What is a Trusted Financial Advisor?

Nov 16, 2023 by Roger Scherping



It’s not easy being a small business owner. They have to handle every aspect of their business, serving as CEO, COO, CFO, CMO, CRO, CHRO, and CxO.

Of course, small business owners can’t possibly be experts in every aspect of their business. Furthermore, in order to grow their business, they simply must delegate some critical tasks to a competent professional. So they need people they can trust to carry some of the burden and to advise them in the areas of the business where they lack expertise.

That’s why you’re a trusted advisor. You possess an expertise that your clients don’t have. Your clients trust you to help them grow their business by taking some of the pressure off them and by providing insights that they don’t have on their own.


Trusted financial advisor

As a trusted financial advisor, you play a very important role with your clients. You might be a QuickBooks accountant, an outsourced accountant, a fractional CFO, or a business coach. Regardless of your title, your clients rely on you because most small businesses lack strong financial expertise. For example, most small business owners can read and understand their income statement, but few understand their balance sheet. And as for the cash flow statement, well, most small business owners incorrectly think that profit is the same as cash flow.

So your clients absolutely need someone like you to help them understand the numbers of their business. You prepare their monthly financial statements, explain the statements to them, and use the statements to guide your clients to make better business decisions.

I’ve been a trusted financial advisor for years. A trusted financial advisor helps their clients in many different ways, and you probably already provide some of these services to your client every month.

  • Financial statement creation and explanation: Creating accurate monthly financial statements on a timely basis. Explaining the meaning of the statements so the client understands their numbers.
  • Profitability analysis: Analyzing the financial statements and developing recommendations on how to increase profitability.
  • Cash flow management: Managing cash flow on a daily or monthly basis. Projecting long-term cash flow and proposing timely action when there is an anticipated need.
  • Turnaround or fixing: Helping the client understand the true nature of their financial condition, and helping them come up with a plan to return to profitability.
  • Financial plan and monitoring: Preparing a budget and monitoring the budget through the year, holding the client accountable and suggesting corrections to keep them on track.
  • Problem solving: Coming up with a financial solution to whatever business problem the client is facing.
  • Sounding board: Providing the small business owner with the high-level insights they expect from the person they trust with their finances.

There’s one additional service you should consider. After many years of experience as a trusted financial advisor, I have found that the one area where I help my clients the most is an area that the majority of them don’t even know exists.


Seeing the future

When I was turning around small companies, there was one thing I did that helped make me successful. I used my ability to look into the future and see where we were going. I’m a CPA and good with spreadsheets, so I was able to answer questions like: When will we start making a profit? How much cash will we need? When will we achieve a positive cash flow?

I later realized that all small companies should look ahead like this. Regardless of their financial condition, all small companies need to know what problems lie ahead. They need to understand where their cash is headed. They need a way to make quantitative business decisions instead of relying on gut instinct. They need the peace of mind that comes from seeing where their business is going.

You give your clients their backwards-looking financial statements every month. That’s great; they need that. But let’s face it: No one drives their car looking in the rearview mirror. They drive their car looking forward through the windshield!

Based on my experience with my clients, I believe that showing them their financial future is the greatest benefit a trusted financial advisor can provide to their clients.


Enter ProjectionSmart

That’s why I created ProjectionSmart. I wanted all small companies to have the ability to look 12 months ahead and see where their business in going.
                                                                                     
ProjectionSmart is a simple and quick way to turn your client’s backwards-looking financial statements into a forward-looking prediction.

Once you’ve completed your client’s monthly financial statements, you just need to spend a few minutes with your client in ProjectionSmart updating their plans for the coming 12 months. These few minutes will help you provide them the following invaluable benefits:
 
  • Point out cash and profitability problems long before they become an issue
  • Create a rolling 12-month plan for their business that predicts revenue, profits, and cash
  • Make quantitative business decisions instead of relying on gut instinct
  • Provide them the peace of mind that comes from knowing where their business is going

We have also found that ProjectionSmart does a great job of helping your clients understand their financial statements. First, we have formatted ProjectionSmart’s reports just like QuickBooks so that the output will be familiar to your clients.

Second, each month your client answers the questions that ProjectionSmart prompts them on, they put their numbers in, and ProjectionSmart produces their prediction: income statement, balance sheet and cash flow, and graphs of their key metrics. We’ve found that when the client sees that output, and they see the numbers that they themselves put in, they really understand the impact those numbers have on the results. This gives them a whole new level of understanding of the numbers of their business.


Monthly prediction service

So add a monthly prediction prepared with ProjectionSmart to the services you provide your clients every month. ProjectionSmart is very simple to use, and it requires only a few minutes per month to achieve many benefits for both them and you.

Maybe you are able to bill for an additional hour each month to create their prediction, or maybe you bill them an additional fee for their prediction. It’s up to you.
                                                
When you do a monthly prediction with your clients, they will be more successful and more comfortable with their numbers. They will be anticipate and avoid problems, leverage resources more effectively, make more quantitative business decisions, and feel much better about their business’s future – all because of you!

On your side, you will increase your monthly revenue, have happier and longer-term clients, help your clients be more successful, and differentiate your practice.
                                         
After all, who doesn’t want happier and more successful clients and more revenue? Let us help.

Here’s a video to show you how easy ProjectionSmart is to use.


 

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