As a small business owner or startup founder, ensuring you have enough runway to achieve your goals is critical. However, balancing finances and growth can be challenging for organizations also invested in sustainability and inclusion.
It can be tempting to rely on your business coach or sales coach for financial advice, but this can compromise your projects.
Both business and sales coaches tend to be too invested in operations and may not have an objective view of the organization’s finances.
To build a solid finance strategy to support your objectives, it can help to have another pair of eyes. This is where an independent financial coach comes in.
What is a financial coach for businesses?
A business financial coach aids you in drafting budgets, financial planning, and cash flow.
These professionals can help you overcome a single challenge or help you implement your strategy over some time.
In other words, a financial coach provides small businesses and startups with high-level guidance and expertise. Some may even be former CFOs or COOs now working on a part-time consulting basis.
How much does a financial coach cost?
Financial coaches charge per session, and the amount is typically around $100-$300 per hour. However, the overall cost depends on the coach’s expertise, location, service packaging, target industry, and other factors.
Where can you find a financial coach?
You can easily find financial coaches on LinkedIn, Wallet Max, the Association of Financial Counseling and Planning Education (AFCPE), or just surf the web.
The important thing is to find a financial coach that makes sense for your business model—even more so if you run a sustainable business.
Unique challenges for sustainable businesses
Traditional business models rarely consider sustainable business practices—whether we are discussing living wages, ethical supply chains, cross-border business, or carbon-negative initiatives.
As a result, it helps to work with a financial coach who understands the challenges specific to green businesses.
Mapping an ethical supply chain
Guaranteeing an ethical supply chain takes more time and resources than simply selecting the most affordable or high-quality materials and procedures.
Depending on your operation, you’d need to consider items like labor conditions, discrimination in the workplace, environmental impact, and fair pay.
Spending time vetting your options in any one of these areas can be time-consuming and costly.
Even for a service provider, you need to consider where your tools and resources originate, as well as how your business activities affect the community or environment.
The hurdle for small businesses and startups is the cost of creating an end-to-end, ethical supply chain.
Almost every step becomes more expensive, from sourcing to packaging and entering the market. This raises costs and may price your product out of the market.
The right financial coach understands this dilemma. They can help you prioritize where to make the biggest impact, avoid potential pitfalls, and discover alternatives to keep products and services affordable.
This can include strategies like working with domestic suppliers, shifting to a remote workspace, finding ways to offset your carbon footprint, using recycled materials, and reducing packaging or paper costs.
Staying compliant
Almost every aspect of business has gone global, from sourcing materials abroad to hiring remote workers and forming international partnerships.
In the United States, 54% of consumers have bought items from foreign websites. China is the leading market for cross-border purchases, with 30% of shoppers worldwide buying from Chinese retailers or businesses.
While trade globalization brings us closer together–and provides opportunities for small businesses and startups—it comes at a cost.
Navigating the global compliance and regulatory landscape is challenging at best. Your specific compliance requirements depend on where your business is registered and where you do business.
The size of your organization, whether you employ people in your target markets, and how much you make from your local operations all play a part in your business operations.
Key areas such as working conditions, invoicing, cybersecurity, business classification, and taxes must be considered.
For example, if you wanted to expand into the Indian market and register your business there, you would need to register your business within the country alongside an Indian national business partner.
If your organization comes under the Foreign Direct Investment (FDI) limit, a policy that restricts foreign investment and control in the business, you would need government approval.
With e-commerce businesses and digital services, the regulations in India would be less intense. If you are not residing in India, you wouldn’t need a Goods and Services Tax (GST) number or a business registration.
You may, however, need to consider potential customs clearance expenses for physical products and invest in reliable mail carriers.
Continuing with this same example of working in India, fintech startups typically have a more complex route, given you may be dealing with cross-border money transfers.
You would likely need to factor in the costs of not only app development and business registration in India but also obtaining a license from the Reserve Bank of India (RBI).
Using the right accounting standards
Another key issue is record keeping. Many countries have their own accounting systems.
Much of the world uses the International Financial Reporting Standards (IFRS), while the United States uses the Generally Accepted Accounting Principles (GAAP) method.
There are some significant differences between these two systems:
GAAP allows last in, first out (LIFO) inventory-costing while the IFRS bans this practice
GAAP prohibits the revaluation model for assessing a product’s fair value, while the IFRS permits re-evaluating.
