"Learn To Select The Best Accountants, Lawyers "

Author: MOREY STETTNER 
Section: Managing For Success 

Date: 9/4/2007 

Every entrepreneur relies on the kindness of strangers. From accountants to attorneys, the best outsiders have both knowledge and integrity.

Business builders routinely conduct due diligence before launching their company. But a surprising number of entrepreneurs skimp on due diligence when hiring outside experts.

"Many owners tend to make their hiring decisions of CPAs or lawyers based on the wrong criteria," said Nick Martorano, a Melrose, Mass., coach and consultant to business owners. "They may pick someone because they're a golfing buddy or they just seem nice, not because they're the most qualified."

To recruit the best brainpower, begin by setting reasonable expectations. Research the range of services that outsiders provide, and make sure you're getting the full package out of them.

In shopping for an accountant, for instance, expect more than a bean counter who fills out tax forms. Top CPAs can also help with succession planning and financial projections as well as suggest legal tax-avoidance strategies, Martorano says.

Ask other business owners what kind of services they get from their accountants. By exploring what a CPA can do for you before you start interviewing them, you can assess candidates more thoroughly.

"That's better than asking, 'How much do you charge?' and deciding purely on price," Martorano said.

Only hire firms that already understand your type of business. Review their client list to confirm that they serve others in your industry. Contact references to ensure they're satisfied.

Ask references, "What made you hire this firm?" That way, you can gain insight into how your peers shop for accounting and legal expertise.

Just as many entrepreneurs dread firing employees, they may hesitate to sever relationships with outside firms. Business owners need to set a high standard and stick to it, Martorano says. Demand improvement if performance or customer service slips.

"When problems occur, like an attorney not returning calls or a CPA filing late even after you submitted everything on time, then you need to put them on notice and follow through if necessary," he said.

Martorano recalled a case in which a business owner summoned his accountant to a meeting to terminate the relationship. But the CPA convinced the owner to back down and give him another chance.

"Now it's two years later and the CPA's service is even worse," Martorano said. "The owner just can't fire him."

Another trap that befalls entrepreneurs is misplaced loyalty to sole practitioners, Martorano says. As your company matures, you can outgrow a one-person shop.

"I've seen owners stick with the same guy for too long when what they really need is more depth of service," Martorano said. "You want firms that can handle your account well into the future. Unless a sole practitioner can expand capacity to meet your needs, consider a bigger firm."