Are you an entrepreneur preparing to start a new business? Before your doors open, learn how a specialist financial advisor who has walked in your shoes can help you succeed.
Small business owners are known to wear many hats, especially when just getting started. From creating a business plan to navigating the process of incorporation, hiring your first employees, and researching local and federal laws, the responsibilities can feel endless and overwhelming.
Before starting your business, you can choose to burden yourself with all of these responsibilities or focus your efforts on the areas where you can add the most value while surrounding yourself with professionals to help in their areas of specialization.
Given the importance of financial planning for new business owners, hiring a financial advisor experienced in working with company founders can prove incredibly valuable. A financial advisor who knows what it takes to start a business can offer their expert advice and guidance so you can spend more time preparing for a successful launch and less time worrying about money matters.
You’ll likely find dozens of nearby financial advisors well-suited to help you prepare a personal financial plan. But it may be more difficult to find a financial advisor who specializes in helping entrepreneurs who are preparing to start a new business.
Fortunately, many financial advisors offer virtual services so you can meet online no matter where you (or they) live. This means you can choose to hire a specialist financial advisor who lives hundreds of miles away if you decide their knowledge and experience working with small business owners is a better fit to help with your unique financial planning needs.
Should You Hire a Financial Advisor Before Starting a New Business?
💡 In the Q&A below, you’ll gain insights from financial advisors who work with individuals and their partners who are preparing to start a new business to ensure their first months and early years operating the business goes off without a hitch.
🙋♀️ Do you have questions not answered below? Use the form on this page to submit your questions, and we’ll update this article with answers from the financial professionals and educators in the Wealthtender community. You can also contact the financial advisors featured in this article directly to set up an introductory call or ask your questions by email.
💸 Smart Money Tips Before Starting a Business
This page is organized into sections to help you quickly find the information you need and get answers to your questions:
- Q&A with Financial Advisors Specializing in Helping New Business Owners Succeed
- Get Answers to Questions Before Starting a Business
- Browse Related Articles
Q&A: Financial Advisors Specializing in Helping New Business owners Succeed
Three Questions with Scott Boyles, CFP
We asked Dallas, Texas-based financial advisor Scott Boyles to answer three questions useful to people preparing to start a new business. As an entrepreneur himself, Scott is uniquely qualified to provide advice and guidance through the lens of both a financial professional and an experienced business owner.
Q: What is a common financial planning challenge you often see among individuals who are preparing to start a new business? How do you work with them to overcome this challenge?
Scott: I have two things, but they relate. Cash on-hand and health insurance. The amount of cash required to open is a lot greater than you think. An underfunded business is not going to last long. I work with my clients to figure out what is a ‘need’ and a ‘nice to have.’ Also, you must make sure you have enough cash to survive in case your original idea needs to be tweaked.
My wife and I lived across the street from a great restaurant several years ago. When they opened, the furniture and décor were sparse, but the food and service were amazing. Each time we went back, they managed to add something new. After a year, their restaurant looked completely different from night one and was packed. Their food and experience never really suffered. If you have a good product or service, the rest is optional and can come later. I see this happening with other businesses where they hire too many people or start accumulating unnecessary monthly expenses that are hard to pay, much less contributing any funds to the owner necessary to survive.
And I mention healthcare specifically because many people overlook this. We had to figure it out ourselves, and it’s a large ongoing expense. Options and strategies are available, but you must evaluate what those options are and what the limitations might be. A health crisis isn’t just emotionally hard but can be catastrophic to the health of the business.
Pivoting in business is almost guaranteed. You might have a great idea, but until you actually have paying customers, that idea might need some tweaks. Having a little cash in the bank helps with this.
Q: For people preparing to start a new business who are unsure whether or not they should hire a financial advisor at the current point in their lives, what guidance can you provide to help them make a more informed and educated decision?
Scott: Making good decisions is easiest at the start of a business instead of when the business is running at full speed. Even setting up the business structure has many technical details that I help with. One of the more specific questions I help answer up front is ‘what happens if the business isn’t successful?’. Advisors like me have resources available to make sure you are putting yourself in a position to succeed and avoid expensive mistakes.
Starting a business always has an impact on someone’s personal financial plan. I help put together a more realistic idea of what to expect and a reality-check as to if something is the right fit.
As an example, a typical recommendation for an emergency fund for someone employed by a company is 6 months of expenses. However, if you are starting a business a lot of times, this should be more like 12 months. We are just coming out of a pandemic. The US Government launched programs to help businesses, but you needed a few months of expenses in reserve to stay in business to even access the money available.
Get to Know Scott Boyles, Financial Advisor for New Business Owners:
View Scott’s profile page on Wealthtender.
Q: When you first speak with an individual or couple who is preparing to launch a business, what questions do you like to ask to understand their unique circumstances better and determine how you can best help them achieve their goals?
Scott: Why are you trying to launch this business? What is the long-term vision for yourself and your family? What is this business going to do for you? If something doesn’t work, what’s the exit plan?
Most people relate launching a business to some sort of key to freedom. They don’t realize how hard it is and what kind of effort it is going to take. Keep in mind, for every 100 businesses you see launch, only 15 of them are going to be around after the first year. I like to relate owning a small business to pushing a rock up a mountain. If you are not prepared in the beginning, it’s going to be difficult to push this rock up the mountain. It’s going to require a lot more energy and time than you think, and letting this rock go can crush your future success.
Define your long-term vision as the mountain. Most mountain paths aren’t straight lines up. And you can’t go too fast up the mountain either. I have many personal stories of growing too fast and the impending business and personal trauma that ensues. The successful business owners I know work harder to keep moving the rock than most people realize. And many times, it’s still not enough. Sometimes success requires just plain luck.
If your business doesn’t work out, what’s the backup plan? When you have family involved, it is even more imperative to have some sort of idea of what your overall business plan looks like.
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About the Author
Founder and CEO, Wealthtender
Brian and his wife live in Texas, enjoying the diversity of Houston and the vibrancy of Austin.
With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.