Things I wish I knew before starting my first business. #1 Pay for Expertise

This is the first article in a series on hidden or unexpected challenges that Entrepreneurs and Small Business Owners face on a regular basis. (Click here for an introduction to the series with links to other topics.) Here, we will discuss the notion that you generally get what you pay for in terms of Professional Services that we need from time-to-time in our businesses. I.e., don’t assume that cheaper is better, because sometimes it is not.

We are all trying to do more with less. And, that is amplified in the #SmallBusiness and #Entrepreneur worlds. As the owner, there is the realization that every extra dollar that we spend is a dollar that is not in our pocket at the end of the month. There are lots of decisions every day on where to invest or spend our money. One of the temptations is to cut corners, when you need specialized professional services, such as lawyers, accountants, or consultants.

For better or worse - Professional Services is an area where you generally get what you pay for.?

While you may think an accountant is an accountant, or a lawyer is a lawyer, don’t be fooled by that oversimplification of complex disciplines. Let’s take lawyers for example. Just related to business law, there are Corporate Attorneys, Tax Attorneys, Labor Law Attorneys, Bankruptcy Attorneys, and Financial Attorneys, just to name a few.?

You probably had a Corporate Attorney to set up your business and help you with registering your business with your Secretary of State or equivalent. That person is probably perfectly qualified to help with things like Terms & Conditions with your clients or customers, business contract reviews, and even helping negotiate deals on your behalf. But, there are many areas of the law where your Corporate Attorney does not have the expertise you need or expect.?

Even if they have a lower rate than specialized attorneys, Corporate Attorney may not be the best person to help you with complex tax planning or issues. A Tax Attorney is much better suited for that, as he or she has specific education and experience regarding Tax Law in your jurisdiction.?

Similarly, the Corporate Attorneys may not be the best person to help with Labor Compliance or Dispute Resolution. A more specialized Labor Law Attorney is better suited to address those often complex issues.?

Now, the Corporate Lawyer may tell you that he or she can help you with Tax Law or Labor Law questions or issues - and here is where my lesson was learned - but they are likely going to have to do research on your particular issue or question. And, while you are expecting and assuming that they should know the answer to your question off the top of their heads (it seems simple enough to you, right?), they don’t do their research for free. They are going to charge you their normal billing rate to educate themselves on your issue or question. Said another way, yes, you are going to pay for their training.

So, let’s do the math. Say your Corporate Attorney is $300/hour and a Labor Law Attorney is $450/hour (I am using round numbers for easy math). All the Corporate Attorney has to do is spend 30 minutes researching your Labor Law question and he or she is even with the Labor Law Attorney in terms of cost (but not in overall expertise). And, as a side note - you may not know that they are going to have to do research until you get the invoice, and I never saw an invoice for just 30 minutes of research - they were all in terms of hours. (Your experience may be different than that, I am merely sharing what my experience was.)

While we all understand how hard it is to write a check to someone for $450 for an hour or less of work, we can quickly see how paying someone for their expertise and experience works to our advantage.?

The real lesson for me was that I sometimes have to swallow my pride and frugality and pay for people’s expertise, when it serves me best.

Please ask any questions in the Comments section below. Alternatively, you can message me with any specific questions that you may have.?

Follow us if you like this article and are interested in similar topics. There is another article coming next week.?

Finally, I don’t mean to pick on attorneys in this article. The lessons of asking, how much am I going to pay for a service and using your best judgment after receiving input from professionals applies equally to accountants, consultants, advisors, or any other expense for that matter.?

Disclaimer: Of course I have to put a disclaimer in an article that mentions attorneys! I am in no way, shape, or form and attorney or CPA. You should always seek professional legal or accounting advice from licensed professionals in your area.?