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4 Ways a Financial Advisor Can Help Your Small Business

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Startups can be forgiven for focusing most of their time on sales. After all, without revenue, owners will see their small businesses fail. However, neglecting other parts of the business, like financial management, threatens business survival.

Unfortunately only about 40% of small business owners consult with a financial advisor. Maybe one reason is the misconception that financial advisors are for individuals personal needs for example creating retirement plans.

Is there a correlation between the percentage of businesses that neglect financial planning and business fails?

Arguably yes. Suppose a business survives the first couple of years. In that case, that’s no guarantee it’s home dry and likely to succeed as the percentage of businesses failing in their fifth year five increases substantially. However a financial advisor is engaged by a small business can provide a lot of value with recommendations on business insurance, investments, budgets and more.

Financial advisors also help businesses navigate the impact of economic ups and downs on their investments. Business owners also need to have an exit plan. Another exciting statistic from Investopedia is that 30% of self-employed people haven’t calculated how much money they will need for retirement.

It is difficult for busy entrepreneurs to handle all the financial aspects of their personal and business life, and this is where a financial advisor can help.

1. Prepare Your Business for Future Growth

For startups and small businesses, it’s difficult not to get emotional when thinking about the future, especially if the economic outlook is bleak. Engaging a financial advisor with business financial forecasting experience can look at the financial health of your operation from a third-party perspective.

What’s required is objectivity and clarity. If you are the only person looking at the business finances, the burden will likely affect your mental health and motivation to keep the business trading.

Financial advisors can put things into perspective and tell you – realistically – if you can achieve your goals on schedule. Advisors can also help you succeed in a crowded marketplace by discovering untapped niches and future developments.

Law firm Meyer Wilson suggests choosing an advisor who will work well with your business goals to realise your company vision.

An advisor may suggest growth opportunities for your business that you weren’t even aware of. These recommendations can help you reach your goals faster or set new goals you never thought you could achieve.

Additionally, a financial advisor can help you plan for the future by creating a succession plan for retirement.

2. Improve Efficiency and Profitability

A financial advisor can help you find ways to make your business more efficient and profitable. Advisors bring expertise and experience to the table, helping ensure that your business isn’t mismanaging money or running into cash flow problems.

In addition, an advisor can provide you with accurate projections to establish and grow your business. They bring an objective, professional perspective that is invaluable at every growth stage.

3. Help Your Business Save Money

A financial advisor will save your business time and money by offloading non-core financial tasks to a professional.

Financial advisors can establish an internal accounting system that monitors expenses to help your business keep costs down.

4. Plan Personal and Business Finances

Many small business owners launch their businesses to improve their financial future. Still, they often get so caught up in the launching and running of their business that they neglect their personal finances.

An experienced financial advisor will help ensure that your personal and business finances are in order. An advisor can coordinate with your business attorney, bookkeeper, accountant, estate attorney and insurance broker to keep everything on the right track.

Hiring a financial advisor can alleviate stress by helping you make important decisions and lending expertise that will help you reach your goals. Many small business owners forgo hiring an advisor due to the costs, but their services should be viewed as an investment. Look for advisors that offer reasonable fees and specialize in your required services.