Grow Your Business by Growing Your Knowledge!
by Jennifer Wedzik
SBDC Business Advisor
April is financial literacy month, so we couldn't pass up the chance to pass along financial literacy tips, right? Let's start with this doozy... per a Wasp Barcode Technologies survey, as many as 60% of small business owners feel they aren't knowledgeable about accounting and finance. That's a big number if you're running your own business. Not an accountant? Not a college graduate? You don't have to be, BUT you do need to have some basic financial literacy for your business.
Becoming more financially literate may mean having to spend some time educating yourself about some financial terms and concepts - I know this isn't very exciting but not every aspect of owning your own business is. According to a CBInsights.com study, 82 percent of businesses that fail do so because of cash flow problems. Poor cash flow is often a result of poor understanding and planning for your cash needs. Basic financial literacy helps to ensure the success of your business by helping you to make better decisions. Want to know if you should increase the price of your product? Trying to figure out if you have the cash flow to hire someone new or take on a big client? These are just some of the financial decisions you will face as a business owner. If you have some basic knowledge about future financial impacts, you will be prepared to take on challenges, tax time, and growth opportunities.
Need some accounting basics? Here are some great options:
1. Enroll in a JCC accounting course
2. Watch JCC SBDC's webinar on Accounting Basics on our Small Business Academy
3. Check out online free, or low cost, classes at any of these sites: SBA/FDIC's Money Smarts, Accountingcoach , Coursera, Open.edu, Skillshare, Freshbooks, LInkedIn, SkillShare.com,360financialliteracy.org , or SBA website at ascent.sba.gov
Already know the basics? Keep learning while you grow your business:
1. Review your financials. Simple right? What's your biggest expense? What expenses have changed/increased in last year? In a study completed by UCF SBDC, they found that 50% of business owners did not regularly review financial statements, and 86% of those businesses were experiencing financial difficulties. Running a business means you need to take time to look and review your financials. Know your numbers!
2. Ask your tax preparer and/or accountant questions. Don't let him just hand you the reports! Can they prepare a comparison to the prior year? What are typical tax deductions that you need to take advantage of?
3. Compare your financials with industry/peers. Your SBDC can help you with this!
4. Be on the lookout for ways to automate payments, invoicing, and bookkeeping.
5. Do some light reading, listen to some great podcasts, or watch a seminar on financial topics
6. AND of course, set up a discussion and review with your local SBDC! We offer webinars, tools, and one on one counseling if that's more of your type of learning.
Financial Literacy means you are prepared for the worst AND prepared for the best - fit it into your busy schedule!