Full-Time Business Owners Planning & Financial Advice

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Minou33
Posts: 38
Joined: Wed Dec 17, 2014 7:32 pm

Full-Time Business Owners Planning & Financial Advice

Post by Minou33 » Tue Sep 12, 2017 7:06 pm

My husband and I own a full-time business (professional services). As our business grows each year, I am realizing just how little I know about the numbers behind our business. I have no business degree or prior business experience myself. Our business has grown substantially over the last 7 years, and I now realize I'm at a place where my ignorance may become a disadvantage in making smart financial decisions. I realize that not only do I need to have a better understanding of the numbers behind my business, but I also have to start considering our exit strategy (as this may be as soon as 3 years.)

However, I am also frugal and lean towards doing things myself more than outsourcing. Our business accountant is quite expensive (but comparable to others I have contacted offering similar services) and the accounting company has just begun offering a business consultation service headed by a PhD in Organizational Leadership. They are asking for a $325/mo. fee for this service with a 1 year commitment. While it would be nice to have someone who is familiar with all of our business's finances giving us more insight into our numbers and help put a value on our business--I feel like this may not be a service we necessarily would need or benefit from on a monthly basis. Have any of you full-time business owners been able to find a person, company or software that has been invaluable in helping you organize a plan for your business?

JBTX
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Re: Full-Time Business Owners Planning & Financial Advice

Post by JBTX » Tue Sep 12, 2017 9:55 pm

Minou33 wrote:
Tue Sep 12, 2017 7:06 pm
My husband and I own a full-time business (professional services). As our business grows each year, I am realizing just how little I know about the numbers behind our business. I have no business degree or prior business experience myself. Our business has grown substantially over the last 7 years, and I now realize I'm at a place where my ignorance may become a disadvantage in making smart financial decisions. I realize that not only do I need to have a better understanding of the numbers behind my business, but I also have to start considering our exit strategy (as this may be as soon as 3 years.)

However, I am also frugal and lean towards doing things myself more than outsourcing. Our business accountant is quite expensive (but comparable to others I have contacted offering similar services) and the accounting company has just begun offering a business consultation service headed by a PhD in Organizational Leadership. They are asking for a $325/mo. fee for this service with a 1 year commitment. While it would be nice to have someone who is familiar with all of our business's finances giving us more insight into our numbers and help put a value on our business--I feel like this may not be a service we necessarily would need or benefit from on a monthly basis. Have any of you full-time business owners been able to find a person, company or software that has been invaluable in helping you organize a plan for your business?
How do you track your businesses financial performance? Does your accounting company give you financial statements? Typically they would. Do you do any tracking of your revenue and expenses? The financials of a professional services business with two people should be pretty straight forward.

The business may be easy enough to use something like Quicken, or if you wanted a more complete like Quickbooks, although realistically I doubt you are going to master quickbooks over a course of 3 years then exit.

If you are going to exit in 3 years, I'm not sure diving into a new financial model/system makes sense. Take a look at what the accountants provide and see if they are helpful. A lot of times accountants produce financial statements and the business owner just files them and never looks at them.

Finally, not sure what a PhD in organization leadership is going to do for your desire to get better financial information.

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Sandtrap
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Re: Full-Time Business Owners Planning & Financial Advice

Post by Sandtrap » Wed Sep 13, 2017 1:25 am

First: There is another way to look at things besides "hiring out" for business services. By this I mean, You can also consider delegating or outsourcing or consultants, etc, as income or revenue "leaks". This may be a time to apply the same drive to obtain the same level of proficiency in business planning, accounting, finance, and project management, as you did to grow the business that you have.
Especially with all the information available now. For example: Even if you enlist the services of a CPA, it still greatly benefits you to learn business accounting. Apply this to everything.
IMHO and experience, a self-employed business, whether professional services, or other, can be quite large and still be completely owner managed and owner advised. I have personally worked with multi millionaires (20-50mil) who did everything on a small desk with a pocket calculator and school notepads.

