While deliberating entity structure of a client to create a cannabis company with ideal legal protection and tax-advantaged status with Tyee Carr, the leader of the Business Advisory Services team at McDonald Jacobs, and a brilliant young attorney from a firm in Portland, OR, I reminisced on a discussion I had with my father. In his heyday, my father was an accomplished businessman, overseeing all operations for Mettler-Toledo scales in Asia. When discussing complex start-ups he had described a metaphor that stuck:
“Brian, there are three core legs that hold up the dream on the table of the entrepreneur. The first leg of this table is the entrepreneur himself/herself, who provides the dream for the business and will not break under its weight, up no matter how heavy it is. The second leg of this table is the attorney, who ensures that the dream is following the correct legal course and protects it from others who seek to steal or destroy this dream. The third leg of this table is the accountant, who guides the financial resources and helps the entrepreneur interpret the numbers and is fluent in the language of business decision. As the business grows, more legs can be added to support the weight of the dream, such as marketing, sales, etc. But these three core legs are necessary, or the dream will disappear or transform into a nightmare.”
Who the entrepreneur chooses as his “legs” is of utmost importance. Metaphorically and realistically, some legs are meant for specific tables. In many industries, legal and accounting services are seen as a commodity, where low-cost is best. This is akin to looking for the cheapest leg to build a table, instead of the correct leg to build a table. While working with cannabis clients in town, it became exceedingly apparent that my Dad’s words rang true. The cannabis space is highly complex, with laws such as 280E creating complex issues for legal and accounting functions. The entrepreneur needs the correct services, not necessarily the cheapest. While working with the attorneys, we identified costing issues that would not have been discovered if their law firm and McDonald Jacobs did not understand the cannabis industry.
When identifying what accounting or legal firm is correct for your specific business, an entrepreneur might ask themselves the following questions:
- Do they have any experience in my specific industry?
- Are they interested in my industry?
- Are they open to learning more about my industry?
- Do they understand what my dream is as an entrepreneur?
- Do they have connections to others who understand my industry?
- Do they ask me the right questions?
- Are they responsive, timely and do they anticipate issues that might impede my dream?
- Do I get along with them and do they seem to genuinely have my best interest in mind?
- Do I trust them?
- Does the cost of this service match the value they are providing to my company?
- Bonus Question: Do they make me laugh? *This is an optional question for some, but when selecting people I personally work with, this is preferred.
Understand that when an entrepreneur is choosing a lawyer or accountant, they are choosing the very people that will hold up the weight of their dream. Find the right people!