Whether you’re starting a business, are established in your vertical or at the mature end of the business cycle, you and your business need the insights and experience of a diverse team of financial advisors. A well-structured financial advisory team brings fresh perspective, professional expertise and puts the business’s success top of mind. While an owner may rely on their banker for financial guidance, a CPA, attorney and an industry expert will play pivotal roles on the advisory team. In highly specialized or high growth industries, additional advisors should be considered as temporary or permanent members of the advisory team.
This team of outside professionals provides ongoing insights into industry, markets and business strategies more objectively than those working inside a business. This outsider view gives a broader scope to strategy development, issues identification and problem-solving solutions. While each member of the team has a specific area of professional expertise, together they give a full view of where a business is today and how to grow in the future.
Kurt Kappa, chief lending officer at First Federal Lakewood, says, “Having the right team of outside financial advisors gives business owners a more wholistic view into their business, their industry and their finances. A trusted team can advise on operations, finances, legal matters and industry and market trends to allow the business owner to stay on course or make necessary adjustments to be successful.”
Building the Strongest Advisory Team
Above all, the most important ingredient in an advisory relationship is trust. The business owner must trust the team completely and believe that the team members have the business’s best interests at heart. The advisory team must trust the business owner’s intentions and abilities. This trust does not mean that differences of opinions will not arise or that the business owner will always take the advice of the advisors. It means instead that opinions and advice are offered and considered thoughtfully and respectfully.
To build the financial advisory team, the business owner should self-assess their own strengths and weaknesses before beginning the process of identifying and selecting candidates and advisory team members. Perhaps operations is a strength but understanding tax implications of growth is a weakness. Once the required skill sets are identified, the business owner can reach out to their network, other financial resources and trusted contacts for recommendations on individuals to fill specific roles on the advisory team. This groundwork enables the business owner to leverage what’s working and source team members who can work to leverage the owner’s strengths while closing gaps with supplemental knowledge and skills. Having a clear view of what’s needed makes the process more efficient and focused.
Time upfront is worth the investment. Taking the time to identify and interview each potential member will ensure clear expectations are set, the right people have the acumen and personalities to work together with each other and the business owner effectively. The result is a team aligned with the business’s mission and goals.
Utilizing the Team
Once the financial advisory team is in place, it’s time to tap into their individual and collective expertise. An ideal advisory team’s diverse skill sets empower the business owner to rely on each individual to provide analysis and counsel in their field. While there may be some cross-over, each will most likely gravitate to what they know best.
While one-on-one meetings or even casual conversations will address specific issues or answer certain questions, harnessing the real power of the team involves group discussions and meetings. The frequency is dependent on business needs but some formalized scheduling should occur to allow everyone to participate. Topics may include business development reporting, internal company changes, financial results, pending legal issues or updates on industry, market and regulatory news. It’s the group who will together dig deeper into results and uncover solutions to drive the business’s strategy forward.
From time to time, topics or issues out of the advisory team’s expertise may arise. For example, during the pandemic, many businesses found additional health and safety expertise and the ability to understand and act on pandemic-related relief programs invaluable to running their operations. Outside advisors added to the advisory team on a temporary basis helped fill these gaps.
“While a core advisory team is critical, businesses can often benefit from additional outside opinions and views,” said Kappa. “Inviting a specialized expert to participate on an ad hoc basis can enrich the board’s ability to more quickly address changing needs.”
Evolving the Team
As the business evolves, the team of advisors may change to meet business needs. Some advisors focus on a particular size or type of business such as start-ups or rapidly expanding businesses. For example, perhaps a local one-person accounting practice worked well in the beginning phase of the business, but a larger firm is needed as the business grows organically or by merger and acquisition. During a mid-cycle phase, the business may require more specialized advice for lending and legal options. At the other end of the business life cycle, management may need to begin planning exit strategies and need the advice of a more sophisticated advisor to create and implement a workable plan.
“Having an effective advisory team over time is a process,” said Kappa. “While consistency allows advisors to really get to know the business and it’s great to engage those who meet your needs where you are, those needs can and probably will change over time.”
From organization to acquisition and everything in between, the financial advisory team engages with the business owner, industry experts and each other to shine outside light on the business. Even when it seems to business owners that another hour in the day can’t be found to meet, discuss and learn, relying on a financial advisory team will make the business stronger in the longer term.