Build a Trustworthy Team

by John Rebmann Make friends with the "Ghost of Business Future" Each December, businesses are visited by a cast of characters reminiscent of Charles Dickens's classic, "The Christmas Carol." Taking poetic license, these characters are the "Ghost of Business Past" the "Ghost of Business Present" and the "Ghost of Business Future." Of course the "Ghost of Business Future" is always a bit fuzzy, while the other two ghosts are more clear and serve as delightful reminders of things gone wrong or left undone. But as Ebenezer Scrooge discovered, business owners can enjoy a second chance if they repent and start thinking ahead. Scrooge's problems were his unrelenting work ethic, (remember Bob Cratchit worked on the holiday without time and a half pay), an insensitivity towards his employees and business partners, and his unvarnished greed. Scrooge didn't trust anyone. He did it his way. For many business owners, drive and passion can often blind them to the fact that they don't know what they don't know. They want to do it their way. They know much about their product or service, but less about what they need to support their business, particularly when it comes to having a team of trusted resources within arm's reach. Observe the owner of a four- year-old plumbing and heating business who decides to give a discount for customers who pay cash. He has an accountant, but feels it's better if his accountant isn't "in the loop" on this particular strategy, nor does he consult his financial advisor or attorney. Come tax time, he is very happy because he can show only 60 percent of his "actual income" for tax purposes. Eight months later, his business has increased 30 percent over the previous year, but because he had increased the discount for cash policy with customers, he was reporting only 55 percent of his real income. He approached his accountant about preparing an income statement and other financial in preparation for approaching his bank for a business loan. But his accountant and his bank told him the reported income was not sufficient for the loan. He then confessed to underreporting the income. The owner would have been wiser to ask permission instead of forgiveness. He should have trusted and talked with his financial team. Scrooge had plenty of money; but he didn't know what to do with it. For business owners, money can be intimidating, so they don't address the issue until it can't be avoided. But the wise ones focus on finance-related concerns, including taxes, cash management and personal finances as they relate to the business, and risk management (including business insurance and legal structure of the business). While specialists may be necessary to consult on these financial issues from time to time, a business owner would be well advised to have a team of advisors who can not only be available on an as needed basis, but can also assist in finding specialized help when needed. At the bare minimum, a financial advisor, an accountant and a lawyer can address those year-end issues that could still positively impact the "bottom line" for this year. These issues include:

Business retirement plans

Tax smarts for next year

The best business structure (S-Corp, sole proprietorship etc.)

Cash Management and Personal Finances

Contingencies for negative incidents, such as business interruption, accounts receivable, or disasters and positive incidents such as an increase in business or change in product or service to offerings.

There are myriad other issues to deal with before year's end, but the last quarter of the year can be seriously impact the "bottom line" for this and other years to follow and thus avoid visitations from "The Ghost of Business Future" chiding you for things gone wrong or left undone! John Rebmann is a Financial Advisor with Financial Counselors LLC, in West Springfield. He can be contacted at 413-214-6507 or at jrebmann@bppc.com