Regarding the term “business partner,” I’m not referring only to a co-founder or co-owner. While picking the right one of those is also vital, the “business partners” I’m referring to are the third-parties that can provide key services to help you steer your business in the right direction.
The economy has been heading in a positive direction for quite a while. Unemployment is near a record low, Rochester small businesses are expecting to finish 2018 strong with better revenues than anticipated, and interest rates, while rising, are still at historically low levels.
But just because the economy is strong doesn’t mean it’s a perfect time to go-it alone. Third-parties such as a certified public accountant (CPA) and the right lender can help provide answers to difficult questions. “What does the new tax law mean for my business?” “I need to expand, but can’t secure proper funding. What do I do now?” “I need a new piece of equipment to help my business grow, but don’t have the funds to buy it. What are my options?”
The answers to these and similar questions always vary depending on the business. That’s why partnering with the right professionals can help provide clarity and allow you to focus more time on the day-to-day matters of your business. As I like to say, “Make sure you put as much effort working ‘on’ your business as you do working ‘in’ your business.”
Find the right CPA
Often when we hear small businesses mention “taxes,” they are referring to the red tape they must adhere to: permits, fees, HR fees and regulations, etc. These can certainly be confusing and cumbersome, but the right assistance can simplify things. Hiring a CPA firm isn’t as prevalent among businesses under $1 million in revenue, but we are fortunate that the Rochester market has a wide array of CPAs who can work with businesses across the spectrum—from multimillion-dollar firms, to having a side-business out of your house.
The fact is that a large majority of small businesses are not as heavily impacted by the new tax law as larger firms. If you are a “pass-through” company (S-corps, LLCs, partnerships, and sole proprietorships), it is important that your CPA is aware of the deductions that can be claimed and keeps you informed about these and any other changes taking place.
Essentially, your CPA—be it an individual or a hired firm—should have a solid relationship with your business. There should be detailed plans in place and these should be shared between both parties, as well as additional key stakeholders.
Access to the right kind of capital
There are plenty of avenues available today for small businesses to secure funding. Go online and you are sure to come across ads promoting easy access to loans and credit that may seem too good to be true, and a majority of the time they are. The access to funds may be immediate, but the terms and interest can often be costly, even damaging, in the long-term.
To avoid these “too-good-to-be-true” lenders, it is vital to do your research. Small business owners must know not only the right amount that they need, but also the right type of loan, as well as the right partner to provide and service it.
Consultation is the key. A lender that says “yes” when the time is right and “not yet” when there is work to be done is the honest resource a small business needs. Those lenders that say “not yet” and follow up with resources (such as SCORE or Pathstone) to help and guide the small business to get on the right track are the ones that are looking out for the best interests of the small business. They want the loan to be sound, and the business in a healthy situation to use that capital and build from it.
Thanks to the Small Business Administration’s (SBA) 7(a) loan program, lenders are able to provide federally-backed loans to small businesses in need of funding. This program has been immensely popular and has helped to provide capital to businesses looking to get off the ground or grow. Our own SBA 7(a) loan volume has increased 29 percent year-over-year, and has been a key asset for nurturing many small businesses in the Greater Rochester area.
Access to the right business partners can often be a make-or-break decision for small businesses. By finding and working with the right people with the right skills at the table, business owners are setting themselves up for long-term success.