Second: Tap into all the resources around you that are free or minimally charged. SBA business counseling. Successful peers in the same profession, perhaps older and more experienced. Surround yourself with other accomplished business owners. You might be surprised at the success had when you reach out for advice and help from those that have actually "been there/done that" vs "paid professional/experts".

As is said often on the Bogleheads forum, when you know enough to select the correct financial advisor, likely you will no longer need one. The same can be said here.

Finally: You say your business has grown substantially over the past 7 years. You might be underestimating your ability to excel in any area you need without shelling out funds for "expert" advice. You may have more savy in growing a business from scratch to prosperity than many PhD's. For starters, tap into the Bogleheads forum for specifics and look at this as a lst step. There's a wealth of prosperous retired business people here who might be happy to provide input in many areas based on "real life experience" vs conceptual knowledge.

I hope this is helpful and provides an actionable point of view based on real life experience.
Good luck.
j

carolinaman
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Re: Full-Time Business Owners Planning & Financial Advice

Post by carolinaman » Wed Sep 13, 2017 7:22 am

I am not sure what you are asking. In paragraph one you state your desire to better understand the numbers behind your business. In paragraph two you mention a consulting service offered by your accounting firm that will help you organize a plan for your business.

You have obviously been successful growing your business. A good start to better understanding the numbers might be a course that teaches accounting for managers. The focus of this type of course is to explain accounting to managers without getting into the mundane parts of it. This might be all that you need for this and you can probably get this at a local college or from books or an online course.

Using a PhD in Organizational Leadership to help with re-organizing your business sends up red flags to me. What sort of plan would they do for you? Is it an organizational plan, a business plan or what? You need to have a clear understanding of what they would do before committing to that.

Every business needs a business plan. I assume that you have one but if you do not, that would be a good thing to do or to update the one that you have.

My greater concern is that a PhD in Organizational Leadership might want to do a major reorganization. That is probably not something you want to do three years before selling your business.

.

dvmmph
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Re: Full-Time Business Owners Planning & Financial Advice

Post by dvmmph » Wed Sep 13, 2017 11:53 am

I have owned professional services business for 17 years. We have 12 employees. I have used Quickbooks Pro. We use it for payroll and tracking income & expenses. Intuit offers courses in all parts of country. I pay payroll taxes using quickbooks pro. I also use an accountant for preparing balance sheet every 3 months and personal & business taxes once a year. You can do it in 3 years. It took me few months to learn quickbooks pro.

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nedsaid
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Re: Full-Time Business Owners Planning & Financial Advice

Post by nedsaid » Wed Sep 13, 2017 12:20 pm

Minou33 wrote:
Tue Sep 12, 2017 7:06 pm
My husband and I own a full-time business (professional services). As our business grows each year, I am realizing just how little I know about the numbers behind our business. I have no business degree or prior business experience myself. Our business has grown substantially over the last 7 years, and I now realize I'm at a place where my ignorance may become a disadvantage in making smart financial decisions. I realize that not only do I need to have a better understanding of the numbers behind my business, but I also have to start considering our exit strategy (as this may be as soon as 3 years.)

However, I am also frugal and lean towards doing things myself more than outsourcing. Our business accountant is quite expensive (but comparable to others I have contacted offering similar services) and the accounting company has just begun offering a business consultation service headed by a PhD in Organizational Leadership. They are asking for a $325/mo. fee for this service with a 1 year commitment. While it would be nice to have someone who is familiar with all of our business's finances giving us more insight into our numbers and help put a value on our business--I feel like this may not be a service we necessarily would need or benefit from on a monthly basis. Have any of you full-time business owners been able to find a person, company or software that has been invaluable in helping you organize a plan for your business?
I would start with your accountant. Is he or she a CPA?

You had excellent advice to use the free mentorship program from the Small Business Administration. There was a program called SCORE, Service Corps of Retired Executives, not sure what they call it today. I would look into that as a secondary source of information after your accountant. There is a lot of appeal to getting advice from people who have been there, done that, and bought that T-Shirt. You would get hands on, practical experience.

