Perspectives: How a Financial Mentor Can Help Your Business

January is National Mentoring Month, an annual observance that celebrates mentors and encourages people to get involved in mentoring experiences. While you might think of mentorship as a tool for students, the reality is everyone can use a mentor. Mentors help consult, co-pilot and champion ambitions, and financial mentorship can be a game-changer for entrepreneurs and small business owners. 

Recently, we spoke with Sean Chrysostom, an Engagement Specialist at Capital One, and discussed the benefits of having a financial mentor for your business. 

The Money Side of Business

To start, it helps to understand that managing your personal finances like a pro, or having a deep understanding of your industry, doesn’t mean that you’ll automatically understand the details of managing small business finances, says Chrysostom. 

“Running a business can involve a number of complex and interrelated issues, and getting the advice of someone who has experience can help [business owners] navigate these complex challenges,” he explains. 

“A financial mentor serves as a guide to advise and educate in areas that an entrepreneur may lack experience,” he says. Someone who can serve as a sounding board and can provide advice or guidance on how to grow your business and increase revenue. 

“Having a mentor can change the playing field for a small business,” says Chrysostom. In fact, “research has shown that small businesses that receive mentoring early achieve higher revenues and increased business growth,” he continues.

A Sounding Board for the Critical First Years 

According to the Small Business Administration (SBA), only about half of businesses with employees survive at least five years. 

Interestingly, though, a survey by the UPS Store found that 70% of small businesses that received mentoring survived more than five years—doubling the survival rate of non-mentored businesses, reports Chrysostom. In the same survey, about 88%of business owners with a mentor said that having one was invaluable.

Finding the Right Kind of Help: Financial Mentor or Coach?

Working with someone to share their expertise usually comes in one of two forms: financial coaching or financial mentorship. But they’re not the same thing, Chrysostom says.

Financial mentoring is a long-term relationship—lasting months or years. You can expect your financial mentor to provide an honest overview of the business from a macro perspective; assess your strengths and weaknesses; review your business structure and business plan; and most importantly, serve as a confidant since entrepreneurship can be a lonely experience, he says.

Financial coaching, on the other hand, is generally limited to a shorter period of time than mentoring and is more performance driven, explains Chrysostom. “[Coaching] focuses on specific skills and goals to help people build a life they love, but typically has a more narrow scope. Capital One’s Money Coaching program is great for this. 

However you define the relationship, it’s important  to establish clear expectations. From the beginning, you’ll discuss the best way to approach the relationship, says Chrysostom. 

Bottom line, “A mentor can help business owners avoid costly errors, particularly during startup and expansion of a business,” says Chrysostom.

Finding a Good Financial Mentor

Every business can benefit from some level of mentoring, says Chrysostom. But this doesn’t mean that every mentor is the right fit for you. “Not only is it important for mentors to be engaged from the start of a business plan, but good mentors are also proactive, they build confidence, and they take a holistic view of the business. They should also have some financial professional experience,” he says. 

“Finding a mentor can be challenging, but between the SBA, community development financial institutions (CDFIs), friends, and family—there are resources to find a good one.”

Don’t choose just anyone, though. This person should be honest, a good listener, and have integrity. “They must also have a clear understanding of your expectations, and they must be willing to identify personal biases that could negatively impact the relationship,” he continues.

Ask questions: What is your background? How familiar are you with my type of business? How often can we meet? How would you describe your personal mentoring style? How do you challenge your underlying beliefs and assumptions?

You should also ask, Why do you mentor? 

Their responses can speak volumes, helping you decide whether this person is the right mentor for you.