If you’re married (or in some other significant relationship), sharing the following list with your spouse or significant other is often all he or she needs to launch into a horrific harangue. Stay with me, though, as I explain who I consider to be the three most important people in starting a new business. In order of priority, these three very important people are:
- Your accountant
- Your attorney
- Your spouse (or significant other)
My wife has no problem voicing her feelings about coming in third. She fervently proclaims that neither my accountant nor my attorney has ever had to wonder if they were going to live without health insurance or income, or whether they would not see me for weeks on end as I started a new venture. And I agree with her! Your spouse or significant other is actually the first relationship you have to consider when deciding to start a business. Without her or his support, your venture will crumble from the beginning.
However, I order my VIP list this way for several reasons. First, I do it for the fun of forcing a reaction from my wife. (She knows to expect a little bit of this by now, and it enriches our relationship.) My teasing her aside, I cannot overstate how much you need this same support, which brings me to my second reason. Her or his support won’t just magically happen, so you need to open a dialogue about the role of your significant other in your venture. Finally, I use this order to stress how vital it is to ensure that you have the right accountant and the right attorney in your corner as you strive to push your endeavor through its formative rounds.
The reality is that having a spouse or significant other who is willing to embark on this adventure with you is, without question, the most important variable in being a successful entrepreneur. I worked with an individual who had an incredibly gifted business mind and a deep understanding of technology. He was very intelligent, with amazing intuition and market sense. To top it all off, he possessed the rare ability to clearly articulate his knowledge and communicate with engineers.
My first impression of this man was he had the potential to be one of the most amazing entrepreneurs I’d ever come across. We actually embarked upon a short-lived partnership, aiming high and beaming broadly. Why short-lived, then? His wife kept him from ever giving it a healthy go.
She required him to keep his working hours between 8 a.m. and 5 p.m.; anything after 5 seemed to violate the terms of an unwritten prenuptial agreement. Furthermore, his wife—a delightful woman, by the way—mandated a certain level of financial security. She could not stomach the thought (much less the reality) of going without a paycheck for more than a week. She didn’t want to sign up for the risks and rewards associated with entrepreneurship; as a result, he could not, either. His home situation simply did not enable him to consider being an early-stage entrepreneur.
As he did to me, Dr. Peter Horne frequently reminds his protégés of this imperative: “You can replace anything in your life except your family, your health, and your trust relationships.” To this end, it is vital that you analyze your home situation and assess your significant other’s ability to live the entrepreneurial life. In more ways than one, the spouse or significant other of an entrepreneur could be the more difficult role to manage.
During the nurturing stages of the business, your spouse is often relegated to living with a lack of clarity about financial circumstances. To add insult to injury, in this stage spouses tend to live life looking at a control panel that is just beyond their reach. Often, unless they are actively involved in the venture, they share all of the risks with none of the decision-making power.
If your significant other does not have the temperament for this lifestyle, there is no shame in following a different path. As badly as you may want it, don’t do it. You can use your entrepreneurial spirit in some other way—really tackle your corporate work in innovative ways, pick up a hobby, or bootstrap a small business on the side instead of taking the complete plunge.
It is better to come to this realization during the idea stage. Do what you must to secure this trust relationship; don’t go so far down the road that you are faced with a no-win decision. Perhaps, with time, you two can be on the same page. Until you are, trying the waters will always lead to failure on at least one of the two fronts, if not both. We paraphrase this wisdom from the Gospel of Mark: “What therefore God hath joined together, let no venture put asunder.”
Now that you’re convinced that number three on my list should be number one, let’s go back to one and two. Through the years I have tested numerous accountants and many, many attorneys. The reality is that finding the right attorney and accountant is not as easy as it sounds. From my experience, many accountants and attorneys are more eager to tell you “how it can’t or shouldn’t be done” rather than “how it could be done.” You need professionals who can find creative solutions.
There are so many laws and variations of those laws governing how to set up a business that it is crucial to engage an accountant and attorney who are on top of the latest ways to get things done. Many attorneys and accountants are familiar with one or two ways of doing things and hesitate to take the time and effort to figure out different ways of setting up your business. Find an accountant and an attorney who are willing to be creative and uncover personalized solutions that are right for you and your venture.
In all of this, however, I do not promote illegal or unethical activities. Worse than an uncreative lawyer or accountant is a liar—and whether that liar is one of them or you, dishonesty is no way to build a business.
One of my favorite anecdotes exemplifies the necessary honesty-and-creativity-oriented mindset for an accountant. In the early days of his company, an assertive CEO was hiring a financial controller. He invited a candidate into his office and a short interview ensued. The CEO asked the applicant, “So, you know numbers pretty good?” The would-be controller responded in the affirmative. The CEO shot back, “What’s two plus two?” The candidate paused, looked the CEO in the eye, and quipped, “What would you like it to be?” The CEO hired him on the spot.
One key reason the right attorney and accountant are so important in the early stage of your bootstrap adventure is cash flow. You must understand the implications of the tax structure you are setting up. You must understand the ramifications of tax laws and why cash accounting may be more appropriate than accrual-based accounting. You must protect your asset, your intellectual property, your good name, and your reputation.
Savvy and intelligent accountants and attorneys are critical. The right attorney can be used as a hammer in difficult circumstances. Consider what course you might be forced to take at the butt-end of a deal involving unscrupulous customers, partners, or employees. Could you use a tenacious and assertive attorney? Unequivocally, the answer is yes.
Don’t guess! If you are uncertain about where you stand in these relationships, do some digging. Talk openly to your loved ones, make plans and promises, and do your research on the people you hire to handle your affairs. This foundation builds your successful team. If your spouse or significant other is on board and if you have a clever, assertive attorney and a creative, energetic accountant, you’re well on your way to success. I cannot count the times along my entrepreneurial trail one of these three people has saved me from charging over a cliff. It really is as simple as that.
Porter’s Points – The Three Most Important People in Your Life
- Do not attempt to replace your family or your trust relationships with your entrepreneurial dream. Find alternate ways to build your dream and test the waters if you need to. People and circumstances may change with time
- Look for an accountant and attorney with a “can-do” attitude. If one of these two crucial people gets annoyed when you ask “Is there a better way?” then you know you need a better fit.
- Listen to and for the truth when you talk to these three most important people. It may hurt a little at times. You need someone willing to dream, but you don’t want to be fed peaches and cream when what you really need is spinach and broccoli.
- Seek to surround yourself with young, hungry individuals, as opposed to stodgy, set-in-their ways corporate counsel.