8 min read
Running a business is tough, and the odds of success are against you.
According to data from the U.S. Bureau of Labor Statistics (BLS), roughly 20% of new businesses fail during the first two years of operations, 45% fail during the first five years, and 65% fail during the first 10 years. Just one-quarter of new businesses survive to remain in operation for 15 years or more .
What these odds mean is that business owners stand to gain a lot from advisory services, such as improved chances for survival and success.
What Are Advisory Services?
Advisory services are professional consulting services for business leaders that aim to help them achieve success with fresh strategies, ideas, advice, and guidance. Business advisors use their extensive knowledge, expertise, and objective perspectives to help strengthen businesses by improving just about every aspect of a company's operations and finances. Business advisors can help organizations capitalize on their strengths, identify and overcome weaknesses, and assist with strategic planning to help them reach their potential and create a better future.
Different types of advisory services that focus on different aspects of business are available such as:
- Financial consulting
- Business consulting
- Strategy consulting
- Management consulting
- IT consulting
- HR consulting
Business advisors typically include a variety of accountants, business coaches, and mentors who have extensive experience and expertise in business assessment, management, planning, and strategy.
What Are Financial Accounting Advisory Services?
Financial accounting advisory services are similar to general business advisory services. They differ slightly in that they are provided by finance and accounting experts with extensive business management experience. These services have a heavier emphasis on the financial perspective and a stronger focus on management accounting. Financial accounting advisory services enable business owners to make strategic decisions that will continuously improve their businesses based on their financial data.
Additionally, financial accounting advisory services mimic the role of a chief financial officer, devising a strategy for the overall bookkeeping, accounting, and finances specifically to support the overarching business plan and growth strategy.
Financial accounting advisory services look at a business's operations, goals, and strategies from a financial perspective, helping to ensure that the business plan is financially viable and, ultimately, profitable.
This business is now equipped with the financial insights it needs for profitability and growth.
Financial advisory services typically include a combination of financial guidance and management, financially-based business planning and strategies, and financial reporting.
How Financial Advisory Services Work
The process of working with a financial business advisor begins with an information-gathering process during which the advisor researches and analyzes your company. This usually involves a conversation with the business's leadership in addition to the collection of financial data and functional information. During this step, the advisor identifies the business's strengths and weaknesses and determines which aspects of the business need the most attention.
An advisor then works with the business leadership through a period of problem-solving. The advisor works alongside leadership to develop a strategic and logical plan for moving toward a more successful future. The plan is based on data and laid out rationally to prevent reactionary, intuition-based decision-making that can often lead a business astray.
The advisor then helps the business implement the strategy with a combination of ideas and experience in addition to advanced tools and technology. It's helpful if the advisor is working with an entire team to facilitate training and enterprise-wide buy-in during the implementation process.
In addition to implementing the strategy, the financial advisor also puts systems in place that make it possible to measure and evaluate the impact of the changes that have been implemented. Tracking progress, impact, and success is essential when making any changes in your business. Without measurement systems, there's no way to know whether or not the new strategies, tools, and systems are useful or improving the business.
Depending on the initial results, adjustments can be made to the plan. As new measurements are taken, the business owner can continue making adjustments based on the data and results to continuously improve the business while working toward goals.
The Benefits of Outsourcing Advisory Services
Advisory services can be provided in-house. Let's take a closer look at why outsourcing advisory services is the smarter choice.
Sometimes, advisory roles can be found in board members. Often, advisory roles are filled by C-level employees such as chief financial officer, chief executive officer, chief operating officer, chief technology officer, chief marketing officer, chief information officer, chief human resources officer, chief strategy officer, etc. Basically, there is a "chief of-just-about-every-department officer" position that you potentially could fill in your business, and the candidates who are qualified to fill these positions possess extensive knowledge and experience in their respective fields/departments.
So, why outsource advisory services, instead?
Firstly, the attention of your board members is likely divided, and they likely only have a very limited amount of time to dedicate to your business. You might only receive their undivided attention once per month or quarter.
Secondly, but more importantly, outsourced advisory services cost way less than hiring in-house C-level employees. These positions each typically start at six-figure salaries that often cost hundreds of thousands - and that's not including benefits or any additional overhead employment costs.
Thirdly, and perhaps most importantly, an outsourced financial advisor has an objective, unbiased view of all aspects of your business. This fresh, outside perspective can help you see your business with new eyes, spark new ideas, and shed light on overlooked problems. Outsourced advisors do not have any sentimentality toward any aspect of your company, and sentimentality can be very dangerous in business. For example, an external advisor will never suggest you continue a service, product, program, or department that isn't working because it was their original idea that they have become emotionally attached to.
The objectivity that relies on numbers, dollars, and facts is the clearest and most effective way to analyze and improve a business, and a third-party provider is best suited to provide this kind of objectivity.
Advisory Services Best Practices for a Mid-Market Business
Look for Industry Experience and Experience With Your Business Type
All types and sizes of businesses in all industries can benefit from advisory services. That being said, your business will be best served by an advisor with actual experience working (successfully) with businesses of your size and type and within your industry.
Work With an Advisory Team
A group of heads is always better than one. While an individual advisor can provide you with a wealth of knowledge and good advice, most businesses are better served by teams who can work together to compile data and information to provide your company with solid advice and a fresh strategy.
Expect to Build a Relationship
The best advisors are those who build relationships with their clients. Developing good relationships with clients keeps advisors more successful and also improves the services they provide because, through relationships, they can really get to know the ins and outs of a client's business. Look for an advisor who seems genuinely interested in getting to know you and your company. If they aren't asking many questions, then they don't know enough to give you good advice.
Provide a Clear Picture of Your Business
In order to give you good advice and guidance, your advisor needs a clear and complete picture of your business. Be honest about all of the nitty-gritty details and don't leave anything out. No detail is too small or insignificant because all of your information, history, and data come together to help an advisor understand your business and understand how to make it better.
Communicate Your Goals and Expectations
Everyone assumes that a business owner's goal is success, but not everyone defines success the same way. Be sure you think about your business goals, future vision, and your expectations or what you're hoping to get out of working with an advisor. Then be sure to communicate these ideas to your advisor so that they understand what success means to you (for example 10% growth in the five years, opening up another location, selling the business, or transferring leadership responsibilities so you can exit).
Ask About Your Advisor's Process, Workflow, and Expectations
Make sure you and your advisor are on the same page in terms of deliverables. Find out what you can expect from them during the advisory process in terms of communication, workflow, and deliverables. Additionally, ask what they specifically need from you to facilitate the process.
Improve and Grow Your SME With Financial Accounting Advisory Services
Outsourced advisory services can help you identify hidden problems in your business, overcome challenges, leverage opportunities, and optimize your overall operations to continuously improve your business. With an external advisor, you can benefit from an objective perspective that can help you lead your business into a more successful future.