Startup Business: Look Before You Leap
As the economy ebbs and flows, we get numerous inquires from present and prospective clients about starting a new business.
1. Organizational Structure ~ Including an Organizational Chart, Company Policies and specific Job Descriptions for each employee (including the owner). The job descriptions should include the critical job procedures that the employee needs to be aware of and follow. This establishes “expectations”, eases training new employees, and avoids the chaos of “re-creating the wheel” for your operations. Yes, it takes time to set up and maintain these, but employees like the certainty that comes with having these.
2. Separation of duties (Internal Controls) ~ Employees who have access to the company’s cash or sign checks should not be responsible for recording those same transactions in the books. Employees who make collection calls should not touch cash/checks. In a very small business, the owner can exert control over company disbursements by signing the checks but be sure to also review the related invoice/bills in detail – it can surprising what you may find. It is critical that the owner has the bank statements delivered to her/him un-opened and analyzes each bank statement for improper: checks, wire transfers, or Debit Memos. Once this step is completed, write your initials onto the outside of the envelope – which tells all of the employees that you have reviewed all disbursements for appropriateness. Steps for controlling receipts depend on the business - sometimes the owner can make the bank deposits; sometimes just reviewing the receivables is enough for the owner to know if there is a problem. Let employees know it’s okay to tattle.
3. Computer Back-up ~ Keep back-up copies of your computer data in a remote location. The owner or a high-ranking employee can carry the current tape home each night. Use passwords to protect your records and files.
4. Disaster Planning ~ How can you restore your business quickly if your building were destroyed (for whatever reason)? Do you have enough business continuation insurance coverage to keep you going while you rebuild? What if your key employees were killed together? Do they travel separately? Do you have key-man life insurance to help your business in case of the deaths of key employees? Do you have enough disability insurance in case you are hurt? It’s been said that disability can be financially worse than a death. Do you have enough life insurance to cover your dependents in case of your death?
5. Strategic or Future Planning ~ Where do you want the business to go? When have you reached success and how do you stay there? Where is your industry headed? What are your competitors doing? Do you need to start new lines of business or products? How can the Internet work to your advantage? When is the optimal time to sell your business? If so, what do you need to do to prepare your business for that sale? Do you have employees you can groom to buy out your business interest, or run it while you retire or travel? How does the business fit with your estate plan?
6. Buy/Sell Agreements ~ If you have partners or multiple shareholders, you need these.
If your business is lacking any one of the above items, you’re not fully in control of your financial future. We feel that the best advice comes from the best C.P.A.s, so call Stanislawski & Company to assist in your business and personal tax returns or email: chuck@stanislawskiandcompany.com.