Among the key players in any company’s financial group are its CPA,
corporate attorney and business banker. The typical business manager
might feel like an orchestra conductor, giving each musician room to play a part, but
trying to keep the whole thing in balance.
“Rarely do all the providers have the full
picture — and it is even rarer that they
have a common, shared understanding,”
says David J. Janus, president and CEO of
FirstMerit’s Cleveland area office. “I think
the biggest synergy is the shared knowledge of the owner’s long-term strategy and
goals.”
Smart Business turned to Janus for tips
on keeping the relationships harmonious
and in balance.
What is the basic strategy with providers?
External service providers are no different than a management team. The owner
must get them all working in the same
direction to execute their strategy and to
accomplish the goals they set forth. Too
often these service providers are privy to
the piece of strategy around the particular
service or project they are working on but
do not have the entire picture.
A service provider might suggest a solution that fits the current situation, but
another solution would be better from a
long-term perspective. For example, I’ve
worked with companies that wanted debt
capital available for substantial growth and
large equity capital distributions for estate
planning purposes, to buy out shareholders, and to purchase another company
with bank debt. Those objectives are in
conflict with each other.
Ideally, we’d want to sort out the priorities with the owner along with the accountants, lawyers and insurance providers to
find the best solution.
Does the orchestra leader analogy really
work?
Yes, it does. The conductor is always trying to get the most out of each player, but
they are best when in perfect harmony.
Rare is the company that tries to get perfect harmony. The typical business owner
views them as providing separate services
and playing separate roles.
So are all equally important?
I’m not sure it matters who is most important. All would be deemed ‘trusted advisers’ of the owner but it depends on the
owner’s needs and the situation to determine who plays the lead role at any particular time. The fact that each provider
brings unique services to the owner suggests they are all equally important.
What other professionals should have a seat
at the table?
Add the commercial insurance provider
into the mix and any consultants the company uses with any frequency: management consultants, HR consultants, industry
consultants, and so on.
These providers all sit down with owners
and sometimes with the leaders. What
information you give them depends on
what they need to know at the time. An
owner likely would want his management
team working with the CPAs on an acquisition, but the owner may not want management involved in some litigation work done by the lawyers. It’s very important
that service providers know each other
and effectively provide the best service
possible.
Do many businesses do this?
No. In fact, I have yet to see a business
owner pull together his or her entire professional service team for a strategy summit.
Should all parties have similar access to corporate records and books?
Service providers know what information they need to review. I wouldn’t suggest
they all have free access to everything, but
if the information is pertinent to the situation or the project then they should have
access. The business owner should be in a
position of complete trust with these service providers, so full disclosure is best.
Why is it important to get them all working on
the same page?
Having your professional service provider group working collaboratively will
yield better results, avoid surprises, mitigate potential problems, potentially head-off bad decisions and help owners meet
their objectives.
I would suggest a summit among these
providers once a year after the financial
results are available for the most recently
ended year and plans are complete for the
coming year and beyond. This should be a
thought-provoking session about where
the owner wants to go with the business,
how success is measured, how he or she
plans to get there and what impediments
might be in the way. Consider this group
your informal board of directors. After all,
you’re paying them for their advice and
service, so why not get the most of synergies among them?
DAVID J. JANUS is president and CEO of FirstMerit’s
Cleveland area office. Reach him at (216) 694-5658 or
[email protected].