6 Most Helpful Relationships for Small and Mid-size Business
The quality of a business’ external relationships make running the business easier. Managed correctly, those relationships may also increase a company’s profitability. Here’s how to leverage the resources of six helpful business relationships:
It’s best to have an attorney before the business needs one. A relationship with trusted legal counsel is helpful for many types of advice, from human resources (hiring and terminating) to contract negotiations or new products and services. An attorney who thoroughly understands a business owner’s company and industry is best able to guide with both short- and long-term perspectives. Certain industries have specific requirements that need legal expertise, such as service contracts, partnership or franchise agreements, or intellectual property. Don’t make the mistake of thinking general business counsel can substitute for the specialty areas that may be required if a specific situation were to arise.
Information Technology (IT)
IT is a vital and complex component of any business. A good IT person can prevent technology messes that hamper efficiency, fix issues that come up, or help the business start with a clean slate of running business from the cloud. After things are in place, having an IT ‘partner’ frees the business owner to focus on the core business, without the need to manage or keep up with current technologies. The IT resource also saves money by controlling expenses that companies would need to invest if self-managing IT. Personnel, infrastructure, maintenance, and upgrades are all costly components. One tip: Make sure that files are easily retrievable from back-ups. If back-ups aren’t saved in a standard protocol, retrieval may be delayed.
On a basic level, having a personal relationship with a banker provides a person to access at the bank who can answer questions about the business’ accounts. Talking with a familiar person saves time and helps reduce stress, compared to talking with a customer service line. A personal banker may also facilitate a cost effective cash management program. Such a program integrates cleanly with accounting and payroll systems, and makes bank reconciliation easier. Also shop around to find an uncomplicated and price competitive credit card merchant program. Finally, day-to-day management of cash flow is always better than drawing on a line of credit. But having a line of credit may be helpful for instances where cash flow just isn’t sufficient, especially in a seasonal business.
A good insurance broker understands specific industry/sector requirements. They evaluate and ensure that companies have correct coverage for property and casualty and equipment, whether owned or rented. They may also recommend business interruption insurance. If there is a flood, power outage, or anything that takes your business out of action for a period of time, business interruption insurance has it covered. An insurance broker (may be a different person from property/casualty) also keeps up with healthcare rules to help manage health insurance administration. Good insurance brokers stay on top of insurance needs and requirements throughout the year, not just at renewal time.
An accountant who understands the company business has value that extends year-round. Beyond making sure that the company is compliant with taxes and tracking issues such as depreciation of assets, an accountant is helpful for financial decisions regarding the business. A good accountant makes sure that books are set up correctly, helps with KPIs, the right corporate structure, and succession/retirement planning. Most companies can manage day to day accounting on their own, but the structure must be correct to run the business and provide actionable data for decision making. Never forget that if taxes aren’t correct, the business owner is personally responsible for things like payroll taxes. Not paying is a criminal offense. The owner is responsible even if the business has a payroll service.
Human Resources and/or Environmental Health Safety (EHS)
With regulatory issues becoming more complex every day, keeping up with OSHA/safety, training, Workers Comp, employment issues, and reporting to the state to stay in compliance is serious business. Depending on the type of business and the amount of compliance, outsourcing certain HR or EHS functions may be a good call that lets the company owner keep focused on the business.
Running a business is a complicated, yet rewarding, endeavor. Having strong business relationships makes the job easier and helps the business run more smoothly, with fewer surprises. If one of the above relationships is missing, talk with industry contacts for recommendations.