate planning. But having a plan in place for the eventual sale or transfer of your business will help to ensure that you operate it aware that you are building value over time. Many small-business owners don’t consider whether they’re building a business that would be worth anything if they died or wanted to sell. Businesses that rely on the presence or personality of the owner cannot easily be sold to someone else. Customer loyalty is built on that personal relationship.
You want to build the “personality” of your business so that, with training, one of your employees or a new owner can provide the same quality of service that you do. Think about a company like McDonald’s. You probably don’t even know the entrepreneur who owns the local franchise. McDonald’s itself has a strong corporate identity or “personality” that you as a customer are familiar and comfortable with. This is what keeps you coming back.
As you start up your business, think about your ultimate goals. Do you want to build it and sell it for a profit in ten years? Do you want to pass it on to your children when you die?
When you begin with the end in sight, you will be able to aim your business to that ultimate goal and will be much more likely to meet that goal when you’re ready. For a more in-depth discussion of exit strategies, you may wish to refer to Finance & Grow Your New Business: Get a Grip on the Money, also published by Self-Counsel Press.
Selecting External Advisers
The most successful entrepreneurs in the world understand that no business survives and thrives in the long run without being surrounded by a competent and visionary group of external advisers: lawyers, accountants, financial planners, and a board of directors. It can be a very daunting task, though, to choose those advisers. How will you know what their credentials are? Will you feel comfortable with them? Will they align their goals for your business with yours?
When you first start your bookkeeping practice, you may think that this would be a good area in which to conserve your already limited start-up funds. As a financial adviser yourself, you may think you know enough about the financial, legal, and accounting aspects of your business that you don’t need to bring expensive consultants on board. I highly recommend, however, that you invest in good external advisers. A few hundred dollars now can save you a few thousand (or more) later.
Different advisers will provide different services, but in general, here’s what each adviser can provide you and your business:
(a) Your lawyer. You will need a lawyer to advise your small business on many issues, including the following:
• Incorporation
• Labor laws
• Contracts (with customers, suppliers, and employees)
• Mergers and acquisitions
• Estate planning matters
• Exit strategies
• Personal wills and powers of attorney
(b) Your accountant. Although, as a bookkeeper, you already have a strong financial and accounting background, a good accountant has experience in the following areas:
• Selecting and setting up your record-keeping system
• Developing your monthly management operating plan
• Defining your key success factors
• Preparing cash-flow projections
• Tax planning
• Exit strategy planning
• Mergers and acquisitions
• Human resource interviewing and screening
• Growth strategies
• Estate planning
(c) Your financial adviser. Of all of your advisers, your choice of financial planner can have the greatest impact on your personal and business wealth. Most financial planners can do the following for you:
• Draw up an investment plan for your retirement
• Recommend the mix of investments your portfolio should contain
• Recommend specific investments and even be able to purchase them on your behalf
• Help you determine your insurance needs
• Recommend other financial products, such as mortgages and tax-deferred shelters
Questions to Ask Advisers
You will want to ask your potential external advisers several key questions to ensure that they are a good fit with you personally and with your company. You not only need to assess their experience and skill level, but also softer skills, such as communication style and availability. Here’s a starting list of questions to ask:
• How long have you been doing this type of work?
• How many other clients similar to my company do you deal with?
• Can you describe your background and training?
• On what basis will you be billing me?
• Do you prefer face-to-face meetings or telephone calls or e-mail?
• Can you provide me with references?
• How do you see your role in helping my company?
As you evaluate the answers to these questions, you will also be assessing your comfort level with these professionals. Always trust your intuition. You will have to work with these advisers for many years to come, and it’s imperative that you feel comfortable with them.
Finding a Board of Directors
As you start your business, you may consider it silly to think about putting together a board of directors. In business news and on television, a board of directors is usually portrayed in a large corporation such as ibm. Every corporation, though, is required to maintain a board of directors, regardless of its size. It may only be a single director (you) that is required. It’s advisable to at least have an informal board of directors for your bookkeeping practice.
A board of directors is simply a group of people who help advise and guide the management and owners of a company. Board members may comprise mentors, retired business owners, or others who have skills that can help your business. The incorporation documents of a corporation outline the board’s duties and responsibilities, including which issues must be voted on by the board.
In a small company, getting external board members may be difficult, as they will take on some liabilities for the operation of the company, but having them is even more critical than in a larger organization. Experienced board members bring knowledge and advisory skills to the table