Although you may be perfectly capable of managing day-to-day activities, building a business financial team will become imperative as your company grows. Below, we’ll look at some situations when adding a pro to your small business team is ideal, the types of financial advisors you may need, and how to determine what type of relationship is best.
6 Situations When Small Business Advisors Are Invaluable
Not sure if you need to build a business financial team yet? If you’re experiencing any of the situations outlined below, it’s time to bring on a pro.
1. You Need Help with Comprehensive Financial Planning
Financial planning needs to change as your business grows. In the early stages, you may need help splitting your business and personal finances or selecting the proper business structure. As your business grows, you may need help with financial forecasting to ensure you don’t run out of working capital or invest on behalf of your business.
2. Your Accounting Processes and Taxes Take Up Too Much Time
Small businesses lose 120 hours annually to administrative tasks, according to Plum. This includes things like accounting, payroll, and invoicing tasks. Considering that 81 percent of small business owners handle their own accounting, according to Intuit, that’s a considerable amount of time and focus being shifted away from core business activities. If you’re overwhelmed, exhausted, or can’t find time to work on growing your business, bringing on a pro will help you find balance and strengthen your company.
3. You’re Dealing with Complicated Tax Situations
Not sure how your business should be classified for tax purposes or whether the people who work for you are employees or contractors? Are you worried about underpaying taxes, or have you already received a letter from the IRS? Failure to address these issues can result in hefty fines and penalties. When in doubt, bring on a pro.
4. You Need Investment Planning and Advice
Whether you’re saving for a large expense or have some cash left over after paying expenses, it’s vital to ensure you’re maximizing your returns or putting the money to work for your business. There are lots of ways to do this. The right way depends on various factors, such as the amount of money you have to invest, how soon you’ll need it, and the level of risk you’re comfortable with. A pro will walk you through the options and help you make an informed decision.
5. You Need Working Capital
You need sufficient working capital to cover your expenses. However, rapid growth, slow-paying clients, seasonality, and emergencies can drain your reserves even if your business is profitable. If you find your business is coming up short or you don’t have the cash to invest in growth initiatives, working with someone who can help you address your concerns and get the money your business needs is a good idea.
6. Business Finance isn’t Your Thing
Even though four in five small business owners handle their business finances themselves, less than half say they’re financially literate, per Intuit. If you don’t feel you have the knowledge to address your finances accurately, bring on someone who does. It could save your company or, at the very least, provide you with peace of mind.
Building a Financial Advisor Business Plan: Key Elements for Success
In the world of financial advisory, creating a financial advisor business that stands out is crucial. A business plan is not just a formal statement of business goals; it reflects your startup’s financial future and a roadmap to success. When constructing your business plan, it’s essential to incorporate financial projections and strategies tailored to your niche. This includes setting clear KPIs (Key Performance Indicators) to measure success and forecast future growth.
Advisory businesses, especially those just starting, must focus on key elements like attracting new clients, defining a marketing plan, and understanding the importance of a well-structured financial plan. A comprehensive financial advisor business plan should outline how to reach your goals and consider the long-term vision, setting quarterly and longer-term benchmarks.
For startups and established advisors alike, it’s important to ensure the business plan is agile and adaptable. Regularly evaluating performance against your financial projections helps you stay on top of things, ensuring you’re prepared to make necessary adjustments. Remember, a successful financial advisory business is not just about managing funds; it’s about helping clients reach their financial goals while ensuring your advisory firm thrives in a competitive market.
Types of Financial Advisors You May Need
As you build out your business financial team, there are several types of financial advisors or professionals you may want to bring on.
Certified Public Accountant (CPA)
A certified public accountant (CPA) is someone with specialized training in accounting and taxes. Typical CPA services include:
- Bookkeeping
- Financial auditing and assurance services
- Tax advice, planning, and filing
Certified Financial Planner (CFP)
A certified financial planner (CFP) has specialized financial strategy and management training. Their goal is to help your business accumulate wealth. Typical CFP services include:
- Investment planning
- Debt management
- Retirement and succession planning
- Insurance
- Risk management
Business Attorney
A business attorney can help with a variety of legal issues that either directly or indirectly impact your finances. Services typically provided by business attorneys include:
- Ownership and partnership agreements
- Succession planning
- Licensing and regulatory compliance
- Contract review
- Intellectual property concerns
- Mergers and acquisitions
- Bankruptcy
Insurance Specialist
Insurance can help protect your assets and may be required in some cases. A good broker can help you decide which policies you need, how to maximize the value of your plans, and get the most affordable pricing on your policies. It’s a good idea to connect with an insurance specialist if you need:
- General liability insurance
- Professional liability insurance
- Commercial property insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Commercial umbrella insurance
- Business income insurance
- Any other insurance required by law or prudent for your business
Source of Capital
Lastly, your business financial team should contain at least one lender or source of capital. Even though you may not need working capital right now, it’s a good idea to become established with someone so you’re covered in an emergency or cash flow shortfall. Some common sources of capital include:
To Hire or Not to Hire: External Collaboration vs. Hiring an In-House Team
You don’t need to build an entire in-house business financial team if you’re just getting started. Often, external collaboration or outsourcing specific tasks is sufficient. This allows you to have expert advice as needed without the expense of hiring full-time employees.
As your business grows, you may want to consider hiring part-time or full-time employees to handle accounting, tax, and financial planning concerns. Most businesses don’t need an in-house attorney until they’re quite large.
Include Viva Capital in Your Business Financial Team
Viva Capital specializes in invoice factoring, a form of debt-free funding that turns your unpaid B2B invoices into immediate cash. It’s flexible, so you can set up your account and wait until you need working capital to leverage it. However, we provide various business funding solutions to ensure you’re always matched with the right funding for your business needs. To learn more or get started, request a complimentary factoring rate quote.
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