Should You Hire a Financial Advisor if You Run a Business?

. 6 min read
Should You Hire a Financial Advisor if You Run a Business?

Why Financial Advisors are Indispensable?

Having specialised financial management expertise and understanding, financial advisers are the lifeline of the business ecosystem, shepherding business entities in their road to success. These experts essentially help business owners assess their business model and planning exercise feasibility, developing effective custom-built strategies and their expected timelines to optimise their capital investment.

Who is a Financial Advisor?

A financial adviser or financial advisor (FA) offers a range of vital financial services to businesses. Financial advisors are mandated to complete specialised training in several countries worldwide and register with a regulatory body before providing advisory services to their clients.

A financial advisor can help business entrepreneurs chalk out a blueprint to minimise financial risk and create wealth over the long term. Though these advisors could be expensive hires, they can assist the owner with financial planning, including financial budgeting and retirement savings.

Here are the critical functions of a financial advisor:

  • Prepares financial statements like the cash flow statement, balance sheet, and profit-and-loss statement
  • Analyses financial statements to identify cash flow leaks and areas where business spending could be reduced to boost profitability
  • Insurance Planning and efficient Cash Flow Management
  • Creates a Cash Reserves strategy for unforeseen business situations
  • Manages Tax Reporting, Payment, and Legal Compliance frameworks
  • Recommends specific financial products or services that are beneficial for the business
  • Charts a long-term growth strategy for the business
  • Carries out research and comes up with solutions to financial issues
  • Legacy Planning - Succession and retirement plan to transfer business ownership
  • Provides an Independent, Third-Party perspective on business finances
  • Conceptualises the Financial Business Plan, which provides an overview of the current and historical financials, along with future projections, factoring in business growth, investor consolidation, and potential exit strategies
  • Develops a winning investment strategy for the business, which helps create business   valuation and attracts investment capital

Role of a Financial Adviser - How They Accelerate Business Success?

Integral to the success of every business, hiring a financial adviser leads a business owner to the following benefits, i.e.

1. Helps to run businesses:

By asking the right questions about the financial health of your business, financial advisers can quickly decide upon the right growth strategy that will yield the desired results. Through their professional observations and accurate financial projections (vis-à-vis the expenses budget, asset allocation, cash inflows, cash outlays, and financial statements), businesses can rapidly move towards an upward growth trajectory.

In the initial few months of supporting a business, a financial adviser can provide timely insights on your risk exposure, the areas where you can economise and cut costs, and possible investment opportunities. A financial advisor can also help you shape and revise your existing business plan - the business process roadmap for the organisation.

2. Ensures time, cost savings, and profitability:

If the business owner is not a financial expert, hiring a financial adviser to save valuable time and money makes complete business sense and helps avoid financial blunders. By getting expert help for the whole range of business finances, all important financial decisions, including expense monitoring, can be taken care of. The financial advisor can effectively monitor internal processes in the finance and accounts department, thereby ensuring day-to-day transactional governance and implementing statutory compliance measures.

3. Prepares businesses for future growth at various stages of the business cycle:

A financial adviser always provides a balanced viewpoint about the business’s financial standing. Using various tools and software, he/she helps to shape the future of the business by charting out its financial objectives, and vision and mission statement. For example, suppose the business is not doing well due to market congestion. In that case, the financial adviser can assess and navigate around the problem by recommending and tapping into newer, niche markets, technology, product mixes, and strategies.

4. Balances the personal and business financial goals and objectives:

Business owners often plan to start businesses in line with their future personal finance aspirations, but cannot do so due to time constraints. Thus, personal finances get neglected at the cost of achieving business leadership. An experienced financial professional will see to it that personal finances remain in good shape along with business finances. The two need to be always in sync with cash flow, investment, and tax considerations. The financial adviser acts as a lynchpin and lead program manager amongst other finance professionals like the accountant, business attorney, bookkeeper, and insurance broker.

Do Small Businesses Need Financial Advisers?

