Certain aspects of your new business will require the help of an attorney and an accountant. But how do you find the right person or firm for you and your new business? We asked some professionals for their advice.
20. Think ahead. What do you hope your company will look like in 10 years? The attorney you choose is important, especially if you plan to go public or seek venture capital. "Venture capitalists I talk to say they judge the company by the lawyer the company picks," says Trey Cox, partner with law firm Lynn Tillotson & Pinker LLP in Dallas. "Get one who has experience in dealing with venture capital firms."
Most law firms post attorney bios on their websites that list the cases they've worked on. Legal search engine Martindale-Hubbell offers a searchable database that grades attorneys on their expertise, knowledge and ethics. Your local chapter of entrepreneurial organizations like the Entrepreneurs' Organization or the Young Presidents' Organization might be helpful, too. Says Cox, "Even if you're not a member, it's a good place to find people you can talk to."
21. Account for it. Meeting with a CPA to set up the financial backbone of your company is time and money well spent. "One of the keys to being successful is to really have nailed down from the get-go how you're going to track the financial story of your business," says Linda Hunt, founder of Sum Solutions, a Trumbull, Connecticut, financial management firm that works with small and midsize businesses. Financial software packages such as QuickBooks can be useful for a few years after you've set up basic financial controls. You can also hire a freelance bookkeeper. Look for someone with "full charge" bookkeeping skills, meaning they're able to converse knowledgeably with big-picture types like CPAs.
22. Bundle up. Professional service firms bundle their services as an advantage to their customers. Will the firm you have in mind do this for you? Will it let you pick and choose which services you want to use, and will something simple--like calling with a quick question--trigger a charge? Inquire whether they'll provide a short list of services for a flat fee instead of billing by the hour, particularly for common tasks such as drawing up incorporation papers and employment agreements. With lawyers, "you can definitely negotiate," Cox says. There are dozens of legal websites that handle the basics of business incorporation, but be careful: You could get what you pay for.
23. Narrow them down. When hiring a financial professional, ask which industry and what size company he or she prefers to work with, because it will indicate how much time and effort will be put into your account throughout the year. "Maybe the [professional] likes to work with manufacturing, and you're [a service business]. They're very different," Hunt says. Another tip: Ask for a written, one-page document about what the advisor will do for your company. Says Hunt, "As a business owner, you should be managing from this document and making sure you're getting what you're paying for."
24. Build a relationship. Don't fall off the radar after working with an attorney, an accountant or a banker. Meet with these outside professionals every so often to learn about their new offers and to tell them how your business is changing. "You should have a meeting with an attorney over lunch about every six months," Cox says. "If the attorney isn't willing or wants to bill you for the time, then that might not be the right attorney.
"Remember, your attorney has a fiduciary responsibility to you," Cox adds. "It is truly a partnership. You want someone who's on your team and is concerned about your company, not concerned about getting the next dollar." The same goes for your accountant.
Continue learning: Learn even more about hiring an attorney by reading our how-to . And for a deeper understanding of the different financial professionals you can hire for your business, read " Choosing the Right Financial Professionals ."
It may take money to make money, but Andrew Zacharakis, professor of entrepreneurship at Babson College in Babson Park, Massachusetts, says that shouldn't be seen as an insurmountable barrier when you're just starting out. "Sometimes people are overly intimidated because they think they're going to have to raise a lot of money," he says. "It doesn't take a lot of capital to get a business off the ground." Many highly successful businesses have been started for less than $20,000, points out Zacharakis, co-author of How to Raise Capital: Techniques and Strategies for Financing and Valuing Your Small Business. Here are keys to getting the financing you need:
25. Consider self-financing. The first place to look for financing is in your own pocket. "One way to really get some momentum is self-financing," Zacharakis says. "I've seen entrepreneurs do this through obvious ways, such as personal savings and a mortgage on the house, and ways that are less obvious, such as rolling credit card offers over so you always have a low interest rate." Many entrepreneurs start with a $10,000 credit card featuring a low initial interest rate. Then, Zacharakis explains, "they use that until the low interest rate expires and start with another one."
26. Try stakeholder financing. Zacharakis suggests having a customer pay you in advance for something you are going to deliver in the future. Then, use those funds as seed capital. It's not as far-fetched as it may sound--many entrepreneurs pay their own suppliers in advance. "In construction, for example, if you remodel your house, your builder is going to ask for a third of the money upfront to get started, another third at some point [in the middle] and the final third on delivery," Zacharakis says. "That kind of financing can be used across industries."
27. Look to friends and family. No matter how well you work stakeholder financing, most new businesses still need more cash, and your best source of the green stuff is friends and family. Parents, siblings and other relatives are obviously more motivated to help you out than a disinterested banker. The interest rates and terms attached to money from family and friends are also much better than institutional sources will offer.
Zacharakis advises drawing up loan documents to make the arrangements official, and he also suggests the debt be convertible into equity if the business achieves certain sales levels or other milestones. "Often, it's based on getting a larger external financing round," he says. "Once you've got a product, you can go to angels." Other early financing sources may be co-founders and early employees. Says Zacharakis, "If they're as excited as you are, you should tap into their personal finances just as you have tapped your own."
28. Look to suppliers. "Your suppliers will often extend you really favorable terms, which is just another form of debt," Zacharakis says. Suppliers are more ready to extend credit than other lenders, especially when it comes to startups. Getting the option of paying in 30, 60, 90 or more days for supplies or inventory you receive now is fairly easy. Says Zacharakis, "Usually you have to pay a small interest rate."
29. Include your landlord in your financing plans. "I think all businesses should start out at home in a garage operation," Zacharakis says. "But at some point, especially if you [have] a retail operation, you'll need a storefront, and a landlord will often give entrepreneurs three months without having to pay." Landlords may also do leasehold improvements for free, building out the space with features you'll need without any cost to you. One Boston landlord offers Babson students six months of free rent if they launch their businesses in one of his properties, Zacharakis says. "The expectation is [that] they'll become long-term paying tenants down the road."
30. Wait until you have some operating history before you approach banks. Banks are generally interested in working with new businesses once they have sales, accounts receivable and short-term financing needs. Start with a revolving line of credit, pay it back, and earn the banker's trust until you qualify for larger, longer-term loans with better terms.
Continue learning: Want more options? We've got 18 ways to raise capital for your new business .