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Thursday, March 28, 2024

Do SMB Owners Need A Financial Advisor?

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[dropcap]I[/dropcap]f you’re a small business owner, you’ve probably put some thought into hiring a financial advisor at some point. Whether you have a long term goal you’d like to reach, or your business has become wildly successful and you’re unsure how to manage the newfound wealth, an advisor can provide you with valuable information to help you make better financial decisions.

To better answer the question of whether or not you need a financial advisor for your small business, it’s crucial that we look at certain aspects of the business before making a decision.

What is Your Financial Situation?

Most financial advisors work with managing wealth or stock portfolios that are worth quite a bit of money. When considering an advisor, you need to take a look at your business’s financials. Are you generating a profit? How much of one? Is the business losing money?

Once you’ve answered these questions, you’ll have a better idea of what kind of financial help your business actually needs. If you’re losing money, an advisor can help you identify problem areas that are causing your costs to increase, as well as sound advice on what goals you should be striving for.

If you’re turning a profit, but you’re unsure how to reinvest it, an advisor can also be of assistance. An overview of the business’s finances will show your advisor where your business is in need of help or improvement, providing a much clearer path on where to reinvest your profits.

Planning for the Future

Is Losing Money Grounds For an Advisor?

A vital component of a successful business is the ability to plan for and navigate any challenges that may arise. With a good financial plan in place, you can be sure that your business will be provided for even when business isn’t so great.

You’re going to have ups and downs when you own a small business. Customers come and go, neighborhoods change, and sometimes there simply isn’t much of a market for your products and services. It’s during these times that you need a backup plan in place to meet the financial needs of your business while sales are down.

There are a number of factors that are likely draining money from your business, from overtime labor costs to expensive utility bills or a drop in overall sales. Your advisor will identify these areas and assist you in creating a better plan for managing them.

What if My Business is Expanding? 

Expanding your small business can be an exciting, albeit stressful, experience that can open up new doors to great opportunities. Unfortunately, expansion does come with serious financial investment, so this choice is one that is best made with the advice and guidance of a financial advisor.

Your advisor will assist you in figuring out how much to save and how often to meet the future financial strain of your expansion. You’ll be able to work out a timeline as well so you can visualize the progress you’ve made and better connect with your goal.

Personal Finance Advice

Your personal finances are likely connected to your personal finances in one way or another. Often, small business owners will get tunnel vision, focusing only on the business finances and not enough on their own financial situation.

If your business is doing well but your personal finances are out of balance, this can create stress and tension that can boil over into your work. So even if the two aren’t connected financially, your business and home life are inexplicably connected through you.

Meet with your advisor to identify personal finance goals, such as saving for retirement or college tuition for your children. Maybe you’re looking to reinvest some of your business profits in another company, but you’re unsure how to go about it. Advisors are extremely fluent in finances and can help guide you toward both your business and personal goals.

Go here to compare the best financial advisors in Los Angeles on CarefulCents.com

New Products and Services

When you choose to launch new products or services, you’ll likely be spending quite a lot on research and development; not to mention marketing costs, upfront production costs, and more. It’s vital to your business that you have a financial plan in place to afford these components.

An advisor will work to help you create a business budget, and factor in all of the new costs associated with your product launch. This will ensure that you’ve produced has been funded while still maintaining the integrity of your business’s finances.

Products with better funding are usually of a higher quality and therefore perform better on the market. Having the right amount of funding behind your project will ensure that maximum quality is achieved, which your customers will thank you for with their business.

So, Do I Need One?

The short answer is yes. While a financial planner isn’t right for every business or situation, most businesses could benefit from the services they provide. More efficient finances mean greater success for the business. The more successful your business, the better you can serve your customers and turn them into lifelong patrons.

With business and personal finance synchronized and managed effectively, you’ll find that running your business is less stressful as well. Stress can affect your mood, appetite, and much more than just your personal life. Eliminate this stress by planning for one of the most stressful aspects of your life: finances.

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