An entrepreneur masters his products and the know-how of the services he renders. But issues like taxation, making contracts, building a net portal, selecting subcontractors, arranging book-keeping etc. may puzzle an entrepreneur. It may come as a surprise how wide is the scope of things an entrepreneur will face as he launches and develops his business.
An entrepreneur is like a decathlete. He needs to engage himself in several areas of managing a business. He may master some areas but most likely lacks in some. It is crucial to recognize when there is a need for outside help. A wise person will acknowledge his lack of knowledge and have a network of people who know better.
I had just started as the CEO of a company when I learned that the local federation of entrepreneurs offered a free consultation of a lawyer. I thought to myself that I’ll go to see her even though I do not have anything particular to ask about. As we chatted, I explained that my limited company bought part of the shares where I now act as the CEO. Soon she asked what percentage of the shares I had bought. Then she inquired me if I am aware of this rule. If the ownership of 50% or more of the shares are exchanged, the loss from previous years cannot be automatically utilized. One has to appeal to the tax authorities. I admitted I was not aware of this. Later she and I worked out together to compile the appeal to the tax authorities. She charged me 160 € for her work. The appeal was accepted, and the company saved over 35 000 € in tax payments.
But an entrepreneur may hesitate to ask for help. Why? It may be a matter of pride. An attitude which makes us say, please, do not confuse my head with the facts, I have already made up my mind. Sometimes it is a matter of finances. An entrepreneur is not willing to pay for the much-needed help. Self-sufficiency and stinginess at the wrong time can be detrimental.
An inventor entrepreneur had finalized his product. The domestic markets had already indicated that the product will sell well. The entrepreneur was convinced that it will have success also in export markets. The question was how to go about with the distribution in Europe and beyond. By chance he met a company that already was operating in Europe and that was willing to make a distribution agreement. A standard form was used to draw up the contract. A lawyer could have been available to help. But the entrepreneur thought that the charge of 3 000 € is too much and he cannot afford it. The result was that he ended up making an amateurish and binding distribution contract. Later he had to face with the 30 000 € lawyer expenses in the court and the loss of 300 000 € sales.
A small company usually cannot afford to make even one major mistake without losing its business completely. A word of wisdom from the book of Proverbs says: ’Plans are established by seeking advice’.
The author, Mikko Loikkanen has a business degree from the Helsinki School of Economics (Aalto University). He has worked in a small leadership role in a big corporation and in a big leadership role in a small company. He has been an entrepreneur since 1995. He has worked in the field of import, business hotel and av&it with his three companies. In recent years he has taught and counselled starting entrepreneurs how to launch their business.