It sounds like you are excellent business people, you just need some help understanding the numbers in the financial statements and maybe some guidance on the day to day managing of your expenses and cash flow. You need to spend more time with your accountant to have some things explained.

Not sure about the PhD. I would want to know more about that person's background. Not against academia and some business professors do consulting on the side. $325 a month is not outrageous and might be well worth the money. I would seek out SCORE first. At least that would give you a learning opportunity. The more you know going in, the more benefit you will get from your consultant.
A fool and his money are good for business.

smitcat
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Re: Full-Time Business Owners Planning & Financial Advice

Post by smitcat » Wed Sep 13, 2017 4:00 pm

You don't say where you are but we got very good inputs and took a couple of classes through the small business development center (SBDC) here in NY.
The help was down to earth , local and valuable for the purposes we needed and they actually meet with you individually and in groups if you like for just about nothing. There are two centers near us both about 1/2 hours away and each had very good counselors.
SBDC had good help and insight for ....financing, banking, marketing , business planning, business organization, legal form, etc.
The folks at SCORE were pretty good as well but that becomes much about which folks are at SCORE locations near you and have the skills and insight you are really looking for.
FWIW - I had a couple of business org classes as well as many other bus. classes when doing my MBA - they did not help much in the real time issues we were solving at the time.

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Snert
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Re: Full-Time Business Owners Planning & Financial Advice

Post by Snert » Wed Sep 13, 2017 7:41 pm

Hello. Longtime (20+ years) professional services business owner here. I own an Inc 5000 company and I do my own books (Quickbooks Pro). You can learn to do the same and it will make you a better entrepreneur. Manage your finances well and your business will be worth more when and if you decide to sell someday.

My experience has been that my education and that of my employees is valuable. Offhand, I cannot think of a single educational investment that did not create more value than the money that I spent. Here are some of the many investments I've made that may be worth considering:

Blogs, YouTube videos, and Podcasts (all generally free)
Books (check out Greg Crabtree's Simple Numbers, Straight Talk, Big Profits) (low cost or free from library)
Your local Small Business Development Center (low cost or free)
Your local Chamber of Commerce (low cost or free)
Industry peer groups (thousands of $ per year to thousands of $ per quarter)
Entrepreneurial peer groups (check out eonetwork.org; if your biz $250K-$999K annual revenue, their Accelerator program is excellent and free)
Business coaches (varies - $1000-5000/mo)

There are probably dozens of other ways to learn what you need to know. Many of those methods are low cost or even free.

I'll leave you with this: Is it more frugal to invest in your education and make informed financial decisions, or the opposite?
Never give up, never surrender!

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳

Re: Full-Time Business Owners Planning & Financial Advice

Post by Sandtrap » Wed Sep 13, 2017 9:42 pm

Snert wrote:
Wed Sep 13, 2017 7:41 pm
Hello. Longtime (20+ years) professional services business owner here. I own an Inc 5000 company and I do my own books (Quickbooks Pro). You can learn to do the same and it will make you a better entrepreneur. Manage your finances well and your business will be worth more when and if you decide to sell someday.

My experience has been that my education and that of my employees is valuable. Offhand, I cannot think of a single educational investment that did not create more value than the money that I spent. Here are some of the many investments I've made that may be worth considering:

Blogs, YouTube videos, and Podcasts (all generally free)
Books (check out Greg Crabtree's Simple Numbers, Straight Talk, Big Profits) (low cost or free from library)
Your local Small Business Development Center (low cost or free)
Your local Chamber of Commerce (low cost or free)
Industry peer groups (thousands of $ per year to thousands of $ per quarter)
Entrepreneurial peer groups (check out eonetwork.org; if your biz $250K-$999K annual revenue, their Accelerator program is excellent and free)
Business coaches (varies - $1000-5000/mo)

There are probably dozens of other ways to learn what you need to know. Many of those methods are low cost or even free.

I'll leave you with this: Is it more frugal to invest in your education and make informed financial decisions, or the opposite?
+1
Excellent advice.

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