In the premiere interview on Family Business Radio, Pat Romboletti and Meredith Moore welcomed John Dillard, owner of HisCPA (www.hiscpa.com) an Atlanta-area CPA for more than 30 years.
In setting the stage for their discussion, Meredith shared some family-owned business statistics, courtesy of the Cox Family Business Center at Kennesaw State University under the direction of Dr. Joseph Astrachan, such as:
• 80% of the world’s businesses are family owned.
• Family-owned business account for more than half of the U.S. gross domestic product.
John began by explaining the difference between a CPA and an auditor. He described an auditor as someone who comes in after the fact and interprets the data, “like counting casualities after the battle.” A CPA, however, is proactive and the best ones help the owners of family businesses run the company, including helping to establish policy and contemplating the future. “You want a CPA who has empathy for your company,” he pointed out, and acts as a virtual CFO/virtual controller.
When asked how a family business owner can best partner with a CPA, he advised to “call and call often,” but especially when something major is under consideration, like buying a business, adding a partner, dissolving a partnership, installing a health plan, etc.
Before bringing new family members into the business, John recommended that a shareholder agreement be drawn up before that person comes on board. Assuming no dramatic change in the company, this document should be reviewed every 5-10 years.
With succession planning, he advised that you begin by knowing the worth of your company, so get a business valuation. If your business grows rapidly, the valuation needs to be done yearly; for those companies enjoying steady growth, every 5-10 years is sufficient. John also recommended that succession changes be implemented over time to allow the new person time to mature into their role. Finally, he suggests that you hire a competent tax attorney.
The final discussion centered on how a family-owned business should deal with their team of trusted advisors. John’s thoughts were that the business is best served when the advisors work in tandem—even when the opinions differ. A little healthy debate can serve you well.
And John’s three parting tips:
1. Live below your means. Financial hiccups will occur; it’s not a matter of “if.” So have a cushion.
2. Know when you need to get a financial “second opinion.”
3. Be debt-adverse
Thank you John for being a part of our family-owned business community and thank you for your expert advice. John Dillard, can be reached at His CPA, PC, www.hiscpa.com 770-814-9304.
