Photo by Rose Lamond on Unsplash
An entrepreneur I know who started a marketing firm for technology clients just hired some new account representatives, bringing his staff up to a dozen people.
“What have you done about setting up 401(k) and health care plans?” I asked.
“Oh, I got something from my insurance agent,” he said.
I saw the benefits plan his insurance agent sold him. It came up way short in terms of investment options for the retirement plan, and the health insurance wasn’t the best bang for the buck.
Here was an entrepreneur who was a marketing wiz and had hired some top talent to serve his growing clientele. But as I told him, he was at risk of losing some of his best talent if, all other things being equal, they found the benefits more attractive elsewhere. The problem was that he didn’t have the revenues to hire an HR director or other managerial-level experts in the financial administrative aspects of a business.
I see this often among entrepreneurs: you might be a great marketer, inventor, architect, chef, software developer or whatever, but there are two things you should know about financial administration–what I call the personal finance of a business.
One, no matter how smart you are, this isn’t your area of expertise. Two, your job is to generate income for your business, and you shouldn’t take your eye off of that. Bottom line: You should bring in experts to take care of the finance details. But most small business owners, like my tech marketer friend, can’t afford high-level hires.
So what do you do?
I’m talking not just about putting together a competitive benefits package, and monitoring how competitive it is from year to year as the market evolves, but also about having experts to list out and evaluate your accounting services, liability insurance, risk management, and more.
The list includes such details as getting the best terms for your lease and your office telecom systems. You might need to upgrade those systems frequently; think of how quickly we moved from landlines to VOIP, from massive servers to cloud storage. And these days you also need expertise on office culture; if you don’t have strict enforcement practices against sexual harassment, discrimination and bullying, a complaint could be costly in terms of settlements and reputation damage.
Trying to handle all this yourself is like asking your bookkeeper to devise a chemical composition. As Jim Collins says in his best-selling book Good to Great, you don’t first figure out where to drive the bus and then get people to take it there–first you get the right people on the bus.
If it isn’t viable to make full-time hires to take care of these details, the next best thing is to have a core group of go-to consultants, paid by fee for services or on retainer, who can go out and gather information for you and come back to you with an objective view. Here are some good ways to find them:
There are many benefits consulting firms, and don’t be daunted by the fact that most are designed to serve corporate clients. You can still pick up the phone and talk to one of their consultants. Ask if they know someone who does this kind of work for small businesses. Or perhaps someone who has recently retired from the firm who might do consulting on an ad hoc basis.
There is, in fact, a growing pool of retired baby boomers doing consulting work of all kinds. You can check with organizations like SCORE.org and Encore.org, or ask around in your own network.
Your board should be a great asset for the services you need, too. You should have a diverse board you can meet with once or twice a year about the direction of the company. They should be a group with expertise in the areas where you need help–HR, insurance, technology, law–and available to either advise you on the latest options or refer you to others who can.
Investors are a source that many entrepreneurs overlook for fear that asking for help might signal weakness, says Julia Austin, a senior lecturer of business administration at Harvard Business School, writing in Harvard Business Review. An informal Twitter poll found that only 13 percent of entrepreneurs tap their investors for financial management advice, but as Austin says, “your investors can probably help you get creative” in such areas as benefits and compensation if you’re trying to land a key hire or to retain and motivate your current team.
Social Networks and Conferences
Cast about on LinkedIn and other sites where people in business come together to network. And go to conferences in your industry that bring in consultants as speakers or operating trade booths–and ask them questions.
I’m sorry to break the news that even though you might already be working 24/7 and finding it isn’t enough, you will need to take some time to sit down with these consultants and consider the ideas they offer. I often advise business owners to assign one item to Q1, another to Q2, and so on, one for each quarter. That way you’ll know the financial management of your business is in good hands without having to take your eye off the ball.