Small Business Owners Needing More Financial Help

While small business owners are often used to dealing with large sums of money and lots of complex information, recent research shows that many of them are also in need of some extra financial help.


image credit: Lars Plougmann via Flickr

Interestingly, around the same percentage of small business owners rely on Google searches and social networks to try to get hold of accurate, sensible financial information and advice. This obviously exposes them to the risk of informing themselves with poor quality or out of date information. It is clear that to run a successful business it is necessary to have access to professional, up to date financial advice that is tailored to the individual.

Perhaps even more worrying are the results of a study carried out on the other side of the world, by the University of Western Australia’s Business School. In this case, the results seem to show us that small business owners put more effort into sorting out pension plans for their employees than for themselves.

This study covered a total of 200 owners of small businesses in Western Australia. The overall trend revealed was that very few of them are making much of an effort to plan financially for their retirement. In fact, an extremely low 34% of the business people surveyed answered that superannuation would be their main strategy for having an income when retired.

Dr Jacquie Hutchison was in charge of the investigation and she said that this figure comes from the fact that small business owners in Australia don’t have any legal obligation to make superannuation payments to cover their own retirement. This appears to make the issue move onto a lower level of urgency in many cases, which is understandable considering how many pressing issues small business owners have to deal with.

Not Enough People Planning for Retirement

When they were asked about their planning for retirement the results weren’t much more re-assuring. This time, just 62% of the men and surveyed said that they are currently making plans to ensure a financially healthy retirement. Only 52% of the female business owners surveyed have made any plans for their retirement to date.

When asked if they knew how much cash they needed for their retirement years, 56% of the male business leaders said that they did already know this figure. Their female counterparts lagged behind in this area as well, with only 44% being aware of their needs in this respect.

The overall summary of this part of the survey appears to be that many business owners are too optimistic about funding their entire retirement on the sale of their business. While this could happen, it is a risky move to depend entirely on the market conditions being perfect for selling a business at exactly the right moment. With some strong forward planning the whole thing can be a lot easier and far less risky.

The reason why women appear to be slower at sorting out their pension plans has been partly put down to the fact that they often start smaller home-based companies with a view to working more flexibly while looking after their family. This can lead to them earning less money than their male equivalents and, as a result, putting away less in savings too.

It is clear that many owners of small businesses around the world are on the ball and look after their finances perfectly well. However, there is also a large group of them that is in need of some help to get their finances on track, especially in terms of their retirement plans.

The Need to Be Smart About Looking for Advice

The good news is that there are plenty of tools around to help small business owners who need some advice and who don’t use a financial adviser. The secret is in being smart about which advice to take and which to ignore, which isn’t always easy if you rely on the internet for tips and plans.

An example of the kind of YouTube video which could be of great help to business people is the following one from the Entrepreneurship 101 in 2012/3. With this sort of professional advice it is a lot easier to control the finances in your business and also to look after your own needs now and in the future too.

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