The newsLINK Group - Fiscally Fit Small Business

Editorial Library Category: General Business Topics: Small Businesses Title: Fiscally Fit Small Businesses Author: newsLINK Staff Synopsis: Doctors recommend getting an annual physical. That is a great idea not just for you but also for your business. Doing a yearly review can be an excellent way to make sure that your small business will continue to support you and your employees for years to come. Editorial: Fiscally Fit Small Businesses 4064 South Highland Drive, Millcreek, Utah 84124 │ thenewslinkgroup.com │ (v) 801.676.9722 │ (tf) 855.747.4003 │ (f) 801.742.5803 Editorial Library | © The newsLINK Group LLC 1 Doctors recommend getting an annual physical. That is a great idea not just for you but also for your business. Doing a yearly review can be an excellent way to make sure that your small business will continue to support you and your employees for years to come. Not only that, but making sure your business is healthy is also a good way to make a positive economic contribution that benefits everyone. Why is your business important to the economy? Every small business is important because it is part of the small-business community. According to the U.S. Small Business Administration (SBA): Since 1982, the number of small U.S. businesses has increased 49 percent. There are currently 28 million small businesses in the U.S., and they make 54 percent of all sales. Small businesses are responsible for 55 percent of all jobs. Since the 1970s, small businesses have created 66 percent of all net new jobs. Big businesses have cut four million jobs since 1990, but small businesses have added eight million new jobs in that time. Of the U.S. small businesses, more than 600,000 are franchises. They are responsible for 40 percent of retail sales, and they employ eight million people. The SBA estimates that 20 to 34 billion square feet of all commercial space is occupied by small businesses. That’s 30 to 50 percent of the total amount of commercial space. What makes a small business healthy? A study was put together by several organizations to determine just that, titled Small Business Financial Health Analysis. If you want to read the full report, it’s available online a t www.frbsf.org ( just enter the report title in the search field on the website’s page). The organizations were: The Federal Reserve Bank of Chicago The Federal Reserve Bank of San Francisco The Pepperdine Private Capital Markets Project Pepperdine University, Graziado School of Business and Management FundWell The study found three index drivers that are most likely to determine the financial health of small businesses. They are: Knowledge about asset-based financing. This includes funding options such as financing inventory, financing accounts receivable, and financing inventory leasing. They also knew about trade credit. Credit experience. Businesses that had high financial health scores had experience in getting business credit card loans, long-term business loans, or both loan types from banks. Financial planning and management. This consists of matters such as having a budget, creating a separate bank account for payroll, having credit available, and having more than five full-time employees. If you want to increase the financial health of your business, here are some important common practices to follow: Learn about the available credit products and practice actually getting a loan from a bank. Keep a large amount of unused credit available. Always write a budget for your business expenses. Planning has several benefits: it minimizes surprises, it allows you to compare your company against other companies and then to learn from the comparison, and it allows you to determine how well your plans have worked out so that you plan more effectively in the future. Pay particular attention to your cash flow, and don’t spend money on assets unless you can’t run your business successfully without them. Frugality is a great characteristic for a business owner to cultivate. Create a separate account for business expenses. It will make it easier for you to get a business credit card or a loan. It will also make paying taxes easier. You should also keep good business records and check the finances for your business at least once a month.

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