How a Financial Advisor Can Help Your Business

One of the most common reasons why businesses fail is financial. According to stats, poor cash-flow is behind 82% of defaults. Furthermore, 29% of small businesses run out of cash, and can’t support their operations any longer.

Given the statistic above, the fact that only 40% of small business owners have consulted a financial advisor, shouldn’t come as a surprise. Attempting to cut down their costs, they manage their finances by themselves, with no external help, until the problems arise.

But you can prevent possible negative outcomes if you acknowledge the importance of adequate financial mastery early on. 

Here is how a financial advisor can help your business. 

Manage Your Personal and Business Finance

Many entrepreneurs start their business ventures to achieve future financial gains and fulfill personal goals. Still, as their business develops, they tend to shift their focus to business demands, often neglecting their private finances. 

Sometimes, they don’t even have separate personal and business accounts, risking to be personally liable for business debts.

Having a well-versed financial advisor by your side can help you balance and achieve your financial objectives. They can help you keep both your business and personal finances in order, and manage them for the cash-flow, taxes, and investments.

 If there is any need, they will coordinate their activities with other relevant professionals in your life. Financial advisors will keep in touch with your accountant, bookkeeper or business attorney, and ensure your personal interests and goals are always addressed.

They Can Help You With Cash Flow

During the first days of running your company, keeping a close eye on your business income and expenses may seem like an easy task. But as the number of your clients and partners grows, and you have more transactions you need to track, it gets harder to make sense of your cash flow.

A financial planner can analyze your cash flow and let you know how much income you’re bringing in every month, as well as where it is coming from. They can also give you projections of income for the future months, and help you prepare for the slow times and dry spells, by putting some money aside for such occasions. 

A financial advisor will also have a clear notion of your overhead and operating expenses. They can help you scale some of the expenses down when you need to keep your cash flow positive.

Prepare Your Bussiness For Development and Growth

When managing your own business, it’s easy for emotions to cloud your judgment.

Keeping an optimistic perspective is a beneficial trait for an entrepreneur, but only when it’s balanced with reality. A financial advisor can be that counterweight you need to keep your business on the path to success. They can offer you a realistic view that is crucial when dealing with finances.

 It’s important to have a detailed plan as well as tactics and resources to achieve your goals when considering the growth and development of your business. A financial advisor can evaluate the viability of your ideas and plans, taking into account factors that are often neglected by the owners, such as changes to the market and technology.

 If seasoned enough, they can present you with opportunities for growth you haven’t even been aware of, or help you reach your goals faster then you’ve planned. 

A financial advisor can also help you calculate the risks for the decisions you’re considering. They can minimize the odds of loss and failure and show you the ways to give your company the best future possible.

Investment and Retirement Planning

As statistics by the American Express Open Forum show, 30% of small business owners haven’t calculated how much money they will need when they retire. Only 25% have a plan on transferring their business to their successor. 

And while most of these entrepreneurs think they have things under their control, they actually go with the flow. They tend to solve the issues when they occur, thus missing the chance to plan their future strategically and get fiscal rewards.

A financial advisor will use cash-flow modeling to assess your current and forecasted wealth and give you a context when making decisions. They will help you build an investment portfolio, taking into account the level of risk you’re comfortable with, as well as your personal and business goals. 

Their professional insight can be beneficial for choosing how to invest your capital to boost the growth of your business and they can help you plan for retirement and succession.

After you create a personal investment portfolio, your financial planner will continue to check it on a regular basis. They will assess how close you are to achieving your goals, and suggest actions when necessary.

Save Your Time and Energy

With managing your business, you already have too much on your plate to think about. Some days will seem as if all you’re doing is putting out one fire after another. 

The worst thing to do is add your business finances on your laundry list of tasks. With such a heavy workload, you can’t be sure you will be able to dedicate your undivided attention to each task.

A study shows that business owners spend up to 40% of their working hours doing tasks that don’t bring profit. Focusing on such tasks leaves them with significantly less time and energy for activities that could stimulate the growth of their business. 

Instead of trying to evaluate market trends to determine how your business will manage, consider delegating such tasks to a professional. That way you will get a more accurate projection and spare some time to focus on the activities where your expertise is irreplaceable. 

In a nutshell, it’s essential to prioritize high-value tasks over the low-value ones. 

A great part of business success depends on whether the owner is savvy enough to recognize their own limits before reaching them. Time is a limited resource, and so are energy and skills. 

In order to decide whether the time has come to hire a professional financial advisor, make sure you’ve taken all the benefits and possible drawbacks of not hiring one into your equation. 

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.