After you have owned your own business for a while, you know how to run it. You’ve probably done everything from answering the phones to hiring a general manager, and you can justly claim to know your business inside and out, in general and in detail. In case there’s any operation you can’t personally undertake, one of your employees probably can. There are, however, exceptions to this rule. Highly technical matters of law, accounting, management and marketing are usually best handled by outside experts. Attorneys, accountants, and management and marketing consultants have specialized knowledge about niche areas that you couldn’t–and shouldn’t–hope to duplicate either personally or in the form of an in-house employee.
Having access to legal, accounting and other expertise is important to help your business grow as rapidly and efficiently as possible. Given enough time, you may be able to master the intricacies of law and finance. But why bother? Hand these duties off to professional service providers. They can do them faster and more effectively than you ever could. Besides, your skills are needed in helping your business expand.
Why do you need a lawyer to grow? It’s generally worthwhile to consult an attorney before making any business decision that could have legal ramifications. These decisions could include setting up or altering the terms of a partnership or agreement, checking for compliance with regulations in new locales where you hope to do business, negotiating loans to fund expansion, obtaining trademarks or patents, preparing buy-sell agreements, tax planning, drawing up or revising pension plans, reviewing business forms, negotiating and drawing up documents to buy or sell other companies or real estate, reviewing employee contracts, exporting or selling products in other states, and collecting bad debts. Many of the same considerations apply to the use of accountants by growing firms. You should at least consider running by an accountant any decision that could have accounting, financial or tax ramifications.
You probably started your business with a lawyer and an accountant available to answer questions, help draw up documents, and solve the inevitable problems of launching a new company. Now that you’ve been underway for a while and success seems to be a given, shouldn’t you keep working with the professionals who helped you get here? Not necessarily, because the needs of a growing business are different from those of a startup.
Giving your professionals a checkup is largely a matter of assessing your need for professional services and judging whether your current advisors measure up. When you were starting up, issues such as the legal form your business would take–sole proprietorship or partnership, for example–were pressing. Today, you may be looking at how you should structure an international subsidiary..
When ready to select a lawyer, be ready to describe your business and its legal needs. Take note of what the provider says and does, and look for the following qualities:
Experience: Although it’s not essential to find an expert in your particular field, it makes sense to look for someone who specializes in small-business problems as opposed to, say, maritime law. Make sure the professional is willing to take on small problems; if you’re trying to collect on a relatively small invoice, for example, will the lawyer think it’s worth his or her time.
Understanding: Be sure the professional is willing to learn about your business’s goals. You’re looking for someone who will be a long-term partner in your business’s growth. Does the professional understand where you want to be tomorrow and share your vision for the future?
Availability: Will the professional be available for conferences at your convenience, not his or hers? How quickly can you expect emergency phone calls to be returned?
Rapport: Is this someone you can get along with? You will be discussing matters close to your heart with this person, so make sure you feel comfortable doing so. Good chemistry will ensure a better relationship and positive results for your business.
Here are 10 steps to keep your costs in check without hurting your chances of growing:
1. Choose the right professionals. The key is to match your needs with the skills and resources of the provider. Most small-business owners simply don’t need a large, major-city law firm. The overhead expenses of such megafirms are passed on to their clients in the form of high hourly rates. Instead of a big name, look for small-business expertise.
2. Examine your fee agreement. Once you find a professional with whom you feel comfortable, read the fee agreement letter carefully. Ask candidates for a sample of their standard fee agreement for your review. Be suspicious of any professional who balks at this request.
4. Do your own footwork. Keeping organized records, indexing volumes of documents and writing out memorandums can reduce your professional fees significantly. Professionals will do all this for you–but at their hourly rates, and on your tab.
5. Meet with your professionals regularly. At first, this may not seem to be a very effective way to keep fees down, but you’ll be amazed at how much it actually reduces both the number of phone calls your provider has to make and the endless rounds of telephone tag.
6. Use your attorney as a coach for minor legal matters. When you have a customer who owes you money and refuses to pay, do you turn the case over to your lawyer? Some entrepreneurs do, but some handle small legal matters on their own by using their attorneys as coaches. Lawyers can be very effective in coaching you to file lawsuits in small-claims court, draft employment manuals, and complete other uncomplicated legal tasks.
9. Don’t make impromptu calls. Most attorneys bill under a structure that includes minimum time increments for repetitive functions such as phone calls. This means when you call your lawyer for a quick question, you’ll be subject to a minimum time increment for billing purposes. For instance, if you place four impromptu calls a week to your professional at a minimum time increment of a quarter-hour per call, you’ll get a bill for an hour of your lawyer’s time–even though you only received five minutes’ worth of advice! Keep a list of subjects you need to discuss, and make a single call to discuss them all.
Writing Professional Service Contracts
Get everything in writing when dealing with professional service providers. Your written agreement should cover the scope of the services to be rendered, the duration of the agreement and the fees. The fee schedule should state whether fees are to be based on an hourly, daily or project rate, and who is responsible for paying expenses.
Your agreement should also specify who will be performing the work for your company. Some professional services firms have certain people whose primary job it is to solicit business, while others do the actual work. However, you may not want a lower-level attorney or junior accountant working on your project.
Finally, the contract should explain how the agreement can be ended prematurely, typically with some kind of notice to the other party. This will allow you to get out of an unsatisfactory contract without having to pay the full amount.
Having access to top legal service expertise is essential to your business’s long-term health. With these professionals on your side, you can deal effectively with legal issues that might require years of study to master. So instead of trying to do a professional’s job, stick to doing what you do best–growing your business.