As a small business owner, I understand the value of having quality staff that have a high character level and work ethic. I have learned that the keys to building a successful small business team includes having an inner circle of mentors and advisors to help me with the parts of business ownership that I have no skill or time for.
A CPA and insurance advisor are important players in business inner circle.
One of the American dreams is the possibility to become a business owner. Who hasn’t thought of being his or her own boss? According to the OECD (2015), 69% of men and 58% of women in the U.S. would rather own their own business than work for someone else. Many of them take the leap and start their own business.
According to the Bureau of Labor Statistics’ Business Employment Dynamics, only about 30% of businesses will survive to their tenth year in business. Over half of new small businesses will fail in the first five years.
This is not meant to discourage anyone from embracing their entrepreneurial spirit, but it’s interesting to explore why so many fail.
Why do new businesses fail?
According to CB Insights, the most likely reason a business fails is lack of cash flow. Generating consistent revenue is the holy grail in business. A successful business must have a product or service people want or need on a regular basis and are willing to pay for.
Amazingly, 42% of businesses fail because there is no market (no demand) for their product or service.
Do you have the right team around you?
Interestingly, 23% of businesses fail because they don’t have the right team. Businesses in which the owner hires employees that feel a sense of belonging and contributing will likely have a much better chance of success than a business where people are brought in as employees with little vision of the company goals beyond their salary.
Small business owners should embrace their smallness! The “benefits” of a small business can be just as attractive as the 401(k) and health care plan of a big corporation to the right people.
I believe this concept of building the right team extends beyond the business owner and staff. Building a successful small business team includes having a quality inner circle team of business advisors is important, too.
A business owner will need quality advice and service from their CPA and insurance advisor. A poor tax plan can bankrupt a business no matter how good the product or service is.
A poor insurance plan can result in an unexpected accident or event shutting the business doors.
The CPA should have a great understanding of the business they are working for. Every industry and business has nuances that can make the difference between profit and loss.
All businesses have to keep up with FICA, Federal and State income tax, unemployment tax, as well as withholding and paying employee taxes. All this, in addition to the variety of licensing, permits, and local taxes that a business can be responsible for, can overwhelm the most efficient of bookkeepers.
The CPA is a team member that is very important to business success.
What about the business insurance plan? Is it really that critical? Most business owners believe that insurance is necessary and important, but they’re not sure why.
This lack of understanding is what leads many business owners, especially brand new ones, to rush through their insurance buying decision.
Commercial liability, professional liability, worker’s compensation coverage, these all start to sound the same after a while, right?
Having an insurance advisor that will take the time to understand the business and the risks that the insurance policy must protect against is critical.
Unfortunately, people have the misconception that business insurance has standard coverages like a car or home insurance policy. A specific business will require specialized coverages because a plumbing business has very different risks than a book store or chiropractor’s office.
Getting poor advice can be as bad as getting no advice when it comes to your insurance.
Life insurance is another very important part of a business insurance plan when there is a partnership or multiple owners. A buy-sell agreement can allow each owner to buy out the interest of the heir of the deceased owner. Without an ownership succession plan, the death of one of the owners could jeopardize the business.
Face it, the family of a business owner may not have the desire or the skills to take over the ownership role. Life insurance can provide the funds for the surviving partner to buy out the family of the deceased owner.
Ambition and work ethic are fundamental in the character of a business owner. That may be enough to start a business, but the long term success will be determined by the thoughtful approach to bringing in team members and inner circle advisors.
Building a successful small business team is easier said than done, but the inner circle the business owner has can help reveal the blind spots that can lead to disaster.
We would welcome the chance to start a conversation to help you review and create the best insurance plan for your business. Call us at 405-340-0606.
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