How can a financial advisor help a small business?

If you are a small business then hiring a financial advisor may seem like a gratuitous expense that you don’t really need. However, financial advisors have many skills and tools that can be applied to your business that can help your company in ways you never imagined.

This article will look at how can a financial advisor help a small business, by diving into the following areas:

• Profit and loss management
• Prepare for different stages of business growth
• Support if things aren’t going well
• Plan activity with finances in mind
• Monitoring expenditure

Money is constantly flowing in and out of a business, and the result of your cash flow should not be taken lightly — ultimately, if you have negative cash flow you won’t be making a profit, but a financial advisor can support you if this is the case.

Financial advisors will be able to create accurate projections for your top line (revenue) and bottom line (profit), so you can have a clear understanding of your business’s financial state. Once you have all the information you’ll be better placed to make wiser business decisions since you are equipped with the reality of your finances. 

While a financial planner will be able to support you at any stage of your business journey, they can be particularly helpful in the early stages. They can support managing your start-up costs, that you’ll need to spend to begin trading, such as:

• Equipment, tools or systems you have to purchase
• Finding a payment system
• Rent for a location/office
• Marketing spend
• Paying for any licences and certifications
• Set up costs (Companies House or trademarking)

In these early stages, an advisor will be able to prepare you for any potential risks and help you create contingency plans to ensure that you don’t fall foul of any common issues. They can also support the creation of the market trends and financial areas of your business plan. 

Even if you have been trading for a while, the advisor will still be able to help you with managing risk, your market trends and your financial planning, such as profit and loss statements, or cash flow and sales projections which will give you clarity about your finances in the present and for the future.

To be able to grow your business you’ll require objectives, you will need to set goals for each stage, a plan of tactics on how to reach those goals and you can get support every step of the way from a financial advisor. 

They may have more experience in pushing business growth than you, and they should also have many tools and skills they can use to help you plan your business’s future from an objective standpoint. While your emotion may cloud your judgement, they will be able to offer you valuable advice based on knowledge and experience, as well as data from your particular industry.

If things aren’t all peachy on the business front, a financial advisor will also be able to help you make a plan to get out of difficult situations. From the beginning of your relationship, they could support in creating backup plans for if cash flow is low, or give you advice on what to do if a potential risk becomes a reality. 

Financial advisors will gather the facts for you and help you face them in a constructive way. They’ll help you navigate tricky situations, or suggest opportunities that could benefit your business. For example, a new competitor may have taken some of your business, but a financial advisor could support you in looking at the wider market and customer behaviour, to find a different angle to draw in customers. They might even identify a niche market that you could sell to, and you could pivot your business toward that niche, to change the course of a downturn in sales.

Your financial advisor will be able to help you plan certain activities while keeping your finances front of mind. 

For example, say you want to spend a bit of money on a new marketing technique — the financial advisor will be able to say if you have enough money to start on this activity when would be a good time to begin the activity (depending on cash flow) and if it’s worth spending your valuable time on. They will weigh up the options available to you, as well as the Return on Investment (ROI) you may be able to get from this spend, to see if it’s worth pursuing. 

Not only will this help you avoid risks that are not likely to pay you back further down the line, but you’ll only be spending what you can afford to.

Many business people hire a financial advisor to help them cut down on costs. As we’ve seen, they have many more benefits as well as being able to save you money on your expenditure, and this can be a very valuable area especially for a small business.

Financial advisors can be masters of efficiency, finding lots of ways to make smart savings in small businesses. They may be able to find the best deals to shave money off your electricity bills, your business Wifi or your storage facilities, as well as potential negotiating with any suppliers on your behalf.

Advisors may also be able to support you on your stock management, which can often be the biggest expenditure in a small business. They can support with planning stock levels, and help you make smarter decisions around storing stock, too. If you find that you have to get rid of batches of old stock or end up with damaged goods, they may also be able to help you plan strategies to deal with this extra inventory.

The Countingup business current account makes it easy to manage all your financial data in one simple app. The app will give you real-time insights into your cash flow, profit and loss reports, tax estimates, and the ability to create invoices in seconds. 

You can also share your bookkeeping with an accountant instantly without worrying about duplication errors, data lags or inaccuracies. Find out more here to save yourself hours of accounting admin and manual bookkeeping, so you can get back to running your business and doing what you do best.