For many small but growing companies, hiring outside professionals such as solicitors or financial advisers can be perceived as an expensive luxury in a culture of freeware. However, moving fast without professional advise can expose you to a great deal of risk and uncertainty in the long term.
Entrepreneurs cannot be expected to be masters of every knowledge domain, often having technical or commercial backgrounds without financial or legal expertise, so it is crucial that they get the right advice.
A great example of this is the shareholders’ agreement or more likely the lack of it! Legal costs vary for shareholders’ agreements and can seem like a lot to a founder with limited cash flow or resources. Many entrepreneurs may also question the need for a formal agreement, as the team are all aligned and agreed on the direction of the firm.
The absence of a shareholders’ agreement will cause immense problems if a dispute arises, costing the business many multiples of the initial legal fee. By then, it is too late, and a shareholder dispute can lead to significant distractions, stress, sleepless nights and of course huge legal fees.
There are other issues which come up in the course of running and growing a business that require experienced professional advice. They range from HR, property, tax, public relations and finance, but this is by no means the limit. Hard lessons need not be learned for the want of a good advisor.
Many professionals in these fields will be experienced people who can also help guide your business, network you to key people and potentially refer you suppliers, customers and investors.
At the FutureScope event in Dublin, we hosted a compelling discussion among founders of scale-up companies and expert professional advisors. One of the scale-up founders told of how his company had brought in a financial advisor early on, when the company was starting to do well. The advisor gave them advice on their pricing structure. To their unenlightened eyes, the advice seemed totally mad. However, the advisor was right and the company continued to grow at lightning speed having increased margin and cash flow to fuel their success.
Our breakout panel also discussed examples of where professionals help and the many benefits that experienced professional advisors can bring. Scaling firms have to manage tax affairs, HR, contracts, licensing agreements and company law in several different jurisdictions and in several different languages without the internal experienced resources to manage this complexity. Lawyers and financial advisors also play a crucial role when it comes to scale-ups and negotiating investments, exits, mergers and acquisitions.
The panel was of one simple view; seek professional legal and financial advice early. Establish the cost and agree a fee. As your company grows and becomes successful, this early advice and guidance pays real dividends and won’t have cost anything like as much as you think.