You’re a business owner who keeps a lot of balls in the air, but no one can successfully master every aspect of service from marketing to bookkeeping while managing a happy, healthy personal life. A financial advisement team makes sure you have a plan that maximizes your options and protects your future, so you have the bandwidth to move your business forward. Chris Ingram, Owner and CEO of Prosperitas Financial, sat down with Amanda Benson-Tilch, host of The Ask Amanda Show to share how hiring a financial advisor is a winning strategy for your small business.
Hiring a Financial Advisement Team for Your Small Business
The skills that you need to launch a small business in Santa Clarita or anywhere else in the world are wide-ranging and many are unique to your industry. It’s helpful to know your strengths, but it’s equally important to recognize your weaknesses so you can build a team to cover those areas of responsibility where you may not have adequate tools. Reaching out to professionals you can trust for help with the financial aspects of your company frees you up from micromanaging every detail, so you can focus on building your business while also having enough time to spend with your family.
Small business owners don’t always see the benefits of bringing in financial advisement, especially in the early stages when they cover nearly everything themselves.
“They’re trying to wear too many hats and they don’t know how to build the right team,” Chris said. “There are a lot of things that we can do to help them put the right pieces in place so they can focus on the things that they do best, but also get away from the business occasionally and go on vacation and live life at the same time.”
Whether you are still branding your startup company or you’re currently in the midst of running a business – or even if you want to talk about retirement – a financial advisor can help you plan for the future.
Financial Advisement in the Startup Phase
If you’re just launching your small business, a financial advisor can put systems in place that improve your financial position while mitigating organizational problems that sometimes crop up later. To develop a customized system your advisor needs to ask a series of questions through each step of the process:
Helping You Lay the Groundwork
- What type of entity should you form?
- What are the legal aspects you need to take into account?
- How are you planning to fund the business? (i.e., loans vs. a partnership)
Helping You Structure Your Business
- What is your mission statement?
- What products are you trying to sell?
- What is the market you’re looking at?
- What type of marketing will get the product out there?
- What do the financials look like going forward?
- Is this business viable?
Helping You Create Financial Projections
- Do you have financial projections?
- What are the goals you’re trying to accomplish?
“Financial projections are part of your business plan,” Amanda said. “If you’re in the startup phase, I can help you and there are other people that can help you with your mission statement, your logo, your photography or marketing, but for the financial projections – which are crucial to your business when you’re starting up – a financial advisor is somebody you want to reach out to. Don’t just think about your CPA.”
If your business startup ideas look good, a small business financial planner can help you construct a sound, viable business plan and explain such features as:
- Setting up business checking accounts
- Creating a personal checking account
- Opening a business credit card
- Putting a tracking system in place
- Making sure records are clean from day one
“Set it up right from the beginning and your life is going to be a lot easier,” Chris said. “A lot of business owners love their idea, they’re passionate about what it is that they want to do, but they don’t understand all these pieces that need to be put into place. It isn’t until about the time they do that first tax return that they find they don’t know what’s going on, their accountant is mad at them because they have no records, and they blame the accountant. I’ve seen that spiral out of control, so we really want to help them set it up right from the startup phase.”
Financial Advisement for an Existing Business
If you set up a small business and it’s running smoothly, you’ll eventually evolve and consider new goals, such as a possible expansion or adding a new service. Your financial advisement team can assess the situation and develop a plan going forward by looking at where your company is today and what it will take to get to the next level.
“That may be bringing in loans or bringing in a partner; again, it goes back to financial projections,” Chris said. “So, what kind of an impact is this growth phase going to have on your existing business? We don’t want it to kill off the existing business, what’s paying the bills, in order to expand and then have it all blow up in your face. You’ve worked really hard for this part back here – we don’t want the expansion to destroy everything you’ve worked for the last couple of decades to build.”
The main questions involved in a financial analysis for taking your small business to the next level include:
- What does the growth phase look like?
- What kind of impact will it have on the existing business?
- What do you need to put in place to be able to take on this next layer of responsibility?
For a financial advisor this phase begins with a litmus test – looking at where the company is today, including an examination of the financials. If the books and records are disorganized and incomplete, you need to clean them up and sometimes it means finding a new accountant.
“You can be in a phase of your business where you outgrow your professional advisors,” Amanda said.
Your financial advisement professional will check to see if you have contracts in place, to be sure they’re comprehensive and protect the partners involved. Existing business support includes identifying and addressing issues within the business.
“Trying to uncover all of what is currently wrong with the business and clean it up,” Chris said, “to help you be able to either manage the existing business better going forward or now be able to grow and expand and do all the things that you need to do.”
Financial Advisement for Succession
An effective financial advisor knows how to position you for a successful exit strategy, whether you have a small business in Santa Clarita you are planning to sell, or you have a global enterprise that you’re passing to the next generation.
“If you’re really serious about selling it you need a true business valuation that you can show to people,” Chris said. “We will help you figure out how to get a business valuation, who you’re going to sell it to and what it’s going to look like.”
Financial professionals can maximize your position for retirement, and they understand the tax efficiency of passing your company to the next generation as well as the steps in a buyout structure. Your small business exit strategy involves getting the parties on the same page and mapping out what your company will look like without you.
“Even though it may be 15 to 20 years off into the future, we look at what we should be doing today in order to position them properly because it takes planning and thought to get there,” Chris said. “We just want people to think about it earlier because people typically wait until the last second.”
