Attorneys, accountants, consultants, oh my! As a small-business owner, how do you know when your firm needs expert intervention?
Professional Horror Story No. 1: You’re just launching your firm, you have one major client and you’ve hired a staff of nine. You don’t take the time to consult an accountant to help you establish a fee structure based on overhead and labor costs. Instead, you quote the client a lowball price on a massive project, just to land the job. Your staff works heroically and your client pays you as promised.
But your income isn’t enough to pay your staff, let alone your landlord or your vendors. You shutter your business after six months, owing payroll, rent and back taxes, much of which you’re personally liable for.
Professional Horror Story No. 2: You’re shorthanded and under a crushing deadline to create a logo for a client who’s opening a new restaurant. In desperation, you call a trusty freelance designer and ask her to develop three comps to present to the client. You agree on an hourly rate, she delivers the goods, the client selects a fork-and-wine-glass design and the job ends smoothly. A year later, the client calls, irate. He’s seen his logo, the one with the fork and the wineglass, on the door of a new gourmet-food store. “How can this be?” he demands. It’s simple: Because you neglected to use a written work-for-hire agreement when you hired the trusty freelancer, neither you nor the client established ownership of the design. The freelancer was within her rights to use the very same logo for another client.
The moral of both of these true tales? If the designers had consulted with an accountant or attorney, they would never have met such terrible fates.
Getting up-front financial or legal advice may seem expensive, but it’s far less costly than dealing with the problems that inevitably arise when you don’t seek professional help. “It would be foolish not to get one of these professionals involved—at the beginning, rather than ‘When I can afford it,'” warns Anthony Mikes, president of Second Wind Ltd., a resource network of creative firms based in Wyomissing, PA.
Here’s a look at the essential players to have in your Rolodex—the accountant and the attorney—plus two other professional types you should get to know.
When to call one: As soon as you even think about establishing a design business, according to Rick Gould, CPA. Gould, whose New York City-based accounting firm Gould Eisele Crombie counsels design firms and ad agencies, says a CPA is a critical player at all stages of your company’s life. Use a CPA to help you set up your corporation, manage growth, evaluate merger or acquisition opportunities, or sell your firm.
A CPA can also create record-keeping and accounting systems, help you obtain a line of credit and guide your executive team in building a strategic business plan for your firm. He’s also a link to other outside advisors you may need. “The CPA should be the first professional retained,” Gould says. “He or she can refer you to the full team of professionals you’ll need: attorney, insurance specialist, computer consultant, banker, employment agent, payroll-service provider. The CPA deals with these people on a regular basis.”
Working with an accountant from the beginning can forestall potential problems down the road. “How to bill, how to control costs, how to comply with government requirements, how to maximize legal tax write-offs, how to set up staff compensation and incentive plans are some of the issues that could become problems if not dealt with thoroughly,” Gould says. Taking these matters into your own hands, armed with an accounting-software package and do-it-yourself manual, is a sure recipe for disaster.
How to find one: Referrals from your peers are the best bet, Gould says. Interview three prospects to determine each CPA’s technical skills, experience and visionary thinking. Don’t overlook your own comfort level; find an accountant with whom you feel unintimidated and relaxed. “Choose an accounting firm that has experience in the creative fields and fully understands your business,” Gould says. “This understanding will put your relationship with the CPA at a proactive, strategic level vs. that of accounting and tax compliance.”
What you’ll pay: CPA firms charge by the hour, basing their rates on the experience level of the professional you’re dealing with. Staff rates range from $65–$200 per hour, with higher-level services running $300–$400 per hour. But price shouldn’t be your sole consideration in choosing a CPA. “Often the most expensive CPA by the hour will be the least expensive annually,” Gould says. “CPAs with experience in the design industry will work faster and smarter, resulting in maximum bang for your buck.”
Plan to meet with your accountant at least quarterly; monthly if you’re just starting the business. Offer to meet at the CPA’s office to save billable travel time and get to know his partners and staff. Gould recommends that you routinely plan for a two-hour session and go to those meetings with specific questions and discussion items.
When to call one: Jean Perwin, HOW’s longtime Legal Ease columnist, says that the best way to avoid calling an attorney when you have a problem is to call one when you don’t. “A lawyer can get your business set up in such a way that you don’t have problems later,” says Perwin, a Miami-based intellectual-property attorney. “People overestimate the cost of getting legal help up front. That’s not expensive; it’s usually less than $1,000 over several months. It’s much more expensive to fix problems with your firm’s incorporation, for example, down the road.”
An attorney can provide standard services at the birth of a business: drafting articles of incorporation, boilerplate client contracts and freelance agreements. In addition, design firms have specific legal needs related to ownership of their creative work. In copyright matters, a comprehensive contract is essential to prevent problems. Still, Perwin says, “Every single design firm will have a copyright issue at some point.”
Off-the-shelf legal guides and prefab contracts, like those in the Graphic Artists Guild’s Handbook of Pricing and Ethical Guidelines, are adequate starting points but aren’t universally applicable. That’s when you need an attorney. “My experience is that most businesses have a unique aspect that needs to be covered specifically in a contract,” Perwin says. “If you do lots of comps in a presentation, for example, you’ll need language in a contract to protect those ideas.”
If you fail to consult an attorney as a preventive measure, you’ll likely need one in a crisis. According to Perwin, legal squabbles in the design world nearly always come down to money—either the designer doesn’t get paid, or the client misuses the designer’s work. In these situations, that copy of Law for Dummies won’t bail you out. You’ll need the real thing.
