I have worked with hundreds of companies on the brink, and here’s what I’ve learned: weak companies have weak advisors. These three people can either ruin your business or help it flourish: your accountant, your lawyer, and your banker.
What makes them weak?
It’s not how much they charge you per hour or where their office is located. It’s not about which college they went to or where they trained. What makes them weak is when they start thinking that they are entrepreneurs. Accountants, lawyers, and bankers spend a lot of time around business executives, so they think they know how to run a business and manage employees, suppliers, and customers. They don’t.
What does a strong adviser do? They stay in their lane.
- Accountants should only be giving you advice on tax matters. They’re very good at minimizing tax burden and tallying up numbers from the past. As a business owner, you understand that the past does not necessarily equal the future. The future is about finance. It’s about cash flow. Don’t let your accountant convince you that he/she knows finance. Let them stick to past issues and taxes.
- Lawyers should only be giving you advice on legal matters. Be very frightened of the lawyer that starts giving you advice on what markets you should be expanding into and what products you should be selling. Senior lawyers tend to be the worst offenders. They’ve spent decades reviewing business contracts (that the junior lawyers drafted) and they feel that they are gurus of all things commerce. They’re not. They should be focused exclusively on helping to protect your business from a legal perspective.
- Bankers should only be concerned with the money that you borrowed from them. Of course, you want to be transparent with them and give them enough information to make them feel comfortable that their loan is secure and will be repaid. You have to demonstrate to them that you know what you’re doing and your business is stable. Other than that, understand that bankers are not entrepreneurs. They avoid risk. What’s their principal focus? To sell money. They sell you money and you pay them back with fees and interest. That’s it.
Business life is challenging enough on it’s own but it becomes increasingly complicated when you have a mixed stew of legal, accounting, and banking advice. Find the best advisors you can afford and establish clear roles and objectives for each one of them. The separation and clarity will help you do what you do best — run a business!
If you need further proof of how critical and potentially damaging these three people can be, my book, Corporate Undertaker: Business Lessons from the Dead and Dying is filled with stories that would frighten even the most resilient entrepreneurs. Have a look and tell me what you think.
If you’re still stuck, call me.