10 of the Most Common Mistakes Small Business Owners Make
- Sloppy records
- Mistakes on the legal side of things
- Conducting employee reviews without taking notes
- No records of client engagement
- Mistakes on the legal side of things
- Meetings with partners with no minutes
- Mistakes on the financial side of things
- Not tracking business expenses
- Failing to keep clean records
- Not using effective systems
- Mixing business and personal finances
- Keep your accounts separate
- Sitting on cash
- Do keep extra cash for emergencies or expansion
- You can invest it and maintain access to it
- Not taking advantage of leverage
- You can expand or move to the next level with low interest rates.
“I hate debt, but when you give me debt at 3% per year, I kind of love that, because I can make that money earn way more than the interest it’s going to cost me to get that debt,” Chris said. “So, taking advantage of that leverage, maybe it comes with having a financial advisor that can help guide you, so you don’t make a mistake, but using and taking advantage of that leverage right now is more important than ever.”
- Not having financial projections for the future
A business plan isn’t just meant for your startup. It’s a working document for your business that you should be looking at no less than once a year. Ask the following: Is your mission still the same? Are your employees still the same? Are your financial projections still the same?
“It is something we preach even on the personal financial planning side,” Chris said. “Financial planning is a living, breathing document you need to be on top of all the time. It’s always evolving, it’s always changing. You need to be updating it, understanding it, making sure it’s current. Those financial projections are important. Most people have no clue. They’re just flying by the seat of their pants doing business every day.”
Business owners need to be able to put the numbers on paper and understand what they’re doing and how it’s going to affect the future growth or profitability of
- No retirement plan or a poorly managed one
- No retirement plan at all is almost better than a poorly managed retirement plan
- If you’re going to have a retirement plan in your business, be sure the people in your organization understand whose responsibility it is to carry out each task associated with the plan
- Not having insurance risk management
- You need risk mitigation in place
- Buy-sell agreements
- Include insurance to protect partners
- They need to be official
- Key managed policies
- You need risk mitigation in place
- Disability insurance
“If something happens and there’s no income if you’re not there, without a disability insurance policy you’re at risk and your family is at risk,” Chris said. “It’s there to keep the business alive and pay the expenses of the business if something were to happen to you, to make sure that when you return your business is still standing and that you can go back into it and be able to continue.”
- Not having a financial planning team in place
Small business owners can be intimidated and sometimes they don’t think they’re big enough yet. Reach out to a financial advisement team that gives you the opportunity to get advice regardless of size.
- Operating without a business coach
- Reach outside your own expertise
- The biggest CEOs and brightest executives have coaches to lean on
- Not paying yourself enough or at all
- Pay yourself a reasonable wage
- Balance between not paying enough and paying yourself too much
Meet the Experts
Chris Ingram – Financial Advisor
When CEO and founder Christopher Ingram established Prosperitas Financial, he envisioned a more comprehensive style of wealth management, offering the expertise of professionals in multiple capacities to meet the wide-ranging needs of their clients. This unique collaboration of financial service providers offers advisement in financial planning, wealth management, life insurance, long-term care insurance, disability insurance, corporate benefits, employer retirement plans, health insurance, estate planning and trust services, tax preparation and planning, college guidance, lending, business succession planning, and more. It is a holistic version of financial planning, guidance, and advice provided by elite advisors who are supported by a team of financial specialists and staff.
Chris has spent more than 22 years as an Investment Advisor Representative/Fiduciary and has built his entire career on the uncompromising commitment to provide financial advice and services where the primary focus is helping clients achieve their goals and financial success. The first 5 years of his career he worked with PaineWebber, now UBS, and Morgan Stanley. In March of 2003 he left Morgan Stanley to start his own firm and become an independent financial advisor. Chris’ goal in launching Prosperitas Financial in 2020 was to be able to focus more on the client and less on corporate quotas and other aspects of a big firm.
Amanda Benson-Tilch – Small Business Consulting
While you may notice her first by her wit and second by her infectious sense of humor, the next thing you’ll learn about Amanda Benson-Tilch is: She’s a problem-solver. Owner and Growth Strategist of Ask Amanda Consulting, she offers the skills, tools, and network it takes to get the job done — no matter the task.
Working with each client differently, she helps identify blocks, present solutions, implement them, and execute. And if she can’t execute, she’ll connect you to someone who can. She’s helped past clients improve their branding, operations, customer service, marketing, company culture, and more. She’s organized a company-wide rebranding and restructuring after it was bought out. And she’s helped local small businesses increase their growth without increasing the headache. From consulting to full-scale project management, Amanda steps in to help your business-level up with ease.
In addition to her work with Ask Amanda, she’s also the Director of Business Development for Thomas Realty Co., a property management company in Burbank, where she oversees the growth of select tenants. Currently, she’s serving as the Managing Director of both Burbank Fitness Club and Burbank Center Apartments. Over the last year, she helped completely rebrand, renovate, and rebuild the gym, and she recently started the same process with their luxury apartments.
About The Ask Amanda Show
On any given day, small business owners and entrepreneurs spend most of their time putting out fires, solving problems and asking themselves questions like: “How do I brand this? How do I reach more people online? Why can’t I break through my revenue ceiling and reach the next level of business?” They often feel like an island – holding it all together without the support, clarity, or feedback they need to finally achieve their vision. That’s exactly why Amanda Benson-Tilch created The Ask Amanda Show. As a small business consultant, not only does she have the answers to the questions you keep asking, but she’s also created a podcast community that reminds you: You’re not alone in this journey.
Tune in once a month to get access to small business experts, nuggets of inspiration and answers to those burning questions preventing you from growth. Enjoy powerful guest interviews as Santa Clarita small business experts share their stories and provide actionable steps to help you grow your business. Whether you’re a business owner, aspiring entrepreneur, or someone looking to get more involved in your community, this is your show!