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Does a Small Business Owner Need a Financial Advisor?

The Right Advisor Can Help You Boost Your Small Business Profit While Preparing for Retirement

As a small business owner, have you wondered whether you need a financial advisor? Most often, the answer is yes.

While there are certain parts of running a business that you can teach yourself as you go along, managing your business finances with little or no background may not be one of them. In fact, poor money management is one of the most common reasons businesses fail. If you’d like help with things like building a budget, developing a smart tax strategy, and fine-tuning your cash flow, it may be time to hire a financial advisor. Read on to learn about the benefits and how to choose the best advisor for you.

Benefits of working with a financial advisor.

Any entrepreneur will tell you that owning a business requires you to wear multiple hats at once, right? You may go from developing a marketing strategy to working customer service to dealing with paperwork all in the span of a few hours. With so many disparate demands on your time, it’s easy for some things to fall through the cracks. When it comes to your finances, however, that’s not something that you want to risk. Having a professional you trust who can help you with the financial aspects of your business gives you the opportunity to focus on running your business operations without the added stress.

Having a financial advisor brings many benefits to your personal and professional life:

  • Saving Money. By cutting unnecessary expenses, you’ll be able to free up capital that can be reinvested in your business. You may find you have the means to hire new staff or pay your current staff better, expand your marketing efforts, release new products, or invest in newer technologies to help your business run smoother.
  • Executing Your Business Plan. If your business is a car and money is the gas that makes it run, your business plan is the GPS taking you to all those destinations you’ve dreamed of. Having a financial advisor can help ensure that your plan is strong – and that it will take you where you want to go.
  • Improving Your Investment and Retirement Plans. Too many small business owners put off adequately planning for their retirement, assuming they can sell the business when the time comes and fund their next phase of life. However, this leaves a lot to chance. A financial advisor can help you build and manage an investment portfolio meant to grow over time and provide you with a tidy nest egg when you’ve reached retirement age.
  • Building a Succession Plan. Nobody likes to think about something bad happening to them or what life will be like once they’re gone, but after all the hard work you’ve put into your business, you owe it to yourself and to your loved ones to have a succession plan in place for when you choose to retire or if the unthinkable should happen.
  • Protecting You from Costly Mistakes. A financial advisor can help you avoid making common (costly) mistakes that put your business’s success in jeopardy. Things like overpaying yourself, mixing your personal and business expenses, buying the wrong insurance for your business, and choosing the wrong business structure are all factors that pose a serious threat to your business. A financial advisor can help you steer clear of these common troubles.

Finding the Right Financial Advisor for Your Small Business

There are many kinds of financial advisors out there, so you want to make sure that you do your research before you hire one. You don’t just want an advisor that specializes in small businesses, but one you’re comfortable with and can trust fully, too. It may make you feel awkward or anxious to talk about something as private as your finances with someone you’re still getting to know, but your advisor won’t be able to properly help you unless you feel safe enough to share all aspects of your finances – the good, the bad, and the embarrassing.

Using resources like the Society of Financial Service Professionals or the Financial Planning Association can be a good place to start. You could also talk to friends or other business owners that you trust to see if they have any recommendations.

As you begin your journey to find the right financial advisor, keep these things in mind:

  • Are They a Fiduciary? It’s critical that your financial advisor is a fiduciary. It means they’re legally obligated to put your interests above all else. When a financial advisor is a fiduciary, you can have the peace of mind in knowing that they’re acting in your best interest in all things.
  • What’s Their Pricing Structure? Typically, advisors are either paid a flat fee or make a commission. As a small business owner, you’ll want to find an advisor that charges a flat fee, as the process is typically more transparent. When an advisor makes money through commission, there’s a risk they’re making choices that will net them the most commission rather than guiding you in the ways that are the most beneficial to you. Obviously, this isn’t the case for all advisors who charge a commission, but it’s something to keep in mind as you’re researching.
  • Do They Have Experience Working with Small Business Owners? When talking with financial advisors, be sure to inquire about their experience, particularly with small business owners. Don’t be afraid to dig into their past work and ask them to provide referrals of other clients that you can speak with.

So, do you need a financial advisor for your small business?

While it’s true that there are plenty of small business owners who find financial and professional success without using a financial advisor, it’s still an incredibly valuable service. This is especially the case if you’re a business owner with no wealth management experience at the business level. A professional will bring much knowledge and experience to your business that can help ensure you’re utilizing every resource available to you while buffering you from making any mistakes that bring about long-lasting consequences. When money is the life-blood of your business, you can’t be too careful about managing it properly.

At Paces Ferry Wealth Advisors, we understand how much time and energy it takes to build and run a business. (After all, we’re doing it, too!) Our team stays committed to helping support our clients with an entrepreneurial spirit so that they can focus on running their businesses with peace of mind. If you’d like to talk to one of our professional advisors about your small business and building a financial plan that sets you up to achieve your goals, give us a call today.

Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).  This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.