Stress Over Your Small Business Finances Keeping You Awake? Try These Tips

by Tracey Hrica May 09, 2024 | Share

52% of americans say money is the most significant cause of their stress

Are you tossing and turning at night, unable to shake off the weight of financial stress? The link between money worries and stress is well-documented.

According to a 2023 study by Bankrate, more than HALF of Americans name money as the number one stressor in their lives.

May is Mental Health Awareness Month, so I want to chat about the effect finances can have on your mental health.

To put it into perspective, in the study, money was cited more often than health, current events, relationships, and work as harming mental health!

A big part of our mission is helping people feel LESS stressed about their business finances, so here are my best tips.

We’ll explore tips to help you manage your finances effectively and get a good night’s sleep, from creating a budget and prioritizing expenses to building an emergency fund and seeking professional advice.

Say goodbye to sleepless nights and hello to financial peace of mind – let’s get started.

Create a Budget (But don’t set it then forget it!)

As Benjamin Franklin once said, “Beware of little expenses. A small leak will sink a great ship.” This quote rings especially true for small business owners. Creating a realistic budget isn’t a one-time task, but a continuous, strategic effort.

By outlining your income and expenses, you can clearly see where your money is going and make necessary adjustments to align with your financial goals.

According to U.S. Bank, 82% of business failures are due to poor cash management.

Budgeting plays a key role in preventing this. It provides a clear snapshot of your business’s financial health, guiding strategic planning and decision-making.

Remember, it’s less about cutting expenses and more about steering your business on the right path. This is when frequent budget revisions become indispensable.

So why regular budget reviews? Here are three reasons:

  1. They allow you to compare expected versus actual expenses.
  2. They assist in identifying discrepancies and recognizing trends.
  3. They help implement necessary changes.

Don’t be left asking where your money went!

Be proactive.

Treat your budget as a dynamic element of your business. It’s not about being limited by a budget, but about maintaining authority and directing your business correctly.

Once you have a budget in place, you can effectively prioritize your expenses to ensure that the essentials are covered before allocating funds to non-essential items.

Prioritize Your Expenses

