How’s that bottom line? Do you need a financial planner?
Your bottom line is more likely going to be red than black in year one.
But within the next 12 months, you should see that tick over into a profit. When it does, you may want to consult a financial planner to decide how to put that money to work.
The problem is, people are often confused about what financial planners do and why they many need one, says Financial Planning Association of Australia’s head of policy Ben Marshan.
“A lot of people think, ‘Oh, I’ve got an accountant, I don’t need a financial planner’. But our professions are really looking at different things,” Marshan says.
While your accountant is focused on your business – how it is structured, cash flow and growth opportunities – a financial planner is more widely focused on how that business can help you achieve your life goals.
Planners are concerned with things such as how you invest your profits, what your superannuation and retirement plans are, and how you protect your personal finances should your business hit trouble.
“So, essentially, a financial planner is helping you plan for the future,” Marshan says.
SME owners need to know their business is not only generating a profit but is setting them up for a secure and comfortable life.
And because financial planners have an overview of both your personal and business finances, they can also act as the voice of reason – the realist who will tell you how long a runway you have to get your business off the ground.
“They can tell you, ‘You can’t afford to be sinking money into this business any more’, or ‘You’re good for six more months’. And maybe that’s the kick you need to start moving your business in the right direction.”
Marshan’s advice when choosing a financial planner is to consult several and look for those with SME experience, particularly in your sector. Financial planners can be particularly helpful in ensuring you have industry-appropriate insurance to protect your livelihood.
Check and triple check your financial adviser’s qualifications and licensing through ASIC.
And look for a member of a Professional Association who has voluntarily signed up to a code of ethics and adheres to higher practice standards.
There has been a major shake-up of the industry following revelations lax standards were allowing some operators to practice after completing courses lasting as little as four days.
The Government has introduced legislation dictating new minimum standards for the industry, including that by January 2019 financial planners should hold a relevant degree.
Reputable financial planners will already meet these standards.