Study: Owners’ Business, Personal Finances Linked


CFED recently conducted a study to examine the financial product, service and capability needs of low and moderate income small business owners to see what affects their operations and potential needs for more working capital.

“In Search of Solid Ground: Understanding the Financial Vulnerabilities of Microbusiness Owners,” which was supported by MasterCard’s Center for Inclusive Growth, aimed to determine what financial products business owners need and whether the market is meeting those needs. The main finding of the study was that owners’ business and personal finances affect each other.

The study results are enlightening, as 92 percent of the country’s small businesses have five or fewer employees, including the owner. The owners also typically have a household income of $50,000 or less, which is less than the national median of more than $53,000.

Forty nine percent of respondents said they have two months’ business savings or less, while 55 percent said they could only cover a month of business expenses. Even more shocking is that 30 percent of respondents said they don’t have any business savings.

Business owners who suffer an emergency – such as a natural disaster that damages their facility or a fine from their municipality – may want to turn to nontraditional lenders like National Funding. These lenders offer greater ease of access and more flexible terms for owners of such small businesses that tend to be cash strapped.

A small business cash advance may help some owners make unexpected payments should they run into an emergency. All owners should focus on saving money and practicing good business habits to start building an emergency fund for such times.

A Forbes piece about the survey advises small business owners to:

  1. Seek financial advice: Other successful business owners, industry association heads and business development experts can help owners gain insight about being financially responsible.
  2. Stay organized: Keeping records of income and expenses is key to making sure business dollars go further.
  3. Stretch out payments: Sometimes, using credit cards to pay for expenses can make debit cards and cash flow last longer.

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