Often, small business owners are reluctant to seek professional financial services from experts. The reason may be that their income is still too low to afford such services.
However, the truth is that you don’t need an in-house expert who might inflate your salary expenses. On the contrary, you can work with a financial officer from a managed service company to provide an expert opinion concerning the economic wellbeing of your small business.
There are various services that you can get from financial advisors in the United States (US). A financial advisor in Phoenix or in your state can help you manage your finances well, understand the tax system in your city, or develop clear and attainable financial goals for your small business.
If you’re wondering why you should hire a financial advisor for your business, here are some fundamental reasons for you:
A financial advisor is an individual who can critically assess the financial strength of your small business. They can also help you develop a budget that’s proportional to your small business, whether it’s a sole proprietorship, partnership, limited liability company, corporation, or cooperative.
To ensure continuity and growth for your small business, you need to understand the principles and strategies of managing revenues and expenses in your daily operations. In addition, you need to keep track of your normal ebbs and flows, budget and anticipate unexpected events, and forecast your ideal future business.
A reputable financial advisor can provide you with the necessary education during your budgeting process. Moreover, they can tell you the appropriate initial budget you can work with from your financial accounts.
On top of that, a financial advisor can keep track of how your budget is performing. From the prevailing situations in the execution of your budget, you can also receive suggestions on necessary amendments that you can make to your budget in order to accommodate unexpected events. A budget is tentative and not permanent. It can change along the way.
Ensure that your financial advisor is actively involved from day one of your budgeting process. Let them work hand in hand with your accountants and business attorney to guarantee a viable budget for your business.
Advice On Employee Retention
Every business is guaranteed success with the right employees. Besides, competent and qualified workers are somehow challenging to get. The competition for outstanding employees in the market is escalating at an alarming rate. As a result, you need the wisdom of a financial advisor to keep your workers satisfied and loyal to your business.
Making your employees happy will require more than their monthly salary to sustain their loyalty. Even if your business isn’t as big as your competitors’, you can excel in making your employees comfortable in your enterprise.
Thus, you need a financial advisor to give you suggestions on employee compensation according to their qualifications. An employee would be at peace if their academic qualifications were considered when determining their salary.
In addition, your employees need to be given benefit plans and insurance policies covering their health or education for their children. Your financial advisor can also suggest that you provide a unique insurance policy to your key staff members.
Moreover, you can enhance your perks such as paid leave days, remote working schemes, and flexible working schedules. Having done that, you’re likely to improve the output of your employees.
Drafting Retirement Plans
There are several retirement plans that your business can adopt for your employees. Thus, by partnering with an expert financial advisor, you can draft a strategy that aligns with your business goals and objectives as a business owner. Moreover, as your business grows, you may consider making better retirement plans for your employees.
Your employees can’t work all their lives because their retirement age will catch up with you. This is a critical time for them. What their retirement package will look like can be a matter of great concern to your employees.
On the other hand, if they foresee hope in their retirement while working for your business, they’re likely to dedicate a lifetime to working for you. However, if their retirement future seems to hang in the balance, they might look for better working environments. It would be a significant loss to have employees leave when it’s possible to offer a good retirement benefit.
Depending on the kind of retirement plan you have for your employees, they can plan for their future effectively. However, a financial advisor should guide the whole process to ensure that there’s a balance between your expenditure and revenues.
Planning Business Succession
After leading your business for some time, the time will come when you’re ready to exit the leadership of your business. You may leave the work of overseeing your business to your son or daughter and take a back seat.
In such a case, it would be prudent to plan the succession of your business early to ensure a seamless transfer of leadership. Grooming your would-be successor is essential if you want to ensure business continuity.
In such a scenario, a financial advisor comes in handy to draft a plan for you. It’s not a quick procedure, and it could take you a few years to develop a succession plan. However, your advisor can help you identify a suitable successor among your children and get them ready to take charge in the future.
Your financial advisor, together with a lawyer, can also establish a purchase agreement if your successor would like to sell the business in the future. In addition, they can also conduct a business valuation with an accountant.
Thus, a financial advisor should be the central person who pulls all the parties involved together and spearheads your succession plan according to your vision and goals.
To Leverage Expertise
In most cases, business owners lack financial expertise where financial matters are concerned. As a result, making sound financial decisions might be a challenge. To take control of your business finances, you can hire an expert financial advisor to help you save time and avoid expensive financial mistakes.
On the other hand, if you make critical financial decisions without the necessary knowledge, you indeed deny your business the advantage of expertise.
If you run into a complex financial dilemma, it’s the work of your financial advisor to look into your business financial position and offer a feasible solution to your woes. For example, an experienced financial advisor may recommend that you develop accounting processes that can monitor your expenses.
Having a small business means exercising a high level of caution to avoid possible errors that can result in bankruptcy. You can bypass stages that have limited other firms by having a financial advisor.
Procuring Business Loans
There are many reasons why you’ll need a business loan. A financial advisor will look at the interest rate attached, the time given to repay the loan, your business’s revenues, and other unseen costs.
For instance, your business could be getting a lot of orders for your products. However, you may be straining the available production resources to ensure that you meet the market demand. In such a case, you’ll need to acquire more resources, like machinery, that boost your production capacity. You’ll also need to build additional warehouses or manufacturing centers.
In addition, you might need a loan to expand your business market reach. It might be in the form of creating business branches in other regions after your brand has grown. Under the two given scenarios that warrant a loan, it’d be the work of your financial advisor to guide you to the best loans for your business.
In addition, when repaying your loans, your financial advisor can recommend renegotiation of a loan repayment policy for the wellbeing of your business. For instance, if your company has positively picked up after expansion adjustments, you can pay bigger premiums to finish loan repayment quickly and avoid paying significant interest.
On the contrary, if your business is experiencing a challenge after taking a loan, you can renegotiate the terms of repaying your loans to ensure that you don’t direct all your revenues to settle your debts. It’ll ensure that your business remains afloat as you clear your loan.
Advise On Tax Obligations
To operate a business, you need to be aware that you must surrender taxes to the local authorities. A financial advisor will ensure that your business is compliant with the tax system in your state or country. In addition, they’ll ensure that you file the right amount to protect your business from penalties due to under remittance of tax dues.
If you want to open new branches, a financial advisor will give you good advice on where you can consider investing: a place where the tax system is favorable for your business.
Financial diligence for your business is a matter you have to take seriously. As a result, it becomes imperative to hire a financial advisor, especially for business owners with no financial background. Such a step comes with many benefits, as outlined in this article. For more information, you can search and read materials online.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.