Big Mistake #1

THE WRONG ADVISOR TEAM

"A genius is a person who surrounds himself with people smarter than himself."

— Andrew Carnegie

Let's say you have a business idea. You've done all of the classic business planning we are taught at business school or your mentors encouraged you to complete. You've included thorough research on your market, a strong business plan, and a laser-focused marketing plan. You've done an in-depth SWOT analysis. All of your work tells you to start.

You're probably a pretty smart person, but we all have to face it: We don't know what we don't know. If we accept this fact, and we surround ourselves with those who can fill in the gaps, we are well on our way to avoiding the major mistakes that can lead to a business failing or sabotaging your personal plan.

When you start a business, any type of business, you will want to surround yourself with smart people who can advise and mentor you. This is the only intelligent approach for success. Surround yourself with people who are willing to tell you things you may not want to hear, because they are looking out for your best interests, not their own. This is how you build a team with complementary, diversified skills and experience to come to your executive suite (even if that's your garage) to help you and your business.

People often pick an advisor team made up of people like themselves, or they simply don't pick an advisor team at all. Sometimes, they'll try to be do-it-yourselfers and use the Internet as their advisor. The information you can get on the Internet today is unbelievable — both unbelievably helpful and unbelievably dangerous. After the careful planning you've done in the rest of your business, why wouldn't you put that same level of care into choosing experts for your team?

There is also the situation where very intelligent people fail to admit they do not know everything and become complacent. Frequently, even though they may hire professionals to "help" them, the business owner doesn't delegate these functions but is rather dictating to the professional what he or she wants the professional to implement. I advise entrepreneurs to hire your team as I describe above, and obtain their input as to your options along with the advantages, disadvantages, and costs of each, so you are empowered to make an informed decision. If the function requires a specialist who can quarterback the process, delegate the information-gathering and -assimilation process in order to provide the best use of your time — leading your organization.

Now, what do I mean by one of the biggest mistakes made by successful entrepreneurs is having the wrong advisor team? There are four primary aspects of an advisor team. Making a mistake in any of these areas can be lethal to your business:

1. Choosing nonspecialists for specialist positions

2. Choosing friends and family as advisors

3. Failures of communication

4. Using planners who are not planners

YOUR ADVISORS NEED TO BE SPECIALISTS

Quite often, people have advisors on their team who are not specialists in what they're doing. It is, first of all, a mistake to choose advisors who are not well versed and experienced in working with business owners. Many professional advisors start their careers working with individuals and families, whose concerns are very different from a business's. They may not complete additional studies in order to obtain expertise in the areas of business planning and tax mitigation necessary to meet the needs of business owners and their executives. Some may work in large corporate environments, specializing in the issues of conglomerates and publicly traded companies. Most small- to medium-sized business owners do not fit in that category either. The circumstances — and, therefore, the strategies and tactical tools and techniques — appropriate for the large corporate entity are vastly different from those of the small-to-medium-sized businesses or individuals and families.

Working with mid-market business owners requires the professional advisor to have the skills, experience, and expertise to work with the business owner as entrepreneur, executive, family man or woman, and member of their community — not any one role or aspect of their life but the integration of all roles. If an advisor is inexperienced in working with this sort of client, their on-the-job training will be on your time and at your expense.

A perfect example of lost opportunity due to a lack of an experienced business advisor is when I was referred to a couple who just felt they were not optimizing their circumstances. In their case, one spouse is a business owner while the other is a corporate executive. The advisor was doing a fine job working with the family for family planning for a client who is an employee; however, there was no integration into what the entrepreneurial spouse was doing with their business. The end result was years of paying unnecessary taxes and unnecessary exposure of assets to liability and creditors, all of which hampers wealth building and protection. Business owners can only benefit from working with advisors who specialize in working with business owners.

The next level of specialty you will want to consider is if you need people on your expert team of advisors who specialize in your industry or field of work. This is not necessary in every business or industry, but with some businesses these advisors should have specific knowledge and experience working with businesses in your industry. This is how they are best equipped to know the issues and the opportunities, the pitfalls and the risks, with your specific business model.

It is more important for businesses in certain fields to work with a specialist. Health-care professionals in private practice or who operate as 1099 independent professionals have particular issues that should be evaluated in their business and personal planning. Similar to other business owners, when the practitioner gains experience and grows their practice, the issues will become more complicated and opportune. However, health-care professionals like dentists, oral surgeons, ophthalmologists, and optometrists are in businesses requiring high-capital equipment expenditures requiring specialized attention. They, along with anesthesiologists, surgeons, general practitioners, oncologists, and others, face high-liability exposure as well. Furthermore, many of these professionals have partners or shared office arrangements, further complicating their accounting, finance, and practice management due to the integration of multiple practices.

These are also people providing important, mission-critical services to our communities. The community...