Key takeaways

  • A small business financial advisor can help manage both business and personal finances for small business owners.

  • They can identify cost savings, improve cash flow and boost efficiency in your business, potentially offsetting their fee.

  • Risk mitigation is a key responsibility of a business financial advisor and involves advising you on succession planning and key person insurance.

If you’re a small business owner, you probably spend long hours every week managing the various aspects of your company — from sales and distribution to marketing, human resources and operations. But what about your business finances? What about your personal finances?

While financial knowledge is a critical component of business management, some owners lack the necessary expertise to ensure success. Because of this reality, a small business financial advisor can provide valuable, hands-on assistance to benefit both the business and the business owner.

Min Yoo, a wealth strategist with U.S. Bank Private Wealth Management, notes that most small business owners’ business and personal finances are closely interwoven.
“A business financial advisor can help bridge the gap between an owner’s business and personal finances, including managing both business and personal cash flows,” he says. “In this way, a business financial advisor can serve as a family business CFO.”


What does a small business financial advisor do?

A small business financial advisor focuses specifically on issues and challenges that are unique to small business owners. These typically include:

  • Creating financial statements (balance sheet, cash flow statement, profit-and-loss statement)
  • Maximizing cash flow
  • Managing tax payments and reporting
  • Investing excess funds
  • Ensuring adequate insurance coverage
  • Planning for business succession

What sets a small business financial advisor apart from a general financial advisor is their ability to bring these business issues and one’s personal financial situation together. On the personal side, this usually includes:

  • Portfolio and retirement planning
  • Spending and debt management
  • Budgeting and saving
  • Insurance planning
  • Estate planning
  • Saving for college

Working with a small business financial advisor can save owners valuable time and relieve some of the stress and anxiety that can come with running a small business.

“While there’s a cost involved in hiring a business financial advisor, this is offset by the additional peace of mind and time freed up to spend with family and focus on other important matters,” says Yoo. “It’s hard to put a price tag on these things.”

“While there’s a cost involved in hiring a business financial advisor, this is offset by the additional peace of mind and time freed up to spend with family and focus on other important matters.”

Min Yoo, wealth strategist, U.S. Bank Private Wealth Management

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.

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