By identifying cost savings, improving cash flow and boosting efficiency, a small business financial advisor could end up saving you more money than what is spent on their services.
Business financial advisors can help with risk mitigation
Yoo believes that risk mitigation is one of the most valuable services a business financial advisor can provide.
“On the business side, this starts with the form of business entity that’s chosen,” he says. “With a general partnership, for example, there’s no liability protection for business owners. A business financial advisor can look at this with a fresh set of eyes and make recommendations.”
Key person insurance
Key person insurance can help lower the risk of losing a key employee, while a buy-sell agreement lowers the risk of losing a partner to death or disability. On the personal side, a business financial advisor can help you decide how much life insurance you need and which type of insurance (for example, term or permanent) is best given your circumstances.
Succession planning
Succession planning is one of Yoo’s specialty areas. “Not having an exit strategy is one of the biggest dangers I see for small business owners, and a business financial advisor can help with issues surrounding succession,” he says.
Yoo recommends that owners start the succession planning process between five and 10 years before their planned exit from the business, so there’s plenty of time to identify successor owners and bring them up to speed on the company.
“For example, you might be planning to pass the business on to your children, but are you sure they want to run the business?” asks Yoo. “If not, you’ll need to decide whether to sell to key employees or to an outside buyer. All of this takes time, so planning early is critical.”
How to find a small business financial advisor
When searching for a business financial advisor, start by asking other small business owners for referrals and recommendations. Check out online reviews and ask any potential candidates for references.
“A business financial advisor will become a key partner, so perform careful research and due diligence before making a decision,” says Yoo. “Find out what kinds of businesses they’ve worked with and for how long. And try to determine if the advisor will be a good fit with you and your other advisors. Trust your gut instinct.”
It’s wise to choose a business financial advisor who’s more of a generalist than a specialist.
“Most owners are already working with a CPA who specializes in finance and accounting and an attorney who specializes in the legal side of things,” says Yoo. “A generalist can help you manage your business and personal finances from a big-picture perspective.”
A business financial advisor can help bridge the gap between your business and personal finances. Find a financial advisor that works with business owners in your area.