Small Business Financial Advisor – Do You Need One?

Strictly speaking, you can run a small business without a professional financial advisor. But it’s highly recommended if you want to optimize your wealth, grow your business, and stay on track without losing your mind.

Think of it this way. You don’t need a CPA or accountant to file your income taxes. You can DIY an oil change for your vehicle. You could probably even renovate your bathroom by yourself. But unless you love doing these things, and are rather skilled at doing them, it’s probably worth paying someone else.

As a small business owner, you wear a lot of hats and perform a number of roles. With time as your most finite and limited resource, what’s the best way for you to spend it?

Financial planning makes your business run.

You may have been thinking that the most valuable asset in your business is money. And you’re not wrong. Capital is the lifeblood of your organization. It flows like blood does too, in and out on a steady beat.

Time is the most valuable resource because once it’s gone, it’s gone and can’t be reclaimed. Fortunately, the same cannot be said of money.

A financial advisor makes you money, and gives you more time. I’ll tell you how.

But first, while we’re on the subject of money, let’s talk about the elephant in the room.

Is hiring a financial advisor worth the cost?

Lots of small business owners (up to 60%, according to a survey by the American College) have never met with a financial consultant. Cost is a frequently cited obstacle to bringing a financial planner on board.

But it may be one of the least risky things you’ll do as a business owner. It’s the best way to ensure not only business survival, but long-term growth and profitability.

One of the things a great financial planner can do is establish a roadmap for growth, and help you stick to it. They can help assess the viability of your business model and outline strategies to get you on a path to profitability with a realistic timeline. In short, they can shore up, improve, and accelerate business success.

There’s almost no way you won’t get some measure of return on your investment, if the financial advisor is worth their salt.

Working with a financial advisor pays huge dividends, literally and figuratively.

Since you’re here, it’s safe to say you’re at least open to the idea of teaming up with a professional financial consultant. But you might be wondering, what does a financial planner do for my small business? It’s got to be more than investment advice and tax tips, right?

It is. (Although investment advice and tax tips are certainly a clutch part of the deal).

The first and most important thing you’re getting, when you decide to invest in professional financial planning, is knowledge. You glean quite a lot of experience and financial expertise just by operating a small business. But probably not to the extent of someone who does it for a living.

Nobody has a crystal ball. But a financial advisor can help with planning for your future with the big picture in mind. They have the experience and outside perspective to help you make the most of your finances and plan for things you don’t see coming.

A financial planner understands market fluctuations and legal requirements, and the way that they impact various sectors. Not enough business owners account for potential changes to technology, markets including inflation and interest rates, and other circumstances when planning for the future of their business. Advisors have the know-how to help businesses weather market disruptions like recessions, new competition, changing government regulations and even inflation.

Financial planners have vast insights around exposure to risk, opportunities to economize, and the best times and areas to expand and invest. They can access a variety of tools to manage and navigate those opportunities.

They also bring a neutral perspective to sometimes fraught situations. They can help you be realistic about the likelihood of achieving your goals on schedule.

Financial planning is an investment that ultimately makes you money.

Financial advisors can be excellent resources for navigating crowded markets and leveraging your competitive edge. Financial advisors recognize and remove cash flow clogs and bottlenecks. They help find ways to reduce your tax liability.

They help you discover and capitalize on opportunities, whether that’s a savvy investment or timing when to break into a new niche. They can help you decide whether and when to diversify your product or service. And when you begin to increase profit margins, your financial planner is on hand to advise on capital investment. They can also help you avoid costly mistakes.

We’re not glossing over the fact that hiring a financial advisor comes at a cost. It’s a case where you get what you pay for. And what you get often comes in the form of major savings.

Cost savings allow you to put more back into your business. Hiring more employees or raising pay, expanding marketing efforts, developing and releasing new products, scaling your business, or even retiring early are just some of the ways to leverage the capital gleaned from having a smart financial strategy.

A financial advisor can do a lot for small businesses.

Don’t forget about that most valuable asset: time. A professional small business advisor can save you a lot of it, not just by sharing the burden of financial operations but by optimization.

They can establish processes for organizing and monitoring expenses, managing cash flow, payroll, and taxes. They can even help with attracting and retaining employees by advising on the right retirement plans, compensation and benefits.

Bottom line: they help you make important decisions from a place of strength.

For example, have you considered what will happen to your business in the future?

A financial advisor is the ideal partner to handle succession planning and prepare for business transitions of any stripe. You may consult a financial advisor for their professional opinion on a merger. Maybe one day you’d like to acquire another company, or take on a partner. You may decide to sell a business and start a new one.

Both cases—business succession or transition—call for an objective expert to help you do things like determine a successor or a buyer, work with attorneys on buy/sell agreements, and oversee business valuations.

Wherever your business goes, a financial advisor will help you map out your business transition plan and execute it to your best benefit.

Which brings us to a final point.

A financial advisor should be 100% invested in your success and work for your business goals.

Your financial partner should be comfortable with meeting expectations and ground rules that you set.

You want someone who sees your success as their success.

What does that look like? They should get to know your business, inside and out. They should ask lots of questions, not just at first blush but throughout your partnership. Their financial experience, knowledge, and expertise should always be provided in the context of your industry, your business, and your goals.

For many small business owners, their business is their livelihood, their nest egg, and often their passion and purpose. You don’t want cookie cutter guidance when it comes to something as important as that.

A small business financial advisor helps you focus your vision and take your business in the direction of stability and growth. Put simply, they help clarify your objective, develop a plan to get there, and execute the tactics to make it happen.

So, who should hire a financial advisor?

Everyone. Or maybe it’s more accurate to say, any business owner looking to maximize profit, manage risk, and optimize for the future.

Whether you’re a new business just starting out, a seasoned business owner looking to stay on track with your goals and flex into new opportunities, or preparing to divest or retire, you stand to benefit from a financial professional in your corner. No buts about it: hiring a financial advisor is one of the most effective ways to grow a successful small business.