Hiring outside advisers and utilizing members of the entrepreneurial infrastructure are key strategies for operating a successful venture. Too many times such personnel are chosen because they are friends or relatives of the owner. This is one of the biggest mistakes an entrepreneur can make. Those selected should balance out the management team, bringing in expertise that the owner lacks and the business strongly needs.
Entrepreneurs give equally little thought to selecting members of the infrastructure, lawyers, accountants, and other management professionals. Again, they usually choose people they know, regardless of their expertise and reputation. Because most start-up ventures cannot afford to take on additional employees to handle various management functions, infrastructure contacts become especially critical. They must be seasoned professionals, chosen solely on the basis of their expertise. This is the only way to build a strong management team besides hiring one. On an informal level, friends, associates, suppliers, and vendors can be good sources of outside advice.
Establishing a board of directors and an outside board or council is one of the best investments entrepreneurs can make to strengthen the stability and growth potential of their ventures. An outside board gives a fresh perspective and objective feedback about the operation and its strategic direction. Unfortunately, few founders seek enough of such advice. Often they neglect to establish a board of directors or advisory council because they think no one would want to serve on a board or that setting one up is too much work.
Smart Strategies for Using the Infrastructure and Business Professionals
1 – Find a lawyer experienced in small business and establish a working relationship before you ever need to hire counsel.
2 – To save on legal fees, complete as much up-front work and information gathering as possible before meeting with your attorney.
3 – Never talk to another party’s attorney without having your own attorney present.
4 – To reduce legal costs, use standardized forms of conducting routine business, but always have your attorney review them before implementation.
5 – To avoid surprises with legal bills, estimate the number of billable hours for your legal project and then negotiate a cap or ceiling on the total fee.
6 – Select an accountant who is also a good business adviser, one who is familiar with your industry, knowledgeable about tax planning, and committed to building and managing a sound cash flow.
7 – If you are considering raising venture capital or going public, contact an accounting firm that has a track record working with promising smaller businesses.
8 – Before you begin a small to mid-size venture, obtain a business-owner’s policy to cover all your major property and business liability exposures.
9 – Ask your local or national professional and/or trade association if it has a group insurance arrangement with specialty brokers or insurers.
10 – Avoid “I can do it all” consultants.
11 – Use a written consulting agreement that specifies work assignments, responsibilities, and compensation.
12 – Assemble a board of directors to add credibility to your venture, enhance your corporation’s assets, and obtain management expertise and advice.
13 – Establish an advisory board to serve as your in-house management consulting team.
14 – Look for advisory board members or board directors who have the specialized knowledge and skills you lack.