With inflation driving labor, inventory, and transportation costs significantly higher over the last several months, the pressure on small business owners to find ways to turn a profit continues to escalate. Many of these entrepreneurs have enlisted the help of financial experts who can offer professional advice and a second set of eyes during challenging times.
For example, a record 63% of US small business owners made the difficult decision to stop hiring new workers, according to Alignable’s September Hiring Report published this month. Among these firms, 10% have begun laying off workers. For business owners struggling to make these tough choices, those working with a financial advisor often feel more confident they’re making the right decision.
If you’re a small business owner, a financial advisor who specializes in working with entrepreneurs can help you with many things that are complicated, confusing, and out of your comfort zone. No matter what stage of business you’re in, it makes sense to surround yourself with professionals who are experts in what you’re not so that you can succeed.
“A financial advisor can help you discover ways to use your business to grow your wealth, both in and out of business,” said Cady North, Founder, and CEO of North Financial Advisors.
So let’s look at seven ways a small business financial advisor can help you.
Financial Planning for Your Business
As a small business owner or self-employed person, you don’t have to deal with big company problems or corporate bureaucracy, which is very appealing. But it also means you don’t have access to big company perks.
So, for example, without employee benefits like a 401(k) retirement plan with matching contributions, a health savings account, primary insurance, or an employee stock purchase plan, you are solely responsible for accumulating your retirement savings as a small business owner.
A business financial advisor can help get you started with financial planning for your business, keep you on track, remind you of the importance, and always have your financial future as a priority.
Cash Flow Management
What do you do with the money you or your business is making? Is it being invested, or is it just accumulating in a low-interest savings/checking account because you don’t know what to do with it?
By investing the money your business earns strategically, you can continue to earn interest. This management can help you afford expenses for your business, training or software, paying taxes, or memberships. By accumulating, saving, and earning interest, you can make money more manageable when money is tight.
Insurance Planning for Business Owners
Insurance is something many entrepreneurs overlook or even try to risk going without to save costs. Insurance is cheapest earlier on. Some insurance plans offer features like the return of premium, meaning if you don’t need the benefits, you get your money back.
A good business financial advisor can teach you about the types of insurance you need to consider and ensure you have a benefits plan that meets your needs. In addition, you and your advisor should consider policies with features addressing critical illness, disability, business overhead expenses, and key person insurance.
Job markets are very competitive. It often comes down to the specific work environment and perks of working for an employer that attracts and retains employees. Everyone needs to have a sound financial plan, and that includes investments and insurance.
Being able to recommend a financial advisor knowledgeable in your business who can work with your employees is a big perk, which also means employees can focus more on their primary job responsibilities.
Money concerns are among the most common fears that distract people and keep them awake at night. Taking care of your employees is not only good for them, but it’s good for you and your business.
Succession and Exit Planning for Business Owners
A financial advisor specializing in exit planning for business owners can help make those decisions easier for you and your family. Financial advisors’ priorities are always protecting you and your family’s wealth. It will be on their mind even if it’s not always on your radar because you’re managing a business.
When the Going Gets Tough
Especially in response to the pandemic, thriving businesses can experience sudden and devastating interruptions to revenues and cash flow.
In times like these, the help of a financial advisor or business consultant with turnaround experience can prove invaluable to help navigate discussions with creditors and possibly even a bankruptcy restructuring. For example, the Small Business Reorganization Act of 2019 offers new and more favorable options for business owners facing challenging times.
“The new law allows business owners to continue to operate and keep their firms and reorganize their debts,” said James Sivco, founder of Molten Layer, an advisory firm based in Houston, Texas. “This is a much more business owner-friendly process with much larger impacts.”
When you combine everything together, a small business financial advisor can save you a lot of time and effort. A financial advisor should be considered an asset, not an expense. Financial advisors can bring a lot of value, not only on the business side but also on the personal side.
Just like a mechanic, dentist, or doctor, it’s essential to hire a financial advisor who is a specialist. A good advisor who works with business owners can focus on what they do best, so you can focus on what you do best, successfully managing and running your business.
How To Find the Best Financial Advisors for Business Owners
While you may find a great financial advisor to work with through the referral of an acquaintance, it’s essential to consider several factors to improve your odds of hiring the best business financial advisor for your unique needs.
Because many business financial advisors can work with you online, you’re not limited to hiring a local financial advisor when your best financial advisor may live hundreds of miles away.
In other words, whether you hire a financial advisor who lives near or far, it may be most important to hire a financial advisor who truly understands your individual needs based on their education, experience, and commitment to helping people like you.
You’ll find many financial advisors on Wealthtender who serve business owners, including advisors working primarily with entrepreneurs.
The Bottom Line
Whether your business is young or you’ve been at it for several years, a business financial advisor should be part of your team. So do your research, look around, and find a financial advisor you trust. You owe it to yourself to have a complete team that can help your business succeed.
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