While not all entrepreneurs are seat-of-the-pants managers, many have achieved success by taking a hands-on approach to running their companies. It gives them a sense of full control over their business operations. And that, in turn, brings them peace of mind because “Who will care about my business more than I do?”
The downside comes when maintaining such tight control means it’s hard to let anyone else in — such as a financial advisor — when it comes to the company’s financials.
In their rush to bring their concept to life, some new business owners may do basic planning to justify the effort, build a business plan to justify financing and make some projections to use as milestones as they move forward. Others may go to great lengths, with sophisticated mapping and planning of the operational and financial sides of their venture.
In either case, an outside set of eyes can be invaluable in pointing out where there might be bias in projections or expectations. That’s where a partner such as HCR Wealth Advisors comes in.
In this age — where technology accelerates every aspect of life and where external forces such as industry disruptors or global pandemics can cause significant upheavals — the steady hand of a trusted external advisor is critical.
Help with early operations
In the earliest stages of a small business, owners may be wearing many hats, from strategic functions like marketing and product development to operating functions like keeping the computers running and customers happy.
Growth rarely happens in a straight line; it tends to come in spurts where you stretch yourself thin until you are forced to add another person and delegate. And, within each crunch period, errors are more likely around money, the lifeblood of any business. These can range from cash flow issues to internal money controls and vendor relations, for example.
While the objective oversight of a financial advisor like HCR Wealth Advisors is vital at every stage of a business, it is invaluable in the earliest stages, when the company is the most vulnerable. An advisor can identify growth and investment opportunities, exposures to risk, and places to economize.
Show me the money
Start-ups may deal with than more than just one’s own money. Founders may be leveraging by using Other People’s Money (OPM). And today, the OPM options are more varied than ever: family-and-friends, small business grants, crowdfunding campaigns, venture capital investors, incubators or accelerators, strategic partners, traditional bank loans, or credit lines. And each option has a different set of long-term implications.
From the outset, it’s critical to know where the capital is coming from. Also, how the company will take on debt, and how revenue will be allocated: to pay down debt or reinvest in the company.
Staying focused on the fundamental financial underpinnings of a company is challenging when owners are facing the daily distractions of operating a business. Emotion has to be kept away from financial fundamentals, whether it’s the excitement over new clients or accounts, or the frustrations over failures or losses that come with a new company. And that’s a role an advisory firm like HCR Wealth Advisors can play perfectly.
Internal reviews like cost-benefit analyses of each component of the business are also helpful. Review procedures should be in place to assess the value of services such as marketing, staff, IT, or accounting. Benchmarks are needed to quantify value and objectively analyze how each department — and each team member within the department — is doing. Also, to give individuals targets against which they can expect to be measured.
Assessing all stakeholders
What is a stakeholder? Investopedia defines it as “a party that has an interest in a company and can either affect or be affected by the business.” Most business owners think of them as directors, investors, employees, customers, and suppliers.
However, in reality, stakeholders also include the community within which you operate, players in your industry, the government and its regulating agencies, and trade associations. And, today, “the community” includes powerful influencers in the nation’s culture.
Functioning successfully within that multidimensional matrix is more complicated than ever. And the wisdom of an expert team of advisors at HCR Wealth Advisors, for example, is priceless.
Going from short-term to long-term
When a business is started, the focus will be on the week, the month, the quarter, and the year. While a new business is started to create profitability and long-term value, it’s easy to get lost in the short-term details and ignore the long-term ones.
One area that is frequently overlooked is that of a business owner’s exit plan — and retirement. While exit strategies may be part of initial business plans, they are so theoretical that they don’t evolve with the growth of the business. And they must.
Bringing in a financial advisory team like HCR Wealth Advisors early on will ensure that all the other professional advisors around the company -bookkeepers, accountants, business attorneys, insurance brokers — are targeting the same goals the business is. And, without a financial and retirement plan tailored to unique goals, it is hard to tell if they are.
What’s the plan?
Small business owners are known to put their own finances at risk in the early stages of their business ventures. But as the business grows, the short-, medium-, and long-term wellbeing of the owner (and family) must be factored into financial decisions.
HCR Wealth Advisors can help these folks reap all the financial benefits and tax advantages that come with business ownership. But, more important, it can develop strategies and plans that help translate those benefits and advantages to a retirement plan.
How HCR Wealth Advisors can help
HCR Wealth Advisors has worked with owners of small, medium, and large businesses for years, creating plans that encompass all aspects of their business and personal finances. HCR’s plans provide not only the blueprint upon which to build wealth but diverse portfolios too. They also provide the spending plan for retirement that makes the most of their clients’ assets while minimizing the loss to taxation.
About HCR Wealth Advisors — HCR Wealth Advisors recognizes that we do not live in a one-size-fits-all world. As such, each plan and strategy that it creates is unique to each client’s needs at a specific time in their life. The firm is particularly skilled at working with clients who are navigating transitions — from small business owners to large business owners, from owner to former owner, from active to retired. Most of all, it helps to prepare its clients for any unexpected curveballs based on upcoming circumstances.
This article is provided for informational purposes only and should not be interpreted as investment advice. HCR Wealth Advisors is not affiliated with this site.