When do you need to hire a financial advisor for your business?

When starting out as a business owner, you may not require the services of a financial partner. This is because the business is still small, and may not have too much going on financially to warrant the hiring of a financial advisor. Most small business owners may also avoid this to cut on expenses and any additional charges. However, when the business starts to grow exponentially, it may be time to reach out to one.

There comes a time when business owners require expertise and strategic guidance to make the best out of their financial opportunities. Your company may be looking forward to acquiring more capital for growth or expanding through an acquisition. When it gets here, it’s often not enough to just read books and ask around for what to do. You may require professional help.

The common fear is that hiring a financial partner is expensive. This has been promoted by the fact that most financial advisors focus on high-income clients. Fortunately, there’s an increasing number of financial partners that work on a fee-based as opposed to an asset-based method. This helps small and medium-sized businesses to get financial help whenever they need so.

Here are signs that you need a financial advisor for your business:

  1. Need for more money for business growth

Your business may need money to grow its operations. This may be through hiring more employees, expanding to new locations, putting existing workers in new fields, growing the product line, or adopting new technology. All these activities require money. If your business is not generating revenue fast enough to cater for these activities, you may decide to opt for external funding sources. A financial advisor comes in handy where you’re having difficulties choosing the best funding option for your business. You do not want to choose something that will cost your business more in the long-run.

  • Strategic acquisitions

Once your business grows internally, it may need to acquire complementary businesses to grow externally. Knowing whether to make the acquisition or not is a crucial issue that any business should first address. Having a financial advisor helps to make a sound decision and to figure out how to finance the acquisition.  The expertise and experience can be of great help especially if the business is new to acquisitions.

  • Expanding the board of directors

Expanding the board of directors is a strategic issue that many entrepreneurs face once their businesses start to grow. It calls for unbiased advice, especially where the business owner would like to extend the board beyond his circle of close associates and full-time employees. A financial advisor will normally sit on the board and provide an external perspective regarding the direction of growth. He or she can opt for help from other seasoned industry advisors for clarification and more information.

  • Recruiting high-level talent

Your full-time employees may be very hardworking people but they are often not what your business needs to expand in the long-run. Home-grown talent can only get a company so far when it comes to long-term growth. At some point, you will need more experience and expertise, especially at the executive level. Based on their experience, financial advisors often have a network of partners and colleagues that can help with recruiting high-level talent for executive positions. They can also be of great help when it comes to structuring fair and appropriate compensation for hired individuals.

  • Portfolio Investment

Most entrepreneurs have much of their personal wealth tied up to their business. This exposes them to high levels of investment risks. A financial advisor would be of great help when it comes to finding ways of diversifying an investment portfolio. This enhances financial security. If the entrepreneur needs liquidity, the financial advisor will advise accordingly. Seeking outside investors that can buy stock from the entrepreneur or employees is a great option. However, it takes the experience to make the right decision.

  • Sale of a Company

Having a financial advisor is the first step that any entrepreneur should take if they wish to sell their company. The influx of money from a sale may be daunting for a first-timer. It can result in poor investment decisions as well as overspending. A financial planner helps to create a plan for the money and to preserve some for the remaining part of the entrepreneur’s life. It also helps to eliminate huge tax bills.

Working with a financial partner helps to maintain good financial health for your business. It alleviates the worries that come with having to figure out everything by you. Go through the list above on a regular basis to check if you need a financial partner. If you find yourself in a difficult situation, don’t hesitate to consult any one of our financial advisors at Growth Financial Australia.

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