Why you need an accountant year-round

I hear this often from entrepreneurs and small business owners: "I have the popular accounting software to manage my business checkbook. I can use it to create invoices and pay suppliers. I even use it to manage my payroll. It is simple, and it is just like my checkbook. I think I have it all covered. I use an accountant for my taxes, but do I really need an accountant other than tax season?"

The answer is,yes. You should have an accountant who can support your business year-round.

An accountant offers much more than bookkeeping and taxes. In fact, an accountant’s area of expertise often goes far beyond that of your neighborhood bookkeeper. While undoubtedly a bit more expensive than a bookkeeper, you should be able to rely on an accountant to add value to your business operations.

For example, an accountant will:

  1. Help you read and understand your financial statements.  If you are just printing them off your accounting program each month without a thorough understanding of what you are reading, your business may be in trouble, and you may not even know it.  An accountant can help you decipher the numbers on your financial statements and determine how to use those numbers to determine the actual condition of your business.
  2. Advise you on Generally Accepted Accounting Practices (GAAP).  Like most business operations, accounting has a defined set of “business rules” or the “acceptable way to do things.”  Although most accounting software packages provide some safeguards to prevent you from making significant errors in bookkeeping process and they do provide an audit trail for what you have done, they will not force you to follow these standard business rules. Regardless of your business size, you will want to be able to justify your record-keeping and financial reporting by the accepted practices.
  3. Provide a dose of business reality.  As a business owner, one of the most challenging things to do is to look at the books objectively. An accountant will provide you with an objective outlook on how your business is really doing.  Moreover, an accountant can give you guidance on how...

Beyond Short-Term Royalty Potential: Vetting Prospective Licensees for Long-Term Success

Licensors often start their vetting process with a license application to learn about a prospective licensee’s proposed licensed product, the sales potential for the licensed product, and the underlying financial health of the licensee. This may be sufficient if the primary goal for a licensor is revenue generation; however, if the licensing strategy goes beyond royalty generation, a licensor will need to consider other factors to help ensure all parties have more significant opportunity for success in the licensing relationship.

A licensor who seeks to increase awareness of its brand, expand into new categories or markets, or develop new products to help serve its business goals, for example, may not consider short-term royalty potential as the primary factor in evaluating new licensees.

Depending on a licensor’s strategy, it might also incorporate factors into its review and vetting process to gain a broader view of a prospective licensee, its alignment with a licensor’s mission and vision, and potential for long-term growth. In such situations, a licensor’s vetting process might include the following:

  • Organizational Fit. A prospective licensee and the new licensed products it proposes must be a good fit with a licensor’s mission and vision. The proposed products, the manufacturing and sourcing procedures, and the marketing and merchandising strategies, must all be in alignment with a licensor’s brand, image, and organizational direction. The prospective licensor’s business practices, executive leadership, management, and customer service staff will likely have an impact on a licensor’s brand, and these factors should be considered in the evaluation of alignment with the licensor’s organization.
  • Operational Stability. Stability is essential, and some licensors assess stability by the number of years a prospective licensee has been in operation or the appearance of financial solvency; however, a more in-depth dive is always required. For example, a licensor will likely want to pull Dun & Bradstreet reports, ask for financial statements from non-public companies, check several references (other licensors, vendors, and manufacturers), and evaluate the leadership biographies for relevant experience. A licensor might also want to consider a prospective licensee’s operational structure and supply chain, paying particular attention to the ability to fulfill its marketing, sales,...

Interview: ClassB CEO Eric Hilferding on Entrepreneurship

The following is an interview with Eric Hilferding, CEO of ClassB, a custom t-shirt manufacturer, and printer for my graduate coursework in entrepreneurship. Eric and I first met in 2005 when I was with the Boy Scouts of America. His company was one of the BSA's first licensees in the revamped licensing program. We became fast friends and I have long admired his attention to detail, his creativity, and his commitment to service.  

 

Eric Hilferding of ClassBQ. Tell me a little about ClassB and your role with the company.

A. ClassB is a provider of custom decorated goods including t-shirts, embroidery and promotional products to primarily nonprofit organizations. The company started in 1982. We currently have 38 full-time employees. We focus on having a great customer experience. The internal motto is we sell service not t-shirts. I am the CEO of ClassB and one of the two company founders back in 1982. I have been formally running the company since the mid 1990’s.

Q. Did you have any entrepreneurial experience or education before launching the company?

A. I have zero business or entrepreneurial education - I have a BA in History. Luckily, learning about running a business was always a part of my life. I started working at around age 8 at my grandfather's lumber yard. My parents often discussed business at the dinner table.

When my mother and I started ClassB, all immediate family members eventually were employed. I read profusely to fill gaps in my knowledge. I was very lucky to have my father with his extensive business knowledge available at all times. Without his experience, I would have failed many times over. Now I realize how right he was on everything.

Another key area is my Boy Scout experience. I learned so much by making lots of leadership mistakes in my Troop and working at Summer Camp. Having that sandbox to learn is one of the most valuable things I can imagine. If not for my parents and the Boy Scouts, my only business reference point would be work based sitcoms.

Q. What are...