There are some worrying statistics around new businesses which have been found in recent years. The percentage of businesses which fail in the first 3 years sits at 55%, of those 45% who survive the first 3 years, just over 47% of them will not last beyond 5. The most common reason for a business to close is poor financial management which begs the question at which stage in your business’ life, should you look to hire a financial advisor. To help us find out more we spoke to financial advisor to many businesses Scott Tominaga, let’s see what he had to say on the matter.
Scott’s response was unequivocal when we asked him at which point a business should be looking to hire a financial advisor. Scott said that as soon as the business can afford the services of a financial advisor that they should seek someone out. Surprisingly Scott believes that even if a company owner is financially minded, that they should still look to hire a professional for their financial advice.
No Emotional Investment
To pick up that last point it is essential to understand exactly why a financial advisor can be beneficial to the business, even if the owner has a smart financial brain. Ultimately this comes down to emotional investment, or a lack thereof on the part of the financial advisor. When taking decisions about your own business you cannot think purely with your head and your heart will play a role in your decision making, which could be a mistake. A financial advisor on the other hand will look at any decisions which need to be made in an analytical sense, looking solely at the facts and figures, rather than using their emotions.
Businesses, especially young businesses can benefit greatly from the list of contacts which a finial advisor has. If a company is seeking investment, lending, premises or any other financial support, heir financial advisor can put them in touch with people who help. Scott jokes that his black book is half of the reason why people hire him and young businesses can really benefit from this.
Failure in business is of course what we are all trying to avoid and given that financial mismanagement is the chief reason why so many companies do fail, it makes sense to have an expert on board. Some businesses try to grow too soon, others try to extend too much credit and some just don’t have a handle on their incomings and expenditure when trying to launch their business. A financial advisor will work in line with an accountant to ensure that every financial decision is heavily scrutinized before it is made, so that it can be made with the bets interests of the company at heart.
If you own a business and don’t have a financial advisor, now is the time to go and get one.