Nearly every business faces a financial crisis or turning point at some point in its lifecycle. In many cases, the expertise and resources needed to handle the situation do not exist in-house. The question then becomes whether to add employees, train existing staff, or seek help from an outside consultant.

Common Reasons Businesses May Need a Financial Advisor

Business leaders and owners need to constantly manage changes brought on by various opportunities & challenges.  A good financial partner helps leaders manage change by ensuring the business has accurate and complete financial records, identifying opportunities for improvement, and helping lead and execute the changes required to secure the identified opportunities. It’s not complicated, but it’s also not necessarily easy.

Here are some of the top reasons we see business owners seek financial advisement:

Market Changes

The economy may be trending downward, causing customers to forego purchases or look for less-expensive alternatives. Or it may be trending upward, giving customers more discretionary funds to spend on your products. Fads and fashion may necessitate updating or rethinking product lines and getting rid of excess inventory. Demand for certain products may suddenly vanish or skyrocket. New opportunities may appear. Supply chain issues may hamper production or provide unexpected opportunities to stock up.

You may need a financial advisor if your team is inexperienced in dealing with market shifts or if your efforts to keep up with market changes don’t seem to be working. A financial advisor may also be able to help you determine if a new opportunity is worth pursuing.

Falling or Stagnant Revenue

Sales may slump due to changes in demand. Competitive pressure may force price reductions. Increasing costs may cut profit margins. Advertising methods may become outdated or ineffective. Inadequate or inaccurate financial reports and projections may give a false picture of the company’s financial status. Inefficient processes and poor financial decisions may impact the company’s bottom line.

You may need a financial advisor to evaluate your accounting methods, production processes, and marketing strategies and recommend the changes you need to turn the company around.

Rapid Growth

Increased demand for products may necessitate quick action to hire and train new employees. Additional equipment, office space, and production facilities may be required. Accounting software may need to be upgraded. Extra funding may be necessary to ramp up the business.

You may need a financial advisor to help you determine the most cost-effective ways to deal with growth, provide financial forecasts, and help you find the financing and facilities required.

Increased Competition

New companies may enter the market, offering competing products. Existing competitors may increase their marketing efforts, lower their prices, or offer enhanced services. Online megastores may begin to stock products similar to yours.

You may need a financial advisor who has experience in your industry to provide ideas for repositioning your products and services to make them more competitive. A financial advisor may also be able to help with strategic business decisions and business intelligence.

Special Projects

Some products or services may be subject to seasonal peak demands. A new opportunity may arise that requires special equipment, trained personnel, extra financing, or temporary labor. A proposed partnership may necessitate due diligence efforts. New industry standards may force changes to your processes.

You may need a financial advisor to help you plan for demand cycles and ramp up or down smoothly. A financial advisor may be able to help with due diligence processes and standards compliance.

New Technologies

Accounting software and computing hardware may become obsolete and need upgrading or replacement. Increased business may make it desirable to add software such as an ERP system. New online sales and marketing systems may need to be evaluated and implemented. Vendors may migrate to new ordering and fulfillment systems that need to be integrated with your processes.

You may need a financial advisor who is up to date on the latest technological developments to help you decide what to purchase, what to upgrade, what to leave alone, and how to effectively integrate systems.

Mergers and Acquisitions

A proposed merger or acquisition may involve a great deal of due diligence work and a thorough review of financial records and processes. Financial institutions, suppliers, investors, lawyers, and many others may need to be involved.

You may need a financial advisor who has successfully orchestrated mergers and acquisitions in the past to help you understand and plow through the process. A financial advisor may be able to put you in contact with the lenders, suppliers, and professionals you need to complete the due diligence requirements. A financial advisor may also be able to help you determine whether the merger or acquisition is a good idea, and how to sweeten the deal.

New Regulations

Changes in laws and regulations may require process changes, licensing, certification, inspections, employee training, and more. The constantly changing tax code may require special attention to financial transactions. Failure to understand and comply with government requirements may land you in legal trouble.

You may need a financial advisor who specializes in compliance and has strong experience in your industry. The right financial advisor can keep you out of trouble and recommend best practices for complying with regulations and keeping your taxes straight without significant disruption to your business.

Personnel Issues

Rapid growth may make it necessary to find and hire qualified personnel very quickly. A business slowdown may cause company executives to consider layoffs or benefit reductions. Finding the right talent with the appropriate skill set may be very difficult. Poor working conditions, a toxic environment, lack of communication, job insecurity, low pay, or burnout may cause valuable employees to leave. Improper disciplinary procedures may result in lawsuits or bad publicity.

You may need a financial advisor who has a background in human resources to help you put together a salary and benefits strategy that keeps employees happy while keeping your bottom line in shape.

What Kinds of Financial Advisors Are Available?

There are several kinds of advisors available with different but sometimes overlapping skill sets. It’s important to understand the different roles and responsibilities of different finance professionals before you start your search. The type of advisor you need depends on the type of issue you are having. You may need one or more of these advisors at different times and at different points in your business cycle. It is preferable to find an advisor with experience in your specific industry and companies similar to yours.

You may, of course, be able to hire a full-time employee who has the necessary knowledge and skills. But if the need is temporary, you may find it more financially acceptable to bring in an outside expert for a limited time or on a long-term but part-time basis.

Some commonly used financial advisors include the following:

  • Certified Public Accountant (CPA) – Prepares and files tax returns, identifies potential tax deductions, and provides support in the case of an audit. Verifies and analyzes data, adjusts entries, and provides general tax strategy.
  • Bookkeeper – Records financial transactions, balances the books, reconciles bank statements, and prepares monthly financial reports. May also help with accounts receivable, accounts payable, and payroll functions.
  • Controller – Manages the company accounting department. Develops guidelines and procedures for accounting and other financial activities. Ensures regulatory compliance. Takes charge of the company’s general ledger. Establishes and maintains financial controls. Provides reports and data to company management for budgeting, forecasting, and risk analysis.
  • CFO – Best option for turnarounds or to prepare for strategic exits. Helps the company overcome financial challenges such as cash flow issues, low gross margins, increased expenses, obsolete software, cost cutting, and audit preparation. Works with top management to raise capital, implement new systems, optimize strategies, and achieve growth. Provides financial forecasts, helps build strategic relationships, and oversees due diligence. Helps the company optimize path to specific short and long-term goals.

Final Thoughts

The wise business owner will “Know what you don’t know,” and will seek the appropriate experts to fill those gaps. If you’re uncertain about the financial assistance you need, it may be beneficial to schedule a free financial consultation with a financial expert, such as with Preferred CFO.

About the Author

Mike Paulsin


Mike Paulsin is a highly regarded financial leader with over 30 years of organizational & financial expertise in a variety of economic landscapes in both public & privately-held companies.

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