What are the differences?
You can easily define and research these four categories or sources of business advice, using a search engine, Wikipedia or dictionary; I will generalize a bit here and identify them as:
an industry or business expert who studies or analyzes your situation, process or environment and provides an authoritative report, usually for a fee.
one-time or ongoing engagement with a person who has experience and skills in the business world and access to data, research and other professionals to help you generate alternative ideas or strategies, solve problems and manage your business. A fee may or may not be involved. The SBDC does not charge for one-to-one confidential advising.
supports a no-fee, one-on-one relationship over an extended time to assist you with the formation, growth and management of your business. Larger firms have “internal” mentors, but as the leader of a small business, you will need to find an “external” mentor.
engaged for a fee for a specific purpose, on a contract or retainer basis, to provide advice and guidance on legal, accounting, insurance or other issues.
This article focuses on the advisor function, but all of these are necessary tools and are equally important in their own right. The successful small business owner will learn how/when to reach out to each as needed.
Examples of Business Advising
Business advising can cover any of the five functional areas of business: operations, human resources, marketing, financial and legal/organization. As you might expect, what a business owner does in one of these areas affects the others, so it is often important to have an unbiased, or outside, set of eyes and ears to provide feedback and act as a sounding board. Also, small business owners often don’t have time or resources to do extensive research. SBDC advisors have access to many nationwide sources of data such as Fintel, RMA, Reference USA and IBIS, which are also available at your local library. This structured data helps in decision-making and focus.
A couple examples will give you an idea of how an SBDC advisor can assist you:
Ray is an owner/operator licensed contractor in start-up year one. He sought marketing advice from me initially and we developed a plan with a sales goal that is tracked monthly. I also recommended cash basis ac-counting in QBooks and his outside bookkeeper agreed.
In reviewing monthly P&L and AR, we noted a large 90-day receivable of $8K and collection would be very helpful. I referred this client to three attorneys who specialize in construction disputes and collection. Estimating, bidding and profit planning are other areas we are addressing now.
Eli had worked as VP for a medium-sized supplier of technical talent to major corporations for years. The owner wished to retire and Eli was offered the opportunity to buy the firm, which he wanted to do. Eli looked for outside advice to help him chart a course with a three-year time line to be in position to purchase the business. We discussed asset vs. entity purchases, I found reliable reading material on the subject, developed a business plan, discussed equity and debt mix and when time came to apply for an acquisition loan, three lenders were referred. Eli received attractive options for six figure term loans and he selected the best one.
Dr. S was a successful chiropractor in a two-provider practice. She wished to be sole owner and broke off from partnership to start a practice in a new location.
Original advising started with an organized search for leased or purchased space and she successfully navigated the commercial real estate market to find a location which an SBDC research study said was “underserved.” She is doing well in gross revenue and has cut back to a partial work week, so she can act more as practice manager.
Selecting an Advisor
Write down your key needs or “pain points.” Then, note your timeline and budget. Then, ask for referrals and research providers. Interview each and ask for background and references. Lastly, be prepared to contribute to the process (after all, you are the expert in your business). Get down to work following the plan you develop, and evaluate progress as you go.
About SBDC – The Washington SBDC is a network of 25 centers in Washington managed by Washington State University. Advisors provide in-depth, confidential, and no-cost customized advising to businesses within Washington State. To locate your local SBDC advisor please visit the SBDC website http://wsbdc.org/contact-an-advisor/
– John Rodenberg. See website www.wsbdc.org for the Washington SBDC network, to access a no cost, confidential, appointment with an advisor.