Monday’s Money Medicine: Small Business Survival, Back-to-School Shopping and More
A weekly dose of tips to help you manage your money
Money Medicine prescription of the week
Many of you work for a small business or own one. I’ve worked for small businesses in the past. And as of April 2017, I run a small business. While I don’t employ anyone aside from myself — meaning I’m a solo entrepreneur — my little media company fits into the small business category.
As the head of a one-person business (that’s me in the photo below), one of the lessons I’ve learned is to pay close attention to cash flow. Income ebbs and flows from one month to the next, reinforcing the importance of keeping on top of your finances. The pandemic-damaged economy underscores this need.
“Small businesses have been hit hard by the pandemic — in many ways, more than their larger counterparts. Organizations that service small business have an opportunity to help these firms as they try to come out of the COVID crisis,” Pete Reville, an executive at payments consulting firm Mercator Advisory Group Inc., says in a news release.
A Mercator Advisory Group survey of U.S. small businesses this spring highlights just how precarious the current situation is for the business sector that employs the majority of Americans. Here are some of the findings:
Two-thirds of small businesses say they’ve been harmed by the pandemic.
Small business revenue, profitability and employment projections for 2020 have been chopped nearly in half compared with 2019.
Use of business credit cards by small businesses has risen from 52% in 2019 to 56% in 2020.
What do these statistics tell us? Many small businesses are being forced to tighten their belts. If you own or work at a small business, how can this belt-tightening be accomplished? Here are four tips (which you also can apply to your personal finances):
Resist the urge to rack up credit card debt. This is particularly critical if you’re not able to pay your bills in full every month. Carrying a balance from month to month translates into interest charges.
If you’re in dire financial straits, consider taking out a loan with an interest rate below what the interest rates on your credit cards. Or explore various forms of federal coronavirus relief.
Conserve cash. Put off purchases that aren’t absolutely necessary. Do you really need a new laptop right now?
If possible, set aside money for emergency expenses in case things get worse before they get better.
Unfortunately, thousands of small businesses have collapsed already or are on the brink of failure due to the pandemic. But many small businesses are finding ways to survive. Here’s hoping that the number of survival stories exceeds the number of shutdown stories.
Here’s to your financial health!
Your Money Doctor,