How to find one: Perwin recommends that design-firm principals ask their peers for referrals. Or visit the Martindale-Hubbell Lawyer Locator online (lawyers.martindale.com/marhub) to search a nationwide database by location or specialty. Local chapters of Volunteer Lawyers for the Arts or your state Bar Assn. may also make referrals. Choose two or three prospects and interview them to assess their expertise and “fit.” Perwin notes that many attorneys don’t charge for initial consultations.
It’s unlikely that you’ll find a single attorney qualified to handle all your legal needs. “A corporate attorney can help you incorporate your firm,” Perwin says. “But your ability to protect your creative work is vital to your business, so finding a lawyer with intellectual-property expertise is very useful.”
What you’ll pay: Attorneys’ fees vary dramatically from city to city. Increasingly, lawyers are moving away from hourly billing toward flat fees for standard services such as writing contracts and filing copyright registration. If you need ongoing consultation, consider a retainer. And if you’re just starting out, be sure to ask for flexibility in making payments; most attorneys will oblige.
When to call one: A consultant, whether she’s a generalist or a specialist, is a key business partner who can help you tackle a specific challenge. Over the course of your firm’s life, you might call upon more than one consultant—a marketer to help you refine your sales efforts, a financial expert to help you with an acquisition, a public-relations guru to help you build a reputation. Rather than covering all the consultants available to you, we’ll focus on the PR pro.
Your firm might be ready to retain a PR expert if you’re poised for growth. Like other consultants, a PR strategist will start by analyzing your business and your vision for it. “I always start by having my clients answer a list of questions about who they are, who their clients are and who they want their clients to be,” says PR consultant Todd Hays, who’s based in Pasadena, CA. “The questions are meant to help the principals focus on what they really want to achieve with this effort. PR should always work synergistically with marketing.”
Once you pinpoint your niche, the consultant’s job is to help generate strategic exposure to those markets. Articles with your byline, features about your firm’s work, speaking engagements, press releases announcing awards and major projects—all placed in appropriate media outlets—reach prospective clients your regular marketing efforts might miss. And coverage by an unbiased publication does more to cement your credibility than any self-generated promo piece.
If you have a copywriter on staff, he can certainly draft press materials. But a PR consultant’s real expertise is in effectively managing a media campaign, cultivating beneficial press contacts and putting the right spin on your firm. “Good public relations isn’t simply about disseminating news,” Hays says. “It’s about effective and appropriate storytelling. A consultant who is well-versed in the design industry can often make the difference between ordinary news and intriguing storytelling.”
How to find one: The best way to find any qualified consultant, regardless of specialty, is to look at other firms you admire. Is another agency suddenly all over the local business newspaper? Have you heard about a design firm’s rapid-fire growth? Chances are, professional advisors are behind those results. Find out who the top firms are working with. Unless you’re fierce competitors, you’re likely to get a referral.
What you’ll pay: Fees vary based on the scope of the project and the duration of the consultation. According to Hays, PR expertise runs anywhere from $1,500–$3,000 per month and requires a six-month commitment up front. Some consultants may be willing to work with you on a per-project basis.
When to call one: Like a personal trainer is for socialites, a professional coach is the “in” thing for entrepreneurs. A coach is one part business and marketing consultant, one part sounding board and one part motivator, according to Shary Hauer, a Clearwater, FL-based coach whose clientele includes creative firms. “My job is to help clients get focused,” Hauer says.
Whereas consulting concentrates on solving a business challenge or improving a process, coaching focuses on the individual’s professional development and personal life, teaches new skills and follows up to ensure improvement. Consulting is typically short-term and project-based; coaching relationships often continue for years. Consultants typically meet with clients in a few intensive and lengthy sessions; coaches touch base with clients in weekly 30- to 60-minute phone calls. Coaching can be especially helpful for designers whose personal and professional lives intertwine.
According to Hauer, several situations might prompt you to call in a coach: your new firm is off to a slow start and needs strategic direction; you’re overwhelmed by growth and desperate for control; you’re frustrated by your established firm’s stagnant performance and want to move to the next level; or you’re dealing with major changes like a new client base or an acquisition.
Hauer walks her clients through five steps; the first happens right away, the others over time:
- Identify where you want the business to be in six months, one year and three years.
- Review your firm’s current state, including business processes, services, client base and marketing strategy, to assess what’s working and what isn’t.
- Close the gap between your current state and your desired state.
- Develop and continually refine a long-term business road map.
- Adopt smart business habits and leadership skills.
Hauer notes that her clients come to the table with predictable problems: They can’t delegate, they don’t have processes in place to manage the business and their priorities are screwed up. “They’re masters in the business, but when it comes to working on the business, they let that slide,” Hauer says.
But coaches aren’t miracle workers; their clients must invest time and effort to make the relationships work. Hauer asks her clients to prepare for their weekly teleconferences by completing a worksheet listing accomplishments, uncompleted tasks, current challenges and objectives for the meeting.
How to find one: Two trade groups, the International Coaching Federation (www.coachfederation.org) and Coach University (www.coachu.com), offer training and certification for professional coaches, and free online referrals. Because many coaches work with clients over the phone, you can look outside your city for the right person.
As with other professional advisors, most coaches offer complimentary initial sessions. Interview two or three prospects to best match the coach’s expertise with your needs.
What you’ll pay: Fees range from $300–$500 per month, which includes four half-hour sessions. Coaches typically seek at least a three-month commitment; Hauer asks her clients to sign on for at least six months.
Does coaching pay off? In its two-plus years working with Hauer, Graff Design in Cincinnati has slashed overhead costs, focused on more profitable clients and boosted revenues by 200%.
Says Hauer, “It’s like getting all the advantages of a business partner without the headaches.”
HOW December 2000