How long do you plan to be in this business? Part 1

May 22, 2019


Earlier this year, I presented on a topic called Be the CEO. That presentation mentioned certain questions that should be discussed with your trusted advisor, i.e. your Certified Public Accountant (CPA), Fractional Chief Financial Officer (CFO), or CFO, at the beginning of the engagement. One of those questions will be the topic of a two-part article series, How Long Do You Plan to be in This Business?

  • Hit and Quit (H&Q): 3-7 years
  • Short Range - Long Term (SR-LT): 10-99 years
  • 100 Year Company: 100+ years
  • Legacy Builder: 100+ years, plus other factors

In this article, we will discuss the first two points, Hit and Quit and Short Range – Long Term. Stay tuned next month for information on 100 Year Company and Legacy Builder.

Hit and Quit

Companies in the H&Q category focus on leaning in and scaling up their company over a short period of time. They see a need in the market and aggressively attack it with the goal of hyper-growth. A good trusted advisor will explain the need to provide you with the following information to achieve your goals, such as:

    • Timely reporting - Businesses in this category tend to have limited cash or limited access to cash. Cash flow reports are extremely important, along with budgeting. A good trusted advisor will put in place policies and procedures to provide this information to you on a timely basis. Your trusted advisor should have a track record of developing and implementing these policies and procedures AND providing them to CEOs in a timely manner.  
    • Short term financial modeling - Providing financial statements on what has already occurred is one component, but so is knowing what the next 30, 60, 90 days look like. Where will the money come from to sustain the business? What is the highest and best use for that money? Is there seasonality in the business that we need to plan for? H&Q companies experience hyper-growth, which means access to cash or credit is important.
  • Trend analysis: Are their competitors coming into the market to compete with our services? Are we gaining traction with the services we are providing? Do people engage us during certain times of the year? What type of customer traction are we gaining after the CEO makes a presentation? A good trusted advisor should be able to translate what is happening in the real world and the impact on the financials of the company
  • Tax implications: While very important to any type of business, tax implications are not the first focus for an H&Q company. A good trusted advisor will be able to balance the need to make the company look good on paper versus paying the least amount of tax.

Short Range – Long Term

Companies in the short range – long term (SR – LT) category focus on the efforts of the CEO. Once he/she retires, the business usually goes with them or there may be an opportunity to sell. A good trusted advisor will explain the need to provide you with the following information to achieve your goals, such as:

  • Budgeting: Developing a budget and sticking to it is one of the most important items for an SR – LT business. A good trusted advisor should be able to show you where companies in your category are spending their money and how you compare to them. In addition, the trusted advisor should develop a financial diet for the CEO so that the company doesn’t become an extension of the owner’s personal bank account.
  • Information gathering and client retention: The development of Client Resource Management (CRM) system is a useful tool, and a good trusted advisor should be able to develop policies and procedures so the CEO can see and make decisions based on real-time data. Since revenue in the SR – LT business is based largely on relationships, tracking those relationships, and sending out  , content should be a focus.
  • Tax implications: Important to any business, businesses in the SR – LT category should be concerned about how their structure affects their tax liability. Businesses in this category should start out with a simple structure such as a Single Member LLC and gradually move up to an S-Corporation or C-Corporation. A good trusted advisor will have metrics that track the savings associated with each of these structures.  
  • Community relationships: Where are you gaining the most traction with your efforts? What group of clients or network are providing you with the most referrals or clients? What was the increase in business after your last promotion? A trusted advisor should be able to either help you translate this information or put you in touch with a person that can.

In summary, knowing where you want your business to go will help you determine what your focus should be. Your resources, whether its time, talent, or treasure, are scarce. Allocating them in the right targeted areas are key for any business. Your trusted advisor should be able to identify, quantify, and simplify those decisions so you can focus on being the CEO.

Topics: Business Operations, business management

Mark Puzdrak


Mark Puzdrak is a Certified Public Accountant (CPA) with more than 13 years of professional experience helping small to medium-sized businesses with their tax and accounting needs including individual, corporate, and partnership income tax returns along with business and individual tax planning. Mark is a member of the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants. He is licensed as a Certified Public Accountant in Texas and Pennsylvania. He earned both of his bachelor of arts degrees in accounting and finance from Lycoming College in Williamsport, PA. Mark is committed to delivering tax and planning services that meet each client's unique objectives with a focus on services for small to medium-sized businesses as well as clients in the Real Estate, Manufacturing, Entertainment, and Professional Services industries. Mark lives in Austin, Texas with his wife, Kelly. He enjoys reading biographies, visiting small Texas towns, and the occasional scotch and cigar.
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