Setting your own hours and being your own boss, it’s the American dream to own your own company. And those dreams are becoming reality for more and more people as the number of small businesses in the U.S. is on the rise. There are 32.5 million¹ small businesses in the country and these ventures make up 99.9 percent² of all U.S. companies. This entrepreneurial spirit shows no signs of slowing down either as it’s predicted that 17 million new businesses will be formed in 2022.³

But it’s not all positive for mini enterprises, many are struggling to recover revenue and customers following the Covid-19 pandemic.⁴ In fact, 65% of small businesses say the pandemic has had a negative effect on them, according to the most recent data from the U.S. Census Bureau Small Business Pulse Survey.⁵

Starting and running a small business requires a lot of hard work. You must market yourself and get customers, maybe manage and employ other people, and of course there are the finances to worry about. That’s where we want to help today. Whether you already own your own business or plan to start a new one soon, here are financial hacks that may cut down on the stress of owning your own company. 

1. Have a safety net

Many small business owners fall into the “ambitious spenders” financial profile, according to The Guardian Study of Financial and Economic Confidence. This is the group that most embraces risk with 77% saying they’re willing to take on above average risks to achieve above average returns. Being comfortable with risks makes sense for people who are willing to go out on their own and start a company, but too much risk can be disastrous.

Cash reserves can help you mitigate risk and more. So while keeping up with monthly expenses is good, if you’re just keeping up and have no other cushion, that can get you into trouble. A drop in sales or the loss of a key employee with no cash reserves can be an unmanageable challenge for a small business. Ideally, you want to have the equivalent of your salary in cash to help you weather any negatives.

2. Set up a cash flow system

You probably think you have a pretty good idea of how the money is flowing in and out of your company. But can you easily rattle off your profit margins? How about your inventory turnover? Hard data and key metrics will help you know exactly what’s going on with your business so you can make more informed decisions. Set up a system to track all income and expenses. 

3. Factor in debt

About 340 million people in the U.S. have debt and small business owners are no exception. Whether it’s a mortgage or student loans, repaying these debts can cause a severe cash flow burden. When creating a financial plan for your business, be sure to factor in every kind of debt repayment. This will help you to be more realistic about the cash flow you need to cover all expenses. 

4. Protect your income

Illnesses and accidents happen, and they can sideline you from working for a long time. This is why you’ll want an income protection plan. Large corporations may provide short and long-term disability as employee benefits, but when you’re the employer you have to get the protection for yourself. You also must save for retirement yourself. Make sure you’re planning properly so you can have an income stream in retirement. 

5. Ask for help

There are great resources out there for when you have questions or feel stuck. Check out the Small Business Development Centers⁶ in your area to find assistance and counseling for starting, running and growing your business. The Guardian Financial & Emotional Confidence Quiz can also help you determine which financial personality profile you fit into and how best to financially strategize based on your personality.

Financial professionals can also be a great resource for small business owners. There are financial professionals with specialized expertise in helping entrepreneurs who can be a sounding board for your business. They’ll suggest additional ways to meet your goals, overcome challenges, and live your dream. 

Brought to you by The Guardian Network © 2022.  The Guardian Life Insurance Company of America®, New York, NY

2022-141967 Exp. 8/2024