Small businesses are the backbone of our economy; they account for half of all U.S jobs and drive roughly 60% of economic growth (Gustafson). But small business owners need help rebuilding their financial health after this year’s government shutdown, if only so they can invest in their employees (Hampton). This article will briefly touch on the best ways small business owners can start rebuilding their financial health after COVID-19.
Work for a small business; here are five innovative ways you can start rebuilding your financial health.
1) Small Business Loans
The small business owners struggle with small profit margins and are often unable to take on more clients or have financial buffers to fall back on in lean times. For this reason, small businesses can benefit significantly from the help of public programs (and grants) designed specifically for small business owners.
Public Partnerships Program
One program that helps small businesses is the PPP (Public Partnerships Program). This program provides small business owners with low-interest loans that can help them expand their operations and improve their financial stability. Qualified small businesses must meet requirements, including having the number of employees who work at least 18 hours per week but do not need specific assets or locations.
This program is available from various financial institutions, including the Credit Union and small business development centers. Since small businesses may still struggle with small profit margins, these small loans can be an excellent way for small business owners to finance new offices or equipment that they need to expand their operations.
Industrial Development Loans
In addition to different trim loan options, small businesses can also inquire about IDL (Industrial Development Loans). These loans are offered by financial institutions as well as state and local governments. IDLs vary greatly depending on the lending institution and local government, money for small businesses to shop around and find the best deals possible.
If you’re interested in learning more about how you can access assistance with your small business, check out small business service providers.
Regardless of your needs, small business loans can be an essential source of financial health for small businesses that want to grow and thrive. For more information regarding small business programs like PPP or IDL (Industrial Development Loans), visit this website
2) Creating an Emergency Fund
Having an emergency fund should be small business owners’ priority. According to small-business administration data, half of the small businesses fail within their first five years mainly due to financial reasons. A financial backup plan will ensure you are not financially bankrupt if another crisis hits your small business (Shamas). When it comes to setting up an emergency fund, small business owners should consider putting away around six months’ worth of expenses just in case the worst happens. Even small amounts help; for example, saving $15 per week adds up to $780 by year’s end. Small business owners may also want to invest in high-interest checking accounts or certificates of deposit if they have extra money after setting aside that six-month emergency fund.
The takeaway from this point above is that small businesses should have a financial backup plan; small amounts contribute to a healthy economic life. Small business owners need to save money consistently.
3) Find Smart Investment Solutions
As a small-business owner, you can also choose different ways to invest your money. The small-business administration found that small businesses that reinvest their profits into the company tend to be more successful than those not (Patterson). You could also use these funds as capital for small business loans or community development organizations. If you are looking for other investment opportunities, small business owners may want to consider opening an Individual Retirement Account (IRA) with a reputable firm such as Vanguard. Opening up an IRA will give small business memberships particular tax advantages. Small business owners can invest small amounts of money (around $5,000) while getting access to more attractive small-business investing rates.
The takeaway here is small businesses should reinvest their profits into the company or open up an IRA with a reputable small-business investing firm.
4) Consult with Financial Aid Consultants
Small businesses may want to consider working with financial aid consultants struggling financially (CSA). They can help small enterprises to develop budgets and handle tax issues. As many small businesses struggle to make ends meet, finding ways to maximize income is essential. There are also government programs available for small business owners who qualify to help them receive funding assistance for their small start-up business plans. The online website Grants.Gov has information on federal grants that small businesses can apply for. Small business owners with specific qualifications may want to look into what is available at their local state level.
The takeaway here is small businesses should work with financial aid consultants, small businesses need to maximize income, small business owners should do their research on government grants.
5 ) Cut Unnecessary Expenses
Lastly, small businesses should always find ways to save more money by researching good deals at nearby small businesses. For example, small business owners should use Groupon to find deals at small businesses in their area.
Whether you are a small business owner or just have small financial responsibilities, it is vital to take care of your budget and your credit to avoid debt as much as possible. If all else fails, don’t be afraid to ask for help from friends and family if you truly need it.
Cutting back on unnecessary expenses, including cable subscriptions, eating out less often, and cutting small amounts from your budget will help increase small businesses’ financial health.
Optimize Your Business While You Find Financial Stability
If small business owners are good at anything, it is thinking outside the box. Now that your small business is financially stable again, get creative about how you plan on advertising your new business. There are many different types of ads, but if small businesses are innovative, they will learn to make their advertisements cost-efficient for themselves and their customers. Be sure to optimize ad spending by using social media or even create partnerships with other small businesses in town to offer discounts when your clients also purchase items from them.
In conclusion, small businesses can rebuild their financial health post-COVID-19 with a bit of advice. Advice such as good credit scores, creating emergency plans, advertising products, making partnerships with other companies, and lastly, asking for support from friends and family if these small businesses genuinely need it.