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7 Ways Your Small Business May Benefit from a Financial Advisor

Wealth of Geeks logo Wealth of Geeks 11/28/2021 Derek Condon

© Provided by Wealth of Geeks

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As a small business owner, you always have a million things on your mind. In the beginning, you're trying to figure out how to get your business started. Then it's on to how do you get new clients, then keep those clients, all in order to be able to grow your business.

It's safe to assume you love what your business does and want to continue to focus on that. There's not always time to think about other things. But some of those other things are very important too, and can actually help your business.

A financial advisor who specializes in working with business owners can help you out with a lot of 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 you can succeed.

"A financial advisor can help you discover ways to use your business to grow your wealth, both in and out of the business," said Cady North, Founder and CEO of North Financial Advisors.  "For instance, making sure you get paid what you're worth, ensuring you have a sustainable business model, and taking advantage of retirement savings incentives."

So let's take a look at seven ways a financial advisor can help you out.

1. Financial Planning

As a small business owner or self-employed person, you don't have to deal with the big company problems or corporate bureaucracy, which is very appealing. But it also means you don't have access to many of the big company perks. For example, without employee benefits like a 401(k) retirement plan with matching contributions, a health savings account, basic insurance, and/or an employee stock purchase plan, you are solely responsible for accumulating your retirement savings as a small business owner.

That's another overwhelming task that can get easily pushed aside, the ‘deal with it later' mentality. With investing and saving for your retirement, the earlier you start and the longer you invest, the more benefit you actually see. A 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. This lets you prioritize your business and how to make it succeed.

2. 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?

Just like for an individual, money your business makes doesn't have to stop making you money once you get paid. By investing the money your business earns strategically, you can continue to earn interest. This can help you afford expenses for your business, training or software, paying taxes or memberships, really anything you can think of. The only people I know who are excited around tax time are the accountants eager to do your taxes. By accumulating, saving, and earning interest, you can make those times when money is tight more manageable.

3. Insurance Planning

I'm sure you sighed when you read the word insurance, but a good wealth management plan needs to incorporate insurance. We could do all of the planning in the world, create a real work of art on a spreadsheet, and then something happens that causes you to not be able to work. Then you have to use all of your savings to keep yourself afloat until you can earn an income again. So the plan becomes completely irrelevant.

About 45% of us will develop cancer at some point in life, that's a scary statistic. With cancer comes additional costs, such as medication and treatments, not to mention the stress that comes with it. You're probably not going to be able to work as much or as hard as you did in the past.

Insurance is definitely something people overlook or 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 financial advisor can teach you about the types of insurance you need to consider, make sure you have a plan that meets your exact needs, and is reviewed periodically as your situation changes. Policies with features addressing critical illness, disability, business overhead expenses, and key person insurance should be considered.

4. Retaining Employees

Job markets are very competitive. A lot of times it comes down to the specific work environment and perks of working for an employer that attracts and retains employees. Everyone needs to have a good financial plan, and that includes investments and insurance. Being able to recommend a financial advisor knowledgeable in your business and 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 keep people awake at night and distract them. Taking care of your employees is not only good for them, but it's good for you and your business.

5. Legacy Planning

What happens to your business when you retire, or if something bad were to happen? Do you have a successor, or an exit plan to sell your business? Are you aware of the potential tax consequences, difficulty with getting fair value, or complications that come along with passing on your business?

financial advisor who specializes in exit planning for business owners can help make those decisions easier for you and your family. Obviously, you want what is best for you and your family. But it's always easy to push things off when they aren't of immediate concern. Financial advisors' priorities are always protecting you and your family's wealth. Even if it's not always on your radar because you're managing a business, it will be on their mind.

6. When the Going Gets Tough

Especially in response to the COVID-19 pandemic, we've seen how even 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."

7. Time

When you combine everything together, a financial advisor can save you a lot of time and effort. A financial advisor should be looked at as 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 important to hire a financial advisor who is a specialist. A good advisor who specializes in working 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.

The Bottom Line

Whether your business is young, or you've been at it a number of years, a financial advisor should be part of your team. Do your research, look around, and find a financial advisor you trust and can work well with. You owe it to yourself to have a complete team that can help your business succeed.

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This article was produced by Wealthtender and syndicated by Wealth of Geeks.

Featured Image Credit: Unsplash.

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