Small business owners often shy away from hiring a financial advisor, thinking of it as an added cost. However, the truth is that choosing a financial advisor not only saves you time and money but also relieves you from the financial worries that come with handling a thriving business.
According to research, 20% of small businesses fail in their first year, and they each have one thing in common – lack of proper planning. While business owners may deem themselves as a Jack (or Jill) of all trades, finance is something that not many are experts in – leading to low savings, inability to manage day-to-day cash flow properly, and lack of retirement plan.
If you are also struggling with this, choosing a financial advisor is the right solution. In this guide, let’s take a look at some ways a financial advisor can help (save) your small business.
1. A Plan for Future Growth
As a business owner, you may have lots of plans for your business. For its future success, you must have planned out various long-term goals. However, many of these goals are often unrealistic and hard to attain.
A financial advisor looks at your business plan from a third-party perspective and ensures you have a clear vision of the road ahead.
He can also evaluate your company’s performance on a daily basis and align it with different performance indicators like market conditions, changing competition, and technological advancements to predict the likelihood that your business is heading in the right direction. With this information, you will know whether your planning is paying off or a change in strategy is required.
2. Saving Time and Energy
Small business owners wear a lot of hats. If you are an entrepreneur, you may find yourself juggling between the different departments within your company. One minute, you are researching a new product to bring to the market, and the next, you are handling a customer service issue.
With so much on your plate, not everything gets your full attention. And in the end, your financial planning suffers the most with poor bookkeeping, unsound financial decisions, and cash flow discrepancies.
This is why delegating your business finances to a professional comes in handy. While you are busy handling the operations of your business, your financial advisors will keep a check on the capital and ensure that it is properly maintained.
3. Saving Money
Business owners who neglect the financial condition of their business often fail to notice where they are overspending. In this case, a financial advisor will evaluate your business finances and keep you informed regarding unnecessary costs.
Once you identify needless expenses, you can take corrective action as soon as possible and ensure your spending is within budget.
4. Evaluating Market Trends
Financial service providers are equipped with some of the best tools, enabling them to research market trends more effectively. Moreover, some markets are more competitive than others and having an expert opinion helps analyze how your business fares in these markets more proactively.
They will also use research to provide you with solutions to any of the problems you are facing in the business world.
For example, if your business is out of cash, your financial advisor can better facilitate you to the type of loan you should be opting for. They can also offer you tax advice and help you out with any tax problems you are facing.
5. Retirement Planning
Many business owners are wrapped up in the logic that they will later sell their business and fund their retirement. While there is nothing wrong with giving all to the business you have in hand, it is not a wise practice. When it comes to investment, it is smarter to have an investment portfolio that is diversified.
A financial advisor can help you choose which investment plan works best for your unique situation – including when and how you want to retire.
As your business starts generating more revenue, the financial advisor can help you decide how to invest the capital and continue to grow your business further.
6. Succession Planning
Besides planning your retirement, you should also plan out what will happen to your business, or who will keep the company running, when you are no longer in charge – for any reason.
Known as a succession plan, the small business advisor will help you draft out a document with clear instructions on how to keep the business running or prepare for sale in your absence.
7. Keeping Personal Finances Inline
Most people start a business to improve their financial position. In fact, making more money is the main motive of any business. However, many business owners become so engrossed in running their business that they neglect their personal finances and end up overspending.
A professional and experienced financial advisor will keep a check on all your spending and coordinate all aspects to ensure your business and you stay on the right financial track.
Do you Need a Small Business Finance Advisor?
While it is not mandatory to hire a small business financial advisor, it is highly recommended that you dedicate one for your organization. With the help of a financial advisor, you can keep a check on all your finances and ensure you are on the right track when it comes to managing your financial position.
Instead of thinking of it as a cost, consider a financial advisor as an investment – one that you won’t regret.