There are a lot of things that can lead to a business's downfall. Failing to market products and services effectively is a major factor. Jumping into an over-saturated market can be another issue.
Did you know that nearly 20% of small businesses fail in the first year? According to the same source, nearly 50% fail by year-five.
However, many businesses go under because their owners don't know how to manage their finances. They don't know how to manage cash flow, prioritize spending or project future income. This is where financial coaching comes in.
A financial coach can help your business in a number of ways. Keep reading for everything you need to know
What is a Financial Coach?
First, let's talk about what a coach is and does. Many people confuse financial coaches with financial advisors. However, the two practices are fundamentally different.
A financial advisor's main priority is helping people manage the wealth they (typically) already possess. They specialize in long-term financial planning, estate management, etc.
A coach, on the other hand, works with people on a personal level to help them build wealth.
A coach will help you understand the basic rules of saving, planning, making investments, and financial management. They'll help you set goals, implement good habits and encourage you to stay on the right path.
The Benefits of Getting Financial Coaching
Let's break it down…
It Can Save You Money
It's hard to wrap your head around paying for services to save money. However, financial coaches bring a lot of experience, knowledge, and skills to the table. Furthermore, look at hiring a coach as an investment in your future.
You don't need to hire a coach indefinitely. Instead, consider working with one for six months or so to establish good habits and increase your personal knowledge.
It's quite similar to hiring a personal trainer to teach you how to exercise safely and effectively for maximum results. Sure, you may desperately need them in the beginning, but eventually, you can branch out on your own.
They Can Set You Up for Long-Term Success
A quality coach (fitness, financial, or otherwise) teaches you the tools and knowledge to help you find success on your own.
A financial coach specializes in setting financial goals and teaching their clients how to do so for themselves.
They will walk you through the goal-setting process, helping you make smart goals that are:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
Just as importantly, a financial coach will encourage you to stay motivated and focused on these goals. The best goals carry no value if you can't stay dedicated to them.
Financial Coaching Keeps You Accountable
Setting financial goals is important. However, you must be consistent in your pursuit of these goals. A financial coach can help hold you accountable for your financial goals and strategies.
Again, look at it as health and fitness goals. If you only diet or workout a few times a week, you can't expect to make significant progress.
In the same way that a personal trainer helps you stay on-task, a financial coach will keep you committed to your goals.
It Teaches You How to Prioritize Your Expenses
We mentioned earlier that the mismanagement of funds is a major downfall of small business owners.
Financial coaching can teach you how to make sound financial decisions for your company. They will help you prioritize your needs and minimize your costs.
Furthermore, they will help you establish good financial habits, such as:
- Being prepared for business taxes
- Cutting back on unnecessary expenses
- Tracking your cash flow through bookkeeping programs
- Estimating future income
Every business needs to plan for necessary costs, such as marketing, insurance, payroll, materials, etc. A financial coach will help you organized these expenses and learn how to save as much money as possible.
Financial Coaching Can Help You Solve Complex Problems
Many entrepreneurs set out with a dream and seemingly unlimited motivation and optimism. However, you must be prepared for business financial challenges.
The statistic noted at the beginning of this articles shows that financial problems aren't uncommon in the business world. The difference between making it through and being forced to shut down can all come down to how you handle these problems.
Financial coaching will teach you how to make tough, but educated decisions that can help you keep your business afloat during hard times.
Ideally, a financial coach will help you prevent such a situation from occurring in the first place.
If Needed, a Financial Coach Can Manage All of Your Finances for You
Hiring financial coaches can be good for business owners with a wide variety of needs. For example, new business owners may need a few months of financial education to help them learn the ropes.
After some time working with a financial coach, they may have all the information they need to succeed.
On the other hand, financial coaches can also provide more hands-on services. If needed, you can hire them to take over your finances entirely.
They can track your cash flow, help you with your taxes, work with you to make financial decisions, and more.
How Much Does Financial Coaching Cost?
If you're looking for a one-time or hourly consultation, we can charge up to $250 per hour. However, you can usually save money by buying a package.
If you're looking for complete business financial management, many charge $500-$1,500 per month, depending on the size of the business and scope of work.
Do You Need Help Managing Your Business's Finances?
If you're struggling to keep up with your finances, or your business continuously dips into the red (or comes dangerously close to it), a financial coach can help.
Be sure to check out some of our other articles on financial coaching and business management. You can also enroll in some of my free and paid courses.
And if you're looking for some one-on-one time, book a free call today.
Related Content:
How to Make Your Money Work for You: 7 Modern Methods for Investing in “The Market”
Big Picture Investing: Why You Need to Get in the Game Now!
How to Incorporate Yourself to Save Taxes (and Protect your Assets)
The Financial Planning Process: How to Mastermind Your Retirement
You Need to Do Your Personal Bookkeeping (Like a Business)…and You Hate It…Now What?!?
Kristin McCasey is a partner and editor atPlay Louder!She is a former award-winning film editor turned work-at-home-mom blogger. Three years after their son was born, she and her husband left their Los Angeles careers to have more time as a family. She now works with her husband, Joe, on their finance blog, teaching others how to achieve financial independence.