Business partnerships are common in the modern world. When people or businesses go into partnership, they bring different attributes such as capital, entrepreneurial, management, leadership, communication, and financial management skills. Such factors will help a business pick up and be successful. One of the famous partnerships that businesses seek today is finance business partnering.
Whether you’re a sole proprietor or a part of a larger organization, working with a finance partner can help grow your business. A financial advisor can help you with certain aspects of running your business, but a finance partner can also be invaluable in getting your business off the ground.
Here’s a quick guide to financing a business partnership.
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What is a finance business partnership?
Finance business partnering is a relatively new role and has evolved from the management accountant and financial controller roles of the past and involves taking on greater responsibility for business decisions. A business partnering in finance collaborates between an entrepreneur or an owner-operator and a financial advisor. A collaborative relationship exists when one party, the partner, provides financial expertise and support to the other party, the partner-financer. The business entity forms a partnership with the financial advisor as to the partner-financer.
The partnership agreement will define the type of entity the business will form and outline the relationship between the partners. The financial partner provides expertise in financial planning, validation of business plans, and navigating the corporate and financial environment. The entrepreneur provides capital and operational expertise and the ability to evaluate business plans and provide investment advice.
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What does a finance business partner do?
A finance business partner will work with leaders from other business areas to help them achieve their financial goals. They should be commercially aware and able to communicate with people from all business areas.
Their responsibilities will include:
- Supporting budgeting and forecasting processes
- Challenging strategic decisions
- Providing financial support to service managers or project managers
- Analyzing trends in revenue and costs
- Explaining the impact of performance on the non-finance staff
- Helping managers to calculate whether investing in new projects is worth it
- Evaluating current processes and suggesting ways they could be improved to increase efficiency or reduce costs
Their purpose is to develop the finance function and help business units achieve their goals. They deliver financial insight, analysis, and advice to decision-makers – board members, heads of departments, or directors – to support them in making better financial decisions.
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Why work with a finance partner?
There are specific reasons you might consider working with a finance partner. Not every person has the ability to overcome hurdles in budgeting and financial planning, and therefore, a finance partner can help you in the following way:
- One is to maximize your profits. A business that starts with a lot of debt could benefit from a financial advisor’s extra insight and expert advice who has access to your finances.
- Another reason is to streamline the due diligence process. Your financial advisor can help you with certain aspects of running your business, but a finance partner can also be invaluable in getting your business off the ground.
- A finance partner will help you by taking the lead in making sure you have the funds to do what you want. They will provide advice to you on the best way to spend your money, saving you from wasting it in the future.
With such benefits, you won’t need to worry about your business working with a very tight budget because of the decision you made.
In a finance business partnership, you’ll be confident that your decision is correct.
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What does successful business partnering look like?
For a finance business partner to be successful, there must be value-added. Here are some of the critical ways that finance business partners add value:
- Leadership through insight: They help understand what is driving your business and its performance and be able to challenge assumptions to improve results.
- Strategic planning and budgeting: The partnership helps you understand what your business is trying to achieve, where it’s going, and how it’ll get there.
- Risk management: The business partnership will help in managing risks and also ensuring that your organization understands the chances it’s taking and can respond appropriately when necessary.
- Financial performance measurement and reporting: The most crucial part is to ensure your business measures the right things in the right way to make informed decisions quickly.
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How to find the right partner
To find the right partner, you want to look at their experience. Do they have a proven track record of adding value? Are they able to partner with people outside of finance? Are they good communicators who can present information in a way that’s relevant and easy to understand?
You also want someone who can develop a good relationship with the senior management team. This is the second most important thing. It’s easy to feel overwhelmed by the details, but it’s essential to take a step back and look at the bigger picture. For example, if someone has invested their own money into the business, you need to consider how you can help them maximize their return on investment (ROI).
Here are some tips to use when looking for a finance partner:
- Request recommendations from friends and family.
- Ask other financial professionals in your industry, such as accountants and lawyers, for advice on which partners they use and why they like them.
- Look at different finance forums where people discuss their problems with finance companies and advise which partners the best suit their needs.
It’s important to remember that the best finance partner isn’t necessarily the one with the most money or experience. The best partner is someone who understands what your business needs and can help you achieve those goals.
Conclusion
Finance partnerships are beneficial for many businesses, and they can also be helpful for entrepreneurs who are looking to get off the ground. The partnership will bring the right financial insights to help you plan, budget, and make your business profitable.
Speak with your financial advisor if you want to explore the possibility of an economic partnership. They can provide a guide on the best way to go about it.
