Seventy-one percent of small business owners think they have enough money to run their businesses, yet only 27 percent believe themselves to be financially savvy. That lack of financial sense is borne out by the finding that most of them view their lines of credit only as an emergency resource, rather than a useful business tool.
All this is according to a study by Bank of America conducted recently – their first-ever Small Business Owner Report, which surveyed 1,300 small business owners across the United States.
In addition to needing help managing their finances, small business owners feel a great deal of stress, saying that running their business is twice as stressful as maintaining their relationship with their partner, three times as stressful as raising children, and at least four times as stressful as managing their personal finances. Fifty-seven percent of them give up leisure time and 37 percent give up exercise on a regular basis because they are so busy working.
Budgeting Headaches Call for Help
Most of the 73 percent of small business owners who don`t feel confident in their financial skills say they depend on financial professionals to assist them with their budgets. They seem to need that help, because while 45 percent of them say that not being paid by clients is one of their biggest headaches, only 31 percent of them have reached out for help from their bank to collect the money that is due to them and only 29 percent use electronic invoicing systems to expedite payments.
Another problematic area is small business owner`s use of credit. While 64 percent of them have an open line of credit, 50 percent of them don`t use it, holding it in reserve for possible emergencies. This can be a huge mistake, as a line of credit is an extremely useful tool for any small business.
Credit cards designed for small businesses are a great way for business owners to strategically manage their finances, earn rewards, and track spending. Most of them come with cash back or travel rewards, as well as tools for categorizing spending and generating end-of-year reports. Credit-Land.com has a selection of the best credit cards for small businesses, chosen by credit experts.
Don`t Let it Get You Down
In spite of being stressed out and financially clueless, small business owners feel optimistic about their prospects. More than half of them think that their own actions are more important to the success of their businesses than the overall state of the US economy. In spite of persistent unemployment concerns throughout the nation, 31 percent of small business owners say they will be hiring during the upcoming year, while 56 percent are more conservative and do not expect to expand their workforce in that timeframe.
Dean Athanasia, Preferred and Small Business executive at Bank of America, says of this can-do attitude: “We know how much small business owners give up to make their businesses successful, but despite their sacrifices, they are still optimistic about the future. Therefore, we believe that the financial services industry, the business community and the general public must continue to take steps to support the growth and success of our small business sector.”
The Weight of the World
The survey, conducted by Braun Research during March and April, also revealed that most small business owners – 75 percent – feel the effectiveness of government leaders is their most pressing concern. They ranked it far above the availability of credit, which only 54 percent felt was of concern.
Other concerns cited as contributors to their stressed-out states were oil and gas prices, worried about by 73 percent of respondents, and health care costs, which keep 70 percent of small business owners up at night.
Those sleepless nights might be better spend coming up with a social media marketing strategy – the study showed that only 38 percent of small business owners use social media to promote their businesses. In spite of their confidence in their business know-how, 64 percent of small business owners say they are aware they should take better advantage of technology to market their businesses.