Unlike executives with publicly-traded companies who are accountable to its shareholders, small business owners dont have the luxury of resigning at the first signs of trouble. Instead they have to come to grips with whatever problems have hit their business and hopefully seek help from a professional to repair the damage before its too late.

Many business owners realize that theyre wearing too many hats so they decide to hire another employee. That suggestion invariably comes from their spouse who reminds them that they havent been home for dinner in many weeks and they havent spent enough time with their kids.

Spouses have a way of bringing you back down to earth and telling you that your life is out of balance, said Gene Polley, a senior business advisor in Fiducials San Diego office. The first warning sign is that youre working in the business and not on the business so you need to get another employee.

Owners are constantly putting out one fire after another so it seems like theyre getting a lifeline when they bring an employee on board to help with the increasing demands.

It could be at any phase of the business where things get out of kilter, Polley said. It could be production, sales, marketing or collectionsyou name it.

Spinning out of control

A crucial moment for the business is when it gets to the point where the owner can no longer do all of the accounting in-house with whoever had been doing it up until then. Thats when they recognize that things are spinning out of control.

Its very difficult to figure out when you need to hire somebody else in your business, he said. They always think the first employee is going to fix all the problems. They think that suddenly their life gets easier until they discover that this person cant wear as many hats and things are going to start slipping through the cracks.

Polley cited the example of a computer reseller who tried to use the in-house receptionist in a variety of job roles until she became the most important person in the business. She was doing the books, had signature authority, sent out the checks and balanced the checking account. What anyone failed to notice, Polley says, is that she had a criminal record in the background since she had discharged a firearm in the commission of a grand felony auto. The computer reseller paid for not doing his due diligence to the tune of $170,000 the receptionist had embezzled from the company.

That was the point he realized he needed to expand his accounting assistance, Polley said. But it was a $170K wake up. I came on board to help prosecute and do forensic accounting since she had walked off with all the accounting records. We had to reconstruct a whole year worth of records.

One of Polleys new clients owns an airport shuttle business. They initially brought him in to do their bookkeeping and taxes but it wasnt long before employee theft was exposed and they suspended giving out financial information to him until they could replace the entire office staff.

They couldnt understand why they were losing money when they were busy all the time, he said. I showed them a couple of records where drivers were putting in $100 of gas and driving 30 miles a day. It was obvious somebody was turning in gas receipts that had nothing to do with the company vehicles.

Business owners dont always know when to ask for help because its usually a friend, spouse or acquaintance that suggests that they seek assistance.

Somebody used to doing it himself doesnt immediately seek help, Polley said. Theyve been successful doing it on their own so they try to resolve things themselves.

After the alarm sounds and Polleys called in, the first place he looks is the companys financial records. The red flags are raised when tax penalties have not been paid, were paid late or someone comes in and does an audit because something wasnt done on a timely basis.

Other signals that things are out of control are when April 15 rolls around and the business has a huge tax liability or if the operation shows a profit but theres no money to pay bills.

Paying the price for bad decisions

Jerry Shriner, a Fiducial franchisee in Pickerington, OH, meets each month with his clients and goes over their profit and loss (P&L) statements from top to bottom so their inventory makes sense, expenses are not out of line and working cash is monitored.

We cant solve all the problems but this certainly helps, said Shriner whos been offering counseling advice and tax planning to many long-time clients for 20 to 30 years.

Hes heard just about every plea imaginable from business owners but he dreads hearing the words Ive made a bad decision the most. Thats because they have got themselves involved in some sort of egregious transaction without consulting their trusted advisor and have paid the price.

One of those who learned the hard way was a restaurateur that decided to lease some equipment, a new security system, for his family style restaurant. The client told Shriner after the fact that it seemed like a good deal at the time. But as things turned out, he was charged a whopping 33% interest for this equipment which put quite a dent in the bottom line.

Having monthly reports at hand is always a plus but if owners dont look at them on a regular basis they could suffer the consequences by making a bad decision. To prevent that from happening, Shriner says its essential that entrepreneurs enlist the help of a professional that wants to work close with them.

A client that came to him in March owned two corporations and wanted him to take care of his accounting. When Shriner examined the owners data they saw that his profit was $600,000 which seemed to be too high. He suggested that the client file an extension which paid huge dividends for him since the income tax was reviewed and recommendations made that saved the client $82,000 in federal taxes.

Shriner noted that the CPA who originally worked for the client did not spend the time necessary to keep track of his borrowing because he had heavy credit card debt.

They did not take the time to review things on an ongoing basis, he said. The client and CPA did not meet. They just dropped the statement off and some clerical person put it together. Once they put it together it was wrong but it balanced. These firms are more interested in balancing than in getting it right.

Thats not the case with Shriner.

We take that personal attention and we get involved, he said. We work a lot harder for our money because we do a lot more for it.

Losing the ability to manage

Over the years Rocky St. John, a Fiducial franchisee in Colorado Springs, CO, has observed that some small business owners are in a perpetual state of crisis management since they are putting out one brush fire after another.

Theres no plan and they are pulled in all directions, said St. John. Smaller businesses dont have five people to delegate to so it kind of implodes and it really becomes quite depressing. They lose their ability to manage and are dealing with one crisis after another.

Another clue that the business is in trouble, St. John says, is when the owner no longer has time to interact with the family.

If their life is their business they will typically end up in divorce, he said. Theyve adopted another family and its running their life. They think workaholic is a good word instead of a bad word and they end up being a specialist in crisis management instead of being a business manager.

Depressed business owners know the solution to their problems but instead of laying out a course of action they let it go on.

It becomes a Catch-22 cycle and they dont know how to break out, he said. They need someone to throw them a lifeline. They want to turn it over to somebody.

Unfortunately, not all clients seek sound counsel from their advisors and so they enter into some sort of arrangement that extracts a painful price. Such was the case when one of St. Johns clients refinanced their home to help fund their cleaning business without consulting with him. They fell victims to a scam, were afraid to ask for an attorney and ultimately lost both their home and their business property.

By the time they knew about it [the fine print] the deal was too well-established, he said. They thought they had an opportunity but by the time we had found out about it, it was a done deal.

While advisors can analyze financial data and explain its relevance to clients, business owners cant benefit from the advice if they dont let give their advisors the complete picture.

We can only make our recommendations from the information clients provide to us, St. John said. If youre not disclosing anything then were going to fall short to be able to provide you good direction. If our data is flawed our recommendations are flawed.

Dont ignore vital information

What becomes frustrating for business counselors is having clients ignore vital information thats sent their way.

Most of our clients dont even read the financial statements we provide for them said Mark Gabriel who handles client acquisition and consulting duties for this father, Ken, a Fiducial franchisee in St. Claire Shores, MI. Gabriel is well aware of the tell-tale signs when a business owner is in way over their head.

When they start getting a lot of government notices by then the horse is out of the barn, he said. Other panic attacks occur when theyre completely lost, they cant make ends meet, theyre running out of money and people are pressuring them from all sides.

Hiring employees for the first time is another area where business owners go off the rails, Gabriel says.

People hire employees without having clearly defined duties for them, he said. They dont know how to train them and they dont know how to pay them. In his experience, great entrepreneurs are not good at delegating or managing employees.

Before enlisting the help of a hands-on advisor, Gabriel noted that some business owners decide to hire a business or corporate consultant that charges from $3,000 to $20,000 and make recommendations that end up hurting the business they were intended to help.

I have not met one business owner that had a good experience with one of these consultants, he said. Ive never seen one yet thats worked out right.

Rather, Gabriel says the professionals owners should enlist are accountants, their bankers and other business associates.

A long-time restaurant owner called Gabriel in to help inject some new life into the business which was in need of refurbishing. He soon found out that they had been using the same menus for quite a while and that the prices hadnt been raised in several years so he told them they that had to change. The owners were leery of doing that thinking they would drive customers away while the waitresses feared they would lose tips.

The owners eventually decided to raise prices 20% but the business increased because of the perceived value of the food and the waitresses ended up getting more tips since the tickets were higher.

The need for a good advisor

Theres no denying that most small business owners are very good at what they do. But when it comes to understanding why sales are up or are down they do not understand all the factors involved.

Thats when they need an accountant, said Roger Bierman, a franchise relations manager for Fiducial for the Alaska, Northeast, Northcentral and Northwest regions. They may have a bill that covers three months and is expensed all under one month. A good system would be expensed evenly over those three months.

Bierman says business owners need to have industry standards to go by so they will be able to fully grasp what theyre looking at when given a detailed monthly report on their operation. This enables them to look at their figures and make comparisons based on data for a full year to date.

If you have last years figures to go by it gives you something to go on, he said.

Having been in the industry for 35 years, Bierman has seen too many entrepreneurs place too little importance on having a good accountant because they think an accountant is involved only with taxes.

Its more than doing tax work, you need a partner that is willing to take a close look at your business, he said. They want to pay the least amount of taxes required by law but if they dont have an accountant thats involved in the business then theyll never be able to do that.

Business owners need a good advisor to help them, someone who understands their business. Without one, getting into a start-up enterprise is a dicey situation.

Bierman cautions would-be entrepreneurs that before they make the investment in any business, they need to realize that its a 24x7 commitment and they need to have the right staff ready to go. If they get themselves in trouble its usually because they havent exercised due diligence.

Back in his days as a Texaco service station owner, Bierman made sure he knew every facet of the business.

I taught myself how to do a tune-up because I never wanted anyone to say hey Roger you need me to do this, he said. Whatever the business is, if youre the owner you better know how to get it done.