Getting a business off the ground requires a firm take-charge attitude. If you don’t steer it decisively in the right direction, no one else will.
But you can’t maintain that level of control indefinitely, because handling the regular operations of a growing business is arduous and relentless work.
Sooner or later, you need to find a way to delegate some of the workload. The more responsibilities you maintain, the harder it will be to pursue your overall business goals, let alone maintain a work/life balance. There are only so many hours in a day.
Now, any business owner will tell you that financial management can be a massive headache. As such, when you reach the point of seeking assistance, that’s the logical place to start.
But how do you go about it? What should you look for? How can you make sure you get great advice that will save you money and free you up to focus on the rest of your business?
Let’s take a look at what you need to know when hiring your first business financial advisor.
Always Check Credentials
I’m the CEO of Microsoft. You know that isn’t true, of course, but most false claims aren’t quite that easy to identify. This is especially the case if they involve subjects or terminology that you don’t know much about.
Unfortunate as it is, it remains the case that people are often willing to make exaggerated or entirely-baseless claims about their skills in order to get work, so there’s every chance you’ll encounter some while looking for a financial advisor.
At a minimum, you should look into your prospect’s:
● Previous clients.
● Relevant industry experience.
● Cloud bookkeeping and accounting expertise (the cloud can save you time).
Even if you think you have a solid grasp of the terms and can tell when someone isn’t quite what they claim to be, take the time to do a formal check. Do some research into their background, contact some references, and, if possible, run their pitch by someone whose financial expertise you trust.
Is it safe to say you’d do your due diligence before buying a business (rummaging under the hood, checking the analytics, making sure it weren’t too good to be true)? I’m particularly careful, so I’d do my due diligence before doing something as pedestrian as buying a new coat.
Ask questions, read reviews, get external confirmation— skepticism is healthy. Don’t put it aside because you want to be nice and give the benefit of the doubt.
Maintain Realistic Expectations
If all goes well, your financial progress will be like tending a flourishing garden. You’ll distribute the right kind of soil, plant the seeds, water them appropriately on an indefinite basis, and eventually you’ll see blooming flowers.
Thus, if a prospective advisor leads you to believe that you’ll plant some magic beans and wake up to a towering beanstalk, they’re selling you a fantasy.
Yes, anyone can go online and start selling things without much preparation or financial investment—but while technology has made taking the first step that easy, it hasn’t changed the nature of business development. It’s still a complex process that (almost always) gets results very gradually.
Anyone claiming financial expertise should be perfectly aware that disproportionate profits or guaranteed results are wholly unrealistic, and you should decisively back away from anyone who paints a picture of the future that seems too good to be true.
Establish Clear Terms
It’s the nightmare scenario: six months after taking on a financial advisor, you can’t say conclusively what they’ve done. What’s more, their payment requests are variable and feel arbitrary. What, specifically, are you paying them to do?
It’s unlikely that it would be quite that bad, admittedly, but there’s simply no reason to leave any element whatsoever to chance when you can get everything confirmed before you get started.
How often will you communicate? What level of access will they have to your records? If you’ve set up an online business, will you require them to explain how tax works for ecommerce? What payment arrangement is best?
Have them answer all of your questions, and answer all of theirs, then draw up and agree on a clear and comprehensive set of formal terms, including a service level agreement.
Avoid Hiring Your Friends
You like your friends, presumably, and trust them. If you didn’t, you likely wouldn’t be friends with them. And if you happen to be friends with someone who has financial expertise, then that’s a perfect fit for your business, isn’t it?
Well, no. It might sound like a good arrangement, but mixing the personal with the professional is dangerous, and all the more so when it comes to something as important as the financial condition of your business.
Even if you have good intentions, getting personal attachments and feelings involved in your business will make it harder to reach rational conclusions and measure success accurately.
Your business decisions need to be made carefully and, for the most part, dispassionately. Take occasional tips from your friends if you must, but ultimately hire someone who can do their work at an appropriate distance.
Explain Your Goals
The financial advice you receive will shape the progress of your business over months or even years, yet it is fairly rare for there to be only one viable path to take; so which one will your advisor recommend?
This will depend heavily on their analysis of the figures, of course, but also very meaningfully on what is most important to you, and what your ultimate goals are.
Taking the time to explain your business plan in detail and elaborate upon where your business priorities lie will ensure minimal friction in the professional relationship and help you get the most useful advice for you.
Keep Asking Questions
Once you’ve vetted and hired a financial advisor, you should resist the temptation to passively defer to them on every matter, and motivate yourself to ask plenty of questions.
This isn’t to say that you should be hyper-critical of every single recommendation or piece of analysis; it’s more a matter of staying involved and learning more about business as you go.
You should get to grips with any accounting software or platforms they recommend and keep adding to your internal knowledge base as an entrepreneur.
Even if you’re so happy with your financial advisor that you end up working with them for years to come, you will benefit from understanding finance better.
It will also make their job easier, as they will ultimately need to spend less time explaining their ideas to you, giving them more time to focus on the good stuff: saving you money.
Are you looking to hire financial advice for the first time? There are a lot of incompetent or unethical advisors around who will take advantage of you given the chance, so follow all of these tips, be thorough, and make sure you hire someone with the credentials and background to warrant your confidence.
Victoria Greene is an ecommerce marketing expert and freelance writer who understands the vital role sensible financing plays in driving business growth. You can read more of her work on her blog Victoria Ecommerce.