Small business entrepreneurs might prefer to manage their business finances on their own without hiring a financial adviser. However, a financial expert can prove useful for a small business, since they help in:

Financial management for the time-starved business owner:

A small business owner is expected to perform multiple roles simultaneously, single-handedly spearheading departments, ranging from marketing, product development to even IT support. He might also be responsible for other functions like packaging, product delivery, direct client engagement. And will therefore always be hard-pressed for time. In such a situation, it's best to hire a financial adviser to manage and plan business finance and strategy independently, avoiding potential bottlenecks like financial mismanagement, cash flow problems, and vendor account neglect. Financial experts can assist busy business owners with allocating financial assets (i.e. interest-bearing bonds, deposit certificates, money market funds, shares, and retirement accounts).

Risk Management:

Small business owners also need to adequately plan for financial risks arising out of unplanned death, disability, illness, infirmity, liability, and loss related to property ownership. Risk-based problems faced by the owner could consist of business interruptions/closing down due to a disaster or adverse business conditions (the sudden onset of COVID-19 being a prime example), death or disability of a person critical to business success, loss of business property, and lawsuits due to negligence or faulty products. All these issues require specialised risk management and compensation cover and can be managed and looked after by a financial expert.

The Financial Adviser 2.0 – Technology Transforms businesses under the new normal

Technology and the sudden onset of COVID-19 in the early part of 2020 have transformed how financial advisers operate under the new, digital business normal. The advisers have now increasingly adopted digital tools to work with business clients in a real-time, immersive, virtual setting. The frequency of face-to-face meetings has diminished due to the need for social distancing. As with most business professions powered by new technology trends like Artificial Intelligence (AI), Machine Learning (ML), Big Data Analytics, Robotic Process Automation (RPA), and Consumer Experience (CX), financial planning and advisory services are now rapidly evolving from being a traditional adviser-driven and product-based approach to an agile, service-oriented and customer-driven model.

To stay relevant more than ever before, financial advisers are integrating the latest technology tools into their work portfolios. Popularly used tools and software systems (with examples) are given below:

  • CRM - Client Relationship Management (HubSpot CRM, Salesforce, Zoho CRM)
  • CMS - Content Management Systems and Website Builders (WordPress, Joomla)
  • Email Marketing (Mailchimp, Sender, HubSpot Email Marketing, MailerLite)
  • Messenger and Video Conferencing/Meeting (Zoom, Google Hangouts, Skype)
  • SEO - Search Engine Optimisation (Google Analytics and Search Console, Ubersuggest)
  • Project and Team Management, Online Scheduling, Automated Workflow (Microsoft 365, Google WorkSpace, JIRA, Trello, ProofHub, Microsoft Project)

Financial Advisors vs Robo Advisers: Who is Currently Ahead?

A new trend in the business and finance space, Robo advisors, or Robo advisers are low-cost digital platforms or chatbots providing automated, algorithm-driven financial planning services requiring little or no human supervision. Examples include Betterment, Wealthfront, and Nutmeg. A typical Robo advisor collects client information and future goals through an automated online survey form and then uses the data to offer investment advice and portfolio management services to clients.

Robo advisers are efficient, low-cost alternatives relying on critically acclaimed investment models and targeting first-time business people and investors.  However, they still lack the crucial human element and a 100% personalised experience, unlike their human counterparts. Thus, financial advisers can communicate, educate, coach, and offer their clients dynamic customised advice on financial and fund management, liability mitigation strategies, and wealth acquisition.


To compete, every organisation has to venture into newer business paradigms dictated by the new normal and a rapidly transforming business environment. When it comes to business entrepreneurs, financial advisers will always help them in the future, expertly navigating their ship through uncharted territory and troubled waters, and allowing the owners complete freedom to focus on other core business issues.

Also read:
Top 10 Businesswomen in the Industry & What You Can Learn From Them
Top 10 Businessmen in the Industry & What You Can Learn From Them
The USA vs India: Taxation System