News & Press
Four Helpful Tips for Founders Looking to Scale Their Businesses
Written in partnership with the Target Accelerators team
By Brent Lessey, CPA, MST – Tax Partner
If you are a founder of an emerging business in the Consumer Packaged Goods (CPG) industry, you know how difficult it can be to not only navigate the financial challenges it takes to grow or manage a business, but to get a seat at the table that is mass retail. From complying with ever-changing regulations to making decisions that will help (and not hinder) your growth, the challenges can seem omnipresent and overwhelming.
In our work at Anchin, we have found that sound financial advice early on can help entrepreneurs more easily navigate the challenges that come with growth and avoid costly mistakes down the line. It’s our team’s hope to help empower founders to find their voice and slice of the market by providing helpful tips and valuable ideas.
With that in mind, here’s four helpful tips for founders looking to scale their businesses:
- Don’t leave money on the table. Take advantage of tax credits already available to taxpayers that provide refunds to businesses for activities that they are already doing, like hiring personnel, improving operational processes, and improving the product. Examples of such credits which is granted to companies that hire people from a targeted group, the Employee Retention Credit (ERTC), which rewards businesses for retaining employees, and the Research and Development Credit (R&D), which rewards businesses for improving systems and products.
- Ensure that you’ve picked the right entity structure for your business. Many businesses are created without focusing on the end goal, which could be to remain family owned, sell the business, or leverage outside investors. Operating in the incorrect structure could create speed bumps when exiting, seeking capital, or providing equity to employees. Read more information here on different kinds of business registrations.
- Nexus, Nexus, Nexus! The rules regarding sales tax and state nexus are complex and difficult. Without proper guidance, many companies and taxpayers are subject to the pain of correcting mistakes made in the past. Repercussions of being noncompliant with state nexus include potential issues arising during due diligence, significant or burdensome interest and penalties assessed by taxing jurisdictions, and allocation of proceeds from the sale of the business being held in escrow. Proper planning with your advisor on business expansion can help avoid the potential landmines in being noncompliant
- Pivot focus from top line growth to free cash flow and positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) while choosing the most effective growth option for your brand. Traditionally, founders and the investment community focused on top-line growth regardless of how healthy those revenue opportunities were from a bottom-line perspective. As the risk of recession grows and companies face inflationary pressures and supply chain issues, it’s important that brands begin to shift their focus on building a brand that can achieve a strategy that is attractive to investors and potential buyers.
Identifying and implementing strategies to improve your company’s financial health can make a huge difference in propelling your company into the future. Proper financial advising can ease strains when it comes to confronting obstacles while building your brand. So, to sum it up? Founders should consider spending time on the onset of building their business finding the right advisor. In the long run, their industry expertise can bring you big savings and help you meet bigger goals along the way.
Brent Lessey, CPA MST is a Tax Partner in Anchin’s Consumer Products Practice. His practice focuses on creating custom tax planning with the end goal in mind and empowering MWBE and other growing companies to succeed. Brent is also a featured Target Accelerators program speaker, sharing his tax expertise with new founders across both Target Forward Founders and Target Takeoff programs.