Best Financial Advisor for Business Owners: How to Choose a Growth Partner

By Kendall Maccagnan, CPA, CFP® and Financial Advisor in Tampa, Florida

Running a business is hard! The journey is more often than not rewarding, but it can also be stressful at times. Business owners are constantly wearing more than one hat and are often pushed to do things outside of their own expertise. For example, I would much rather have my nose in a spreadsheet, but instead I’m sitting here writing this blog post!

The journey can also be a lonely one, which is why having thought partners and trusted professionals around you may make it a little smoother. Having people you can turn to for perspective, expertise, and guidance can make it easier to navigate the areas of running a business that fall outside of your wheelhouse.

That is why choosing a financial advisor who understands small business owners can be so important. Business owners have such different needs than someone with a predictable salary and traditional retirement benefits. Generic financial planning may address investments, retirement, and insurance without fully considering how owner compensation, business cash flow, taxes, reinvestment, and an eventual exit affect those same goals.

Why Entrepreneurs Need a Specialized Business Owner Financial Planner

A business owner's financial plan often evolves alongside the business.

For example, I have spoken with business owners who are early in their journey and really just need help building a simple budget and understanding how much cash they need to keep the business afloat for the next 12 months. There are so many ways to fund a business. You can bootstrap it, get an SBA loan, apply for government grants, or bring in investors.

As the business becomes more established, the conversation starts to shift. Priorities may move toward retirement savings, employee benefits, succession planning, and maybe even an eventual business exit. The conversation becomes less, “Where do I find money?” and more, “Help! I’m making too much money.”

A business owner financial planner understands that progression and can help you navigate new challenges and bring ideas to the table as your business grows. A traditional financial planner may be more focused on stock market investing, but a business financial planner understands that your business is the product of many late nights and weekends and that your business is an investment too.

Eventually, as the business grows, building wealth outside of the business can create greater financial flexibility. A good planner can help you evaluate the potential return of reinvesting back into the business and compare that with your options for investing elsewhere.

Diversification can also be an important part of risk management. Building assets outside of the company may give you more options over time and reduce how dependent your personal financial future is on the performance of one business. Depending on the owner’s goals, that may include taxable investment accounts, retirement accounts, cash reserves, real estate, or other assets that are not directly tied to company performance.

Retirement plan design may also become part of the broader strategy. Depending on the ownership structure, workforce, contribution goals, and available cash flow, an owner may evaluate options such as a Solo 401(k), SEP IRA, SIMPLE IRA, or another employer sponsored retirement plan.

A specialized business owner financial planner may also help an entrepreneur think through succession or exit planning years before a transaction is expected. It is never too early to think about your potential exit. In fact, it may be something to keep in mind from the day you open your business because planning ahead can save you headaches down the line.

As the business grows, you can start building the right management team, keeping your financial statements clean, and properly documenting your standard operating procedures. These steps can make the business less dependent on you and may put you in a stronger position if you eventually decide to sell.

When the time comes, a business owner financial planner can sit down with you and help you understand what your business could potentially be worth, what a sale might mean for your personal financial plan, or what other options you may have if you simply want to gradually step back from the company as your life evolves.

Core Signs You Need a Financial Advisor for Small Business Owners

The need for specialized planning often becomes clearer when financial decisions begin overlapping.

Tax planning is one common example. Business structure, owner compensation, retirement contributions, estimated taxes, charitable giving, and investment decisions can get complicated and be overwhelming! A financial advisor for small business owners can help educate you on your options and guide you through more complex tax issues and decisions.

Cash flow is another pressure point. Entrepreneurs can have strong revenue or profitability on paper while still dealing with seasonal working capital requirements, irregular distributions, major equipment purchases, or periods of heavy reinvestment.

Personal savings and spending decisions can become more difficult when owner income is unpredictable.

Concentration is another consideration. If most of your income, net worth, and future retirement value depend on the same company, you may want a strategy for gradually creating liquidity and building assets elsewhere.

You may also benefit from a financial advisor for small business owners when significant decisions start happening more frequently. Examples can include adding employees, purchasing real estate, taking on debt, changing the company's ownership structure, establishing a retirement plan, buying out a partner, or preparing for a future sale.

The Importance of Fee Structure: Why Transparency Matters

How an advisor is compensated can influence the economics of the relationship, which makes understanding the fee structure an important part of the hiring process.

Some financial professionals receive commissions from products they sell. Others charge based on assets under management, or AUM, generally calculated as a percentage of the investment assets they manage.

An AUM structure can be straightforward for clients primarily seeking portfolio management. For entrepreneurs and business owners, however, a significant portion of net worth may remain tied up in the company rather than in a traditional investment portfolio.

Flat fee and hourly models work differently. Instead of basing the cost primarily on investment assets, the client pays for the planning engagement or the advisor's time.

That structure may make fees easier to evaluate when the work extends beyond investments into areas such as business cash flow, personal financial planning, tax coordination, retirement planning, and exit considerations.

No fee model is automatically the right choice for every business owner. What matters is understanding what you are paying, what services are included, what financial incentives may exist, and whether the structure fits the type of guidance you actually need.

Choosing a Fee Only Advisor for Entrepreneurs

A fee only advisor for entrepreneurs is generally compensated directly by clients rather than receiving commissions for selling financial products.

Flat fee or hourly planning may also provide flexibility for entrepreneurs whose financial complexity is not directly related to the size of an investment account. This can be particularly relevant when the planning relationship covers both the company and the owner's personal financial picture.

Checklist: Questions to Ask Before Hiring

A discovery meeting should help you understand both the advisor's technical background and how they approach the financial realities of owning a company.

Consider asking:

• Are you a fiduciary when providing advice to me?

• How frequently do you work with business owners, founders, or closely held companies?

• How do you coordinate financial planning with my CPA, tax professional, attorney, and other advisors?

• How are you compensated, and are there commissions, referral arrangements, or additional fees I should understand?

• Can you help with issues beyond investments, such as cash flow, retirement planning, tax planning coordination, and exit planning?

  
  

Listen not only to whether an advisor offers these services, but also to how they approach them.

A good fit should be able to explain where their responsibilities begin and end, when another professional should become involved, and how different pieces of your financial life may fit together.

Your Business and Personal Wealth Need Separate Blueprints

For many entrepreneurs, the business is both a source of income and the largest asset on their personal balance sheet.

That does not necessarily mean the business should be the entire financial plan.

A strong planning relationship can help you understand where you stand today, what the company may need to produce for you over time, how much wealth you may want to build outside the business, and which decisions deserve attention next.

Your company may ultimately create a significant portion of your wealth. Your personal financial plan can help determine what happens to that wealth once it leaves the business.

If your business and personal finances are becoming increasingly interconnected, you may want to consider speaking with an advisor who regularly works with entrepreneurs and business owners and understands both sides of the financial picture.

Next step: Feel free to book a consultation to discuss your current business and personal financial picture.

Frequently Asked Questions About Financial Advisors for Small Business Owners

What does a financial advisor for small business owners do?

A financial advisor for small business owners can help connect business decisions with the owner’s personal financial plan. Depending on the engagement, that may include cash flow planning, tax planning coordination, retirement planning, investing outside the business, risk management, and preparing financially for a future business sale or transition.

How is a business owner financial planner different from a traditional financial advisor?

A business owner financial planner looks beyond an investment portfolio and considers how the business affects the owner’s overall financial life. Business income, owner compensation, taxes, reinvestment decisions, retirement benefits, business value, and personal investments may all need to work together rather than being planned separately.

When should a business owner consider hiring a financial advisor?

A business owner may consider hiring an advisor when financial decisions become more complex or begin overlapping. Common examples include increasing profits, unpredictable cash flow, significant tax liabilities, hiring employees, choosing a retirement plan, building wealth outside the company, buying out a partner, or preparing for an eventual exit.

How can business owners build wealth outside of their business?

Business owners can potentially build wealth outside their companies through cash reserves, retirement accounts, taxable investment accounts, real estate, and other investments. The appropriate strategy depends on the owner’s goals, cash flow needs, risk tolerance, and the potential return from continuing to reinvest money back into the business.

What should I look for when choosing a financial advisor for my business?

Look for an advisor who understands both business and personal financial planning and can clearly explain how they are compensated. Consider asking whether they are a fiduciary, how often they work with business owners, whether they coordinate with CPAs and attorneys, and whether their services include areas such as tax planning, business cash flow, retirement planning, investing, and exit planning.

This content is provided for educational and informational purposes only and should not be construed as investment, tax, or legal advice. It is not intended as a solicitation or offer to provide advisory services in any jurisdiction where Off the Bay Wealth, LLC is not properly registered or otherwise permitted to operate. Information presented is based on sources believed to be reliable; however, accuracy and completeness are not guaranteed. This material is not intended to be a comprehensive analysis of all topics discussed. IRS provisions are subject to ongoing guidance and regulatory updates. Any financial decisions should be made in consideration of your individual circumstances, including your goals, risk tolerance, and time horizon. Investing involves risk, including the potential loss of principal.