GAAP is rules-based while the IFRS uses principles to guide decisions
Figuring out taxes
Taxes are complicated in one country or region, but cross-border taxes can get tricky. Your tax burden often hinges on where your business is registered and what tax treaties exist between those countries. Timetables for tax reporting also differ from country to country.
A financial coach can help you factor in the base tax expense, the cost of filing, and when you should make advance payments. As a result, you can get better insight into your cash flow.
Projecting cash flow accurately
Green businesses simply don’t function the same as other models for a variety of reasons:
Sustainable and tech startups are capital intensive
It may take a considerable amount of time to see profits
Profit margins may be tighter
Sourcing and manufacturing may take longer
The upfront costs for green infrastructure are often more expensive
Product or services education may be required before making sales
Skill or material shortages may affect inventory
Certifications may need to be renewed
In addition to these challenges, green businesses are also subjected to the same uncertainties as other business models, such as supply chain delays, natural disasters, geopolitical conflicts, and other market stressors.
Sustainability financial coaches often assist businesses in organizing and forecasting cash flow based on typical challenges for green and inclusive businesses.
Planning for remote work
Working from home is nothing new, but the shift to remote work during the COVID-19 pandemic influenced many industries permanently.
Today 41% of American workers operate in a hybrid system and come to the office only part of the week. In countries like the Netherlands, Sweden, and Luxembourg, the number of remote workers is even higher.
At the same time, employers can now tap into global talent. Not only can you work with global suppliers and manufacturers, but marketers, developers, and mentors.
But while the remote work option reduces rent expenses, it still costs something. Finding the best way to cost-effectively manage fully-remote or hybrid workers is crucial.
Communication channels, secure file-sharing options, and other collaboration software do have a price tag. And if you want an “in-office” experience, you may want to factor in the cost of co-working spaces.
A financial coach can help you structure your operations to better manage a remote team without overspending.
6 questions to ask your financial coach
What is your approach to sustainability?
Not every financial coach approaches sustainability similarly or using the same metrics—especially because “sustainability” can mean many things. Working with a coach with similar green values can make communicating easier.
What industries do you specialize in?
Every industry has different sustainability requirements, and the last thing you want is to get general advice or recommendations that won’t make sense for your field.
Do you handle coaching for products, services, or both?
Managing finances for a product-based business is nothing like a service-based operation. Many coaches may have expertise in both, but some will prefer one over the other.
Do you have any certifications?
Ideally, your financial coach will have certifications or a job history that reflects their finance acumen and potential industry specializations. When looking for a financial coach that emphasizes past work with sustainability initiatives is critical.
What stage businesses do you normally help?
Are you an early-stage business? A startup with bootstrapped funding? Are you scaling your operations to a new level? Every business stage is different. Just as coaches can specialize in industries or business types, many have experience geared toward specific milestones.
Do you help manage accountability?
Business owners often have to wear too many hats —far more than is reasonable. As a result, it can be difficult to remain accountable for every single responsibility. Some financial coaches may also help hold you accountable to meeting goals and check in regularly to provide additional support.
Do you have additional references or professionals you refer clients to, such as business lawyers, insurance agents, etc.
One of the perks of working with a financial coach specializing in sustainability is that they likely have a network of other green businesses and service providers. They may be able to refer you to new partnerships or opportunities to support your goals.
How to work with your financial coach
Come to your session prepared
The more organized you are, the easier it will be to sort out an agenda and pinpoint bottlenecks. Your financial coach will need more than just your balance sheet or proposed budget—they’ll need to know your objectives, your market position, your products or services, and other critical business information.
Don’t just focus on the positives
It can be tempting to overstate where you want to be or focus only on making headway. Addressing current or potential problems can help you plan for contingencies and have enough cash to keep afloat during difficult periods.
Be realistic about your goals
When working with your financial coach, they may suggest scaling back or scaling down ideas to more manageable tasks—even if you have the funds.
Consider different cash flow scenarios
Work together with your financial coach to determine which scenarios are likely for your current stage in your business. This can help you better forecast cash flow and avoid generalizations.
Get free financial coaching at Emerald Summit
Our team at Wallet Max hosts an eco-business summit twice a year. We support small businesses, startups, and fintechs with free financial coaching, networking events, awards, and interactive workshops.
Discover our past and upcoming Emerald Summit events on our website.