Who should you turn to for critical business advice? And how do your sources of advice stack up against other small businesses? NFIB surveyed 750 small business owners to understand who they rely on when making their most important business decisions. Here are the top lessons learned.
1. Don't rely on one trusted business confidante. Engage a variety of experts for different situations to generate the biggest impact on profitability and employment.
While two out of three small business owners relied on a single, trusted advisor when making critical business decisions, the survey showed that drawing on a variety of experts depending on the situation faced was the most productive consulting style in terms of profitability and employment increase or loss. Relying on confidantes was less productive while not engaging anyone appeared even less successful.
2. Identify the right critical business decision.
In one out of three cases, owners were surprised by the issue that turned out to be the most important business decision of the year. For these entrepreneurs, the top issue either came up unexpectedly or was brought to their attention by an advisor.
3. Acting quickly isn't always the right decision when correcting a critical business problem.
The speed of instituting corrective action was not related to the seriousness of the matter, according to the study. Half of small business owners began to pursue a corrective course of action within a week of discovering the matter that they identified as the most important one of the year. Those who waited longer solicited counsel from more people about the matter, which the survey suggests can lead to better decisions.
4. Focus on sales, operations or finances.
Looking back on the previous year, entrepreneurs classifed their most criticial business decision as follows:
- Sales or marketing, 22%
- Operations or purchases, 21%
- Finance, 17%
- Dispostion or changing size of business, 13%
When determining where to focus your attention, remember to consider the categories above.
5. Consider hiring a CPA.
Owners work with a variety of advisors. When asked which types of advisors were consulted in the past 12 months, entrepreneurs replied as follows:
- Accountant were used by 64.4% of small businesses
- Insurance Agents/Brokers - 41.5%
- Business Owners - 39.1%
- Suppliers - 38.2%
- Bankers - 34.6%
- Computers/Software/Web - 33.2%
- Lawyers - 33.1%
For those working most intensively with an advisor, accountants comprise 35.0%, with supplies and other business owners each cited 10.7%. None of the other categories were in the double digits. Here's how to determine if you need a CPA.
6. Act on offense and defense.
Most respondents, 53%, reported that their most critical business decision involved was both offensive in character -- trying to make something happen, and defensive -- preventing something negative from taking place.
7. Prepare to spend time and money.
For small business owners working the most intensively with an advisor, the median amount spent in 2011 was $2,000, with the owners working with the advisor for a median amount of 16 hours. The averages were much higher at $12,000 and nearly 50 hours, respectively. The most helpful assistance reported was adding detail and depth to the owner's basic ideas.