Our August, 2002  newsletter is entitled "Selecting Your Business Advisors."   Our newsletters feature articles on various aspects of preparing a business plan and over time should lead you through the entire business planning process.  

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Selecting Your Business Advisors

 "A prudent man profits from personal experience, a wise one from the experience of others." - Joseph Collins

Why hire professional advisors
Professional advisors are essential to small business. They provide knowledge and expertise in areas where most business people are weak, and they round out your management team.

Most business people feel that professional advisors are too expensive, however if utilized properly, they will provide your business with long term benefits that far exceed their costs.

Qualifications - Seek out advisors with a professional degree or the necessary training and expertise in the appropriate field. When the advisor is a member of an association or institute, it is a good indication that they are up to date with recent developments in their field.

Expertise - Ideally your advisor should be knowledgeable in his or her field as well as in your industry. For example, your lawyer should have expertise in corporate law but also in small business matters. If you are operating a retail store, your accountant should have expertise in retail as well as general accounting, financial and taxation matters.

Compatibility - The better the rapport you have with your advisor, the better advice you are likely to get. Choose an advisor that you get along with so that you are comfortable asking tough questions and receiving frank advice.

Confidence - You must have confidence in your advisor if you are going to rely on the advice which he or she will be giving you.

Fees - You should feel comfortable with the fees being charged. The fees should match the advisor’s qualifications and the type of work being done. You should feel that you are getting your money's worth of advice.

Comparison - It is a good idea to shop around and get two or three quotes from different advisors. When shopping for a professional advisor, ask around for recommendations, check the yellow pages, contact the professional institutes and look for ads in your newspaper.

Selecting a Lawyer
Lawyers can be of assistance from the time you first get your idea right through to start-up, and beyond. Lawyers are able to advice clients on the proper legal structure of their business, draw up partnership or shareholder agreements, management contracts, employment contracts, supplier contracts, etc. Lawyers also give advice on hiring and firing employees, suing creditors, income tax matters, wills and estate planning.

To search for a lawyer, use word-of-mouth, a lawyer referral service, the yellow pages and the newspapers. The lawyer referral service is a provincial program that provides a list of qualified lawyers based on a description of the legal requirements.

When preparing to meet with a lawyer remember that the more organized you are, the less time the lawyer will have to spend collecting information and data. The less time the lawyer has to spend getting the information together, the less he or she will charge. Lawyers use a number of methods to calculate their fees including hourly rates, contingency fees, fixed fees, percentage fees and a retainer. Don't be afraid to ask what the fees will be and how they will be calculated. When you are considering whether or not to use a lawyer, apply a cost-benefit analysis. Decide whether the resolution of the problem is worth the legal fees that will be incurred.

Selecting an Accountant
Accountants provide the expertise required to measure how the business is doing and to advise on what the business is capable of doing. An accountant should be involved right from the start, especially to assist in preparing financial projections for your business.

When selecting an accountant it is important to realize that anybody can be called an accountant, but you should seek an accountant with a profession designation. Designated accountants meet strict educational and experience requirements and are governed by provincial statutes. When a designated accountant is hired he or she will provide you with an engagement letter outlining the nature of the work they will undertake.

It is important to be well prepared for any meeting with an accountant. It may help to prepare a list of concerns and questions and to deliver this to the accountant prior to the meeting. Areas in which an accountant may provide assistance are: selecting an accounting system, raising capital, preparing and evaluating budgets, preparing forecasts and business plans, preparing and interpreting financial statements and tax planning and preparation. Accounting fees are typically based on an hourly charge out rate which is determined by skill and experience level.

Selecting a Banker
Banks and lending offices vary in their lending limits, flexibility and experience. When looking for a banker, use recommendations from your lawyer, accountant, family and friends. If these do not work out then it may be necessary to visit several bank branches in your areas. Try to establish a relationship with the bank prior to making a request for financing. A banker who knows you may be more receptive to your proposal.

Selecting a Business Consultant
Since anyone can use the word consultant to describe themselves and the work they do, it is important to select a consultant based on their education, training, and experience. Qualifications to look for are a university degree in a related field, years of experience working in a related industry and membership in a professional association. In addition, try contacting previous clients. They may give an indication of the consultant's abilities.

Consultants usually have an area of specialty. Some of these specialty areas are: credit and collection, marketing, business plans, security, computer systems and payroll.

The fees that consultants charge vary considerably. Some are based on a fixed fee and some use an hourly rate. There are also some free consulting services available from government programs designed to encourage the development of small businesses. Although all private section consultants charge a fee for their services, they can save you money by saving time, solving problems or implementing systems that can increase your profitability.

Selecting an Insurance Broker
Insurance brokers do not work for an individual company, but have access to policies issued by several insurance companies. An insurance broker is also able to obtain quotes from underwriters in the event that the standard policies do not meet your needs. Select an insurance broker based on credentials, expertise and experience. Given a description of your operations and the assets of the business, an insurance broker will recommend an insurance plan. Some of the policies that may be included in this plan are property insurance, liability insurance, loss of earnings, life insurance, employee insurance, surety and fidelity bonds.

Property insurance covers the damage or destruction of property by certain perils as outlined in the policy e.g.: fire, hail, etc.
Liability insurance covers the negligence or act of omission of the directors, officers, partners and employees of the business.
Loss of earnings insurance covers events or risk that could interfere with the business’s earning ability.
Life insurance provides a benefit on the death of the individual covered.
Employee insurance is taken out by the employer to cover against accidents involving employees.
A surety bond is a contract between two parties and the bonding company relating to performance of a contract. If the contract was not met, the bonding company would step in and pay.
A fidelity bond is purchased in order to protect against the actions of a specific other party.

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