As the world of business becomes more complex, a small-business owner can no longer be an expert in all of the specialized disciplines a small business needs. Despite the fact that small-business owners must necessarily focus on producing and managing enough cash flow and on getting customers in the door, it is also critically important for them to cultivate and nurture relationships with a support team. This group includes:
- a banker
- an accountant/tax specialist
- a lawyer
- an insurance broker
- a sales and marketing professional
- a training provider
- an enterprise systems and IT specialist
Because it is unlikely that all of the above expertise will be available in-house, it is crucial for the owner to develop and maintain close working relationships with the outside caregivers of the business before any emergency need arises.
Although thinking in terms of a "relationship" with employees might seem a little odd for a business owner, that relationship could be the most important of all of the relationships for the owner to cultivate. Because good employees represent a major resource in a small business, the time and effort the owner invests in nurturing that relationship has a huge return on investment (ROI). Employees who feel seen, respected and appreciated almost always produce more than anticipated. (Doing More With Less: The Sales-To-Employee Ratio gives insight into a company's productivity and financial health.)
Employees represent - in fact they are - the company to the customers. The business relationship with customers largely depends upon their experience and interaction with the employees. Happy employees tend to want to satisfy the customers, want to do a good job and want to stay in the job. This is important to the continuity of high-quality customer service and avoids the significant expense of employee turnover, employee retraining and the expensive but inevitable "rookie mistakes" of new, inexperienced employees. In addition, having trusted, long-term employees can free up the owner to handle off-site duties as needed. (Establishing a retirement plan can benefit you and your employees. Read Plans The Small-Business Owner Can Establish to learn more.)
A banking relationship is an obvious need, not only for routine business banking, but particularly when capital is needed to grow, increase inventory, buy a building, bridge a short-term gap between payables and receivables or to address the seasonality of the cash flow in the business.
The banker that an owner goes to for a loan should know the business owner, understand the history of the business and have an understanding of the owner's judgment and credibility regarding the use and payback prospects for a loan. If the long-term relationship is there, or it is at least in the process of being built, the loan request has a much better chance of being approved. If the business has borrowed and repaid loans in the past, the established track record and relationship greatly enhance the approval prospects. (Loan protection insurance can help in the event of financial difficulty. Read Is Loan Protection Insurance Right For You? to find out more.)
Accountant or Tax Specialist
A relationship with an accountant is equally important if the business owner is to be confident in the quality, clarity, timeliness and understanding of the financial reporting provided. A relationship with an accountant can also enhance the business's credibility with a banker when the business is seeking additional capital.
Many small businesses combine the accountant and tax-specialist functions in one outside entity for convenience, time-saving and cost reasons. This is fine if the accountant has the requisite tax experience for the industry and the tax expertise for the specific business it serves. (To learn more, read Crunch Numbers To Find The Ideal Accountant.)
Every business owner should have a relationship with a business lawyer, liability attorney or legal firm. When an owner invests money and effort in building a business, it must be safeguarded from loss as a result of a lawsuit. (To learn more, read How To Pick The Right Lawyer.)
As part of business risk management, the business also should have a relationship with and the trusted advice of an insurance broker who will provide the optimal coverage in the relevant areas within the constraints of the business budget. (Learn more about minimizing the threat of litigation on your business assets in Asset Protection For The Business Owner.)
Depending on the owner's sales and marketing expertise, a relationship with a marketing professional is highly advised. Most small businesses start with an entrepreneur who has a specific technical skill, a trade certification or has built up a following of customers for good work done. When the owner wants to grow the business beyond the established customer base, he or she should have a well-defined marketing plan that addresses the following issues:
- targeting the market
- optimizing the media used
- considering branding issues
- assessing the competition
- getting the best value for the marketing money spent
Few small-business owners possess all of these skills.
A similar situation often exists with training both the owner and the employees. In a small business, especially in a startup, the owner often hasn't had time to acquire the management skills necessary for managing a growing business with more employees, larger or additional computer systems, enlarged inventory, additional vehicles and more customers to manage. A relationship with independent business skills trainers can fill that need. (Tips For Boosting Your Business shows how financial professionals can win clients and improve their business.)
A more recent arrival on the needed-relationship list is the enterprise systems or information technology (IT) specialist. The business owner should have someone who can come in, analyze the systems and suggest ways to effectively and efficiently manage costs. That person (or organization) should also suggest ways to keep the business competitive in terms of administrative, project-management and operating costs and maintain the scalability of the business model through process productivity and system capacity and flexibility.
This might seem like a lot of relationships to sustain for the busy small-business owner. However, although these relationships aren't necessarily time-consuming, they are absolutely essential to long-term business success and are worth their weight in gold when the business needs experts to help solve problems or to take full advantage of a business window of opportunity.
For more reading for the small-business owner, check out Six Steps To A Better Business Budget.