When it comes to running a business, time is money. Small business owners rarely have time to spare. This can result in the neglect of a wide variety of financial matters related to the business. This lack of time presents a unique opportunity for financial advisors.
Financial advisors can add substantial value for small business owners by providing advice and intelligence on the financial matters of the business.
The following explains the importance of financial advisors to small business growth.
Insurance Planning for Small Business Owners
Ensuring your small business against property loss is essential. However, one of the most traumatic events for a business is the death or disability of an owner, partner, or key employee. This causes a wide range of issues including temporary shutdown of operations, a mandatory buyout of a part-owner’s heirs, business closure, and even a large bill for taxes if the business is sold.
[Related: Understanding Capital Preservation]
A financial advisor can help you plan for these events. The highest risks can be assessed and specific policies, such as life, disability, and key person insurance can be put into place. With proper planning, you can provide coverage and mitigate any financial shortfalls.
Many partnership agreements implement a buy-sell agreement. This mandates that life insurance policies be purchased on all partners to buy out their ownership stake in the event of early death. Financial advisors will help you navigate the uncertainty and plan for success.
Financial Asset Management
Small business owners often don’t have the time required to research investment opportunities. As sales and profits grow, capital can build up in checking and low-returning accounts. This earns very little return on the accumulated cash.
Financial advisors, like the experienced professionals at Argent Bridge, can help business owners efficiently allocate their financial assets, including interest-bearing instruments, stock market investments, and retirement accounts. These actions play a critical role in achieving the long-term financial objectives for small business owners.
Exit Strategy for Your Small Business
Eventually, a small business owner will likely exit the company. This may be in the form of selling, transferring ownership, or at the time of death. Insurance plays a key role in facilitating an exit in the event of death. However, selling or transferring ownership can be a complex and overwhelming process. It requires knowledge and experience of factors such as the effects of the sale on employee benefits and taxes.
[Related: When to Consider a Buyout]
A financial advisor can offer expert advice in each facet of the transaction to help you develop a strategy that will yield positive outcomes across all aspects of the owner’s exit. Planning for these events now will greatly increase your chances of success in the long term.
Managing Retirement
After selling or transferring ownership of a small business, the former owner may have significant financial assets. However, without the knowledge or experience to manage these investments for retirement, the former owner may not have the best outcome. An advisor would assume a more traditional role at this point by managing investments, developing a plan for the former owner’s estate, and replacing the income that was generated by the company.
Establishing employee retirement plans and other benefits is a great way to minimize turnover and retain valuable employees. Many companies offer a 401(k) or other defined-contribution retirement plans for employees to participate in. Because of time restraints and the complexity of these plans, small businesses often require a financial advisor to set up and maintain these accounts. Your advisor can help you establish and administer a plan like this in your company. Furthermore, these plans may also qualify the company for a corporate tax break.
Meet With One of Our Experienced Financial Advisors in Vienna, VA
Choosing the right financial advisor will make a world of difference for your small business. While it is an important decision, it doesn’t have to be a hard one.
Argent Bridge Advisors has the expertise and experience that will take your business to the next level and help you prepare for a successful future. Contact us online or call (833) 568-4900 today to get started!
