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What’s Next For Your Micro-Business
Small-Business Owners Optimistic
The nation’s small-business owners apparently aren’t letting fears about higher oil prices, terrorism, rising interest rates or slowing economic growth affect their optimism. A recent Wells Fargo/Gallup survey reveals that a majority of small-business owners indicate a growing level of confidence in their personal financial situations.
In the survey, 68 percent of small-business owners said that their personal financial situations are either “excellent” or “good.”
Additional survey results indicate that 70 percent of small-business owners surveyed say their personal financial situations are getting better, and 77 percent expect to be better off financially a year from now.
“The continued optimism we are seeing from small-business owners is also very clearly translating into greater optimism with regards to how they view their personal financial situations,” says Rebecca Macieira-Kaufmann, small-business segment manager for Wells Fargo.
Small-business owners surveyed were asked to cite their firms’ most important problem. Lack of business/poor economy was cited by 23 percent of all respondents, followed by financial/cash flow issues (18 percent), lack of qualified employees (13 percent), and health insurance (10 percent).
“Business has been picking up over the last 12 months, but the recent economic downturn was a wake-up call that reinforced the need for strong business and personal financial planning,” says Ann Padilla, Owner of SunnySide Inc./Temp Side, a Denver-based staffing company.
What You Can Do
To maintain a solid financial footing for yourself and your business, follow these three tips:
1. Create an emergency fund
Emergency funds ease financial pressure. By stashing some cash in a liquid account (like a money market fund), you’ll be better prepared for unexpected expenses or loss of income. Create separate funds for your business and your personal use.
2. Understand your cash flow
Cash flow is the lifeblood for every small business. It governs how much money you can spend and when you can spend it without going into debt.
You should be able to estimate what your cash balance will be six months from today. So get out the calculator. Start estimating your cash inflows and outflows. How do things look six months from now? Knowing the answer will allow you to see cash-flow crunches in time to take action
3. Learn about retirement plans
It’s not too late to start a retirement plan for 2004. And you have many plans to choose from – SEP, SIMPLE, Keogh and others.
To compare advantages, disadvantages, contribution limits and other factors, go to the Small Business Retirement Savings Advisor at the U.S. Department of Labor Pension and Welfare Benefits Administration, www.dol.gov/elaws/pwba/plans/final.asp.
To learn about the tax implications of retirement plans, get IRS Publication 560, “Retirement Plans for Small Business.” You can download the publication at www.irs.gov.
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