Outside Assistance – Small Businesses

In many cases, “smallest” firms (under 10 employees) to “just small” firms (between 100-250 employees) need expertise that lies outside the knowledge of the entrepreneur and his immediate company. There may be problems in choosing a legal form of organization, and it we recommend that the entrepreneur seek the advice and counsel of an accountant and an attorney. These professionals can be thought of as external functional managers. An external functional manager is a person who doesn’t belong to the small business organization but is hired (or volunteers) to offer counseling, consulting, or technical expertise.

In addition to accountants and lawyers, there are others who serve as external functional managers. Many of these professionals operate under the banner of consultant. Thus, there are personnel consultants, financial consultants, marketing and market research consultants, and consulting engineers.

All these areas have professional orientations and the consultants should be members of their respective professional organization before they are employed. Professional certification is often a requirement before a consultant in a particular field can practice. Entrepreneurs are advised to check certification and references carefully before hiring a consultant. Furthermore, all paid consulting engagement should begin with a written proposal of the work to be done, a time table and a schedule of fees.

The use of hired external functional managers to augment the entrepreneur’s technical sophistication is an expensive proposition. There are other alternatives. Three of these are: establishing a board of directors, using government sponsored counseling and networking the other entrepreneurs and small business owner-operators.

Large firms have boards of directors composed of people who have fiduciary and oversight responsibility for the management of the corporation. Many times managers are directors, but almost all corporations have outside directors, too. These outside directors are hired (large firms pay high directors’ fees) from the pool of captains of industry, political figures and ex-office holders, and respected public servants.

Small businesses can also have boards of directors. For nominal fees, the small business owner-operator can create a board of knowledgeable experts who can advise and manage the firm. Prospective candidates for a small business board would include: accountants, lawyers, bankers, Chamber of commerce staff members, local political figures, college professors, and other business people in similar or related businesses. A motivated, skilled, and enthusiastic board can provide the small business with insights, technical expertise, and perspective that are hidden to the entrepreneur. It also generates valuable goodwill among important local community leaders.

There are also a number of government-sponsored programs designed to offer management counseling and assistance to small businesses. The federal government has three such programs originating from the Small Business Administration: the Small Business Development Center (SBDC), the small Business Institute (SBI), and the service Corps of Retired Executive (SCORE). The SBDC can offer the services of management consultants on a short term basis as well as offering seminars ad market-research information. The SBI program uses teams of senior level business students to work on a semester long project in cooperation with the entrepreneur. SCORE is a voluntary organization composed of retired executives who can offer advice and the benefit of their years of experience to help the small business owner-operator solve problems.

Networking is a term used to refer to making business contacts, finding common problem areas, and offering support to people within the network. For the entrepreneur, networking can be source of technical and managerial assistance, as well as emotional support. Networks can be built from Chamber of commerce committees, church groups, philanthropic organizations, and local political activity. By meeting people from different parts of the business environment and cultivating these people as advisors and confidants, the entrepreneur can create a team of external advisors for his small business.