How to save your money when you’re a small business owner
Small businesses are becoming a growing segment of the U.S. economy.
According to a study by the Small Business Administration, there are more than 1.6 million small businesses in the U, which is more than double the number of U.K. businesses and more than three times the number in the United States.
While small businesses are a relatively new business category, they’re also growing at a fast rate.
Today, the average annual return for small business owners is 5.2% for the SBA’s Small Business Investment Board (SBIB), compared to 5.0% for all businesses.
Here are some tips to keep you on track and avoid the most common pitfalls.1.
Find a good fit for your business.
The right small business may not be the one that fits your budget, but it will work well for you and your business goals.
“Small businesses are great opportunities for growth,” says Elizabeth J. Meehan, owner of Meegan Associates.
“In fact, they may be the best investments you can make for your future.
When you find a good match for your needs, it will pay off big.”
For instance, if you need to expand, hire a bigger staff, or hire a new salesperson, a smaller business can help you grow.
Meeshan suggests a “flexible business model,” where you can start out small and add employees as needed.2.
Make sure your business is ethical.
“Don’t be a victim,” says Meehans husband, former Federal Reserve Chairman Ben Bernanke.
“You don’t want to be the victim of your own success.”
Meehnans goal is to help small businesses become profitable and to help them create a better future.
“If you can help a small company to become a sustainable business, you’re contributing to the larger good,” she says.
“We want our nation to be a safe place to work, and we can do that if we do what we do.”3.
Keep your eyes on your finances.
It’s important to keep track of your investments, especially if you’re making payments on your debt, because they may affect your overall financial position.
“It’s important not to spend too much money on things that aren’t worth it,” says Jessica H. Pinto, owner and CEO of Pinto Consulting.
“The bigger the difference between what you’re doing and what the market needs, the better,” she adds.4.
Know your limits.
“As a small-business owner, you’ll probably find it easier to save money,” says J.P. Morgan Chase & Co. President and CEO Jamie Dimon.
“Most small businesses have a higher minimum spending and a lower max spending.
And then you need a way to keep those limits low.”
This includes spending your money on essentials like groceries, insurance, rent, and other essential items that you’ll need in your business’s first few years.5.
Choose your investments wisely.
“Your money should be a long-term investment,” says Jamie Dimons personal finance advice columnist, Tom Friedman.
“A long-range investment should be one that’s diversified and well-timed, not one that requires a single investment,” he says.
“For small businesses, investing in the stock market is more of a good idea than investing in stocks,” says Paul D. Pimlott, president and CEO, Wealthfront.
“Investing in small-dollar businesses can be a great way to diversify and create wealth over time.”