Finding Your First Advisors: A Guide for New Entrepreneurs

Finding Your First Advisors: A Guide for New Entrepreneurs

DISCLAIMER

This information is intended for business owners in Canada and serves as general guidance only. Always consult with a qualified advisor before making any legal decision. 

In this article, we’ll cover the following topics:

• The first four advisors to your new company

  • Bookkeeper

  • Accountant

  • Financial advisor

  • Corporate lawyer

When starting a business, most entrepreneurs will focus first on generating revenue, and rightfully so – profitability is, after all, the main thing that makes a business viable in the long term. But once you’ve crossed that threshold and your business has begun to take flight, that’s when you start building the next mechanism to keep your business in the air: a circle of key advisors.

But how do you find them? How should you bring them into your circle? Let’s dive in.

1st Advisor: Bookkeeper

In the most basic terms, a great bookkeeper keeps all of your business’s financials in order. They neatly file every financial document that passes through your business. They are exceptionally well-organized, diligent, detail-oriented, and they respond lightning-fast to your most important questions. Put simply, they are on top of it. 

Bookkeeping certainly isn’t an easy job, but in the grand scheme of finance-related roles, bookkeeping is more about tedium, attention to detail, and repetition than it is about providing business counsel. 

2nd Advisor: Accountant

Accountants can sometimes be bookkeepers, and bookkeepers can sometimes be accountants. But the tasks associated with accounting are entirely different from that of bookkeeping.

Accountants often play a big role in the high-level strategy of a business. They don’t just file your T2 (though they may do that); they know the ins and outs of complex financial processes such as corporate tax law, employee benefits, and more. They know how to structure your business in such a way as to put your money to the best possible use.

When choosing an accountant, the first consideration should be your connection with them. Do you trust them? Do the two of you have a good rapport? You’ll be interacting with this person a lot, perhaps every day, so make sure the connection is strong. 

The second consideration is communication. Do they respond quickly to your questions? Do they give you helpful updates, unprompted? Do they speak in a language that you can easily understand?

One of the most common complaints I hear from business owners is that their accountant doesn’t communicate well. They don’t respond to calls or emails, they’re overly technical in their advice, and so on. And I must say, I know exactly how they feel – in starting my vacation rental management company, I burned through five accountants before finding the one that finally made me feel at ease, not more stressed, about my finances. 

In short, when it comes to choosing your first accountant, take every step you can to ensure they’re a match for your business. A great accountant is, of course, competent, but they should also value their relationship with you and know how to communicate effectively. 

3rd Advisor: Financial Advisor

The line between accountant and financial advisor may seem blurry – both roles, after all, deal with the high-level financial strategy of your business. But they do have a few differences. The best way to think about it is this: if accountants have a bird’s eye view of your finances, then financial advisors have the satellite’s view. 

You’ll know it’s time to bring on a financial advisor once your business grows beyond simple, self-operated wealth management tools. Once you’re big enough, you’ll need a high-touch professional to help with some very complex financial matters, such as:

• Managing your investment portfolio

• Shareholders’ agreements

• Providing tax guidance

• Incorporating your business

• Working with a holding company

• Managing a family trust

• Setting up life insurance

When seeking a great financial advisor, you should seek the same traits you found in your accountant: competent, values your relationship, and communicates effectively. One thing to add is that your financial advisor shouldn’t just communicate well with you; they should also communicate well with others, specifically your legal and accounting teams. Your financial advisor will touch many aspects of your business, so try to ensure you’re not the only one who likes them.

4th Advisor: Corporate Lawyer

Among your closest and most trusted advisors will be your corporate lawyer. The most basic (but not necessarily the easiest) responsibility of your lawyer will be to draft contractual agreements, such as shareholders’ agreements, NDAs, and employment contracts. Beyond that, the responsibilities of your corporate lawyer depend heavily on their legal expertise (or lack thereof).

For example, let’s say you have one corporate lawyer, and suddenly you find yourself in need of legal advice related to bankruptcy. However, the one lawyer in your circle does not have any experience with bankruptcy law. You’ll need to find outside counsel, specifically a bankruptcy lawyer, and bring them into your circle. The good news is that if you have a great corporate lawyer to begin with, they’ll do most of the searching and vetting for you. Put simply, your first corporate lawyer is there to provide general counsel, but also to find outside counsel when it’s needed.

Like any other advisor, the green flags to look for in a corporate lawyer are competence, level of investment in your relationship, and effective communication.

A common complaint about corporate lawyers is that they’re overly strict about billing. For example, they’ll send an invoice for six (six!) minutes of counsel or will make a big fuss over sending a quick email. The underlying message of this behavior is that they don’t value your relationship, that your questions are annoying, that you’re just a bag of money. 

Of course, like any other job, lawyers need to get paid, but a great lawyer will weigh payday equally with his or her relationships with you. If you sense otherwise, then find someone else who can give that to you.

Want to learn more about how to build your dream advisory team? Selecting advisors is one of many areas of counsel we can provide you as you structure your business. Click here for an overview of our business structuring services, or get in touch using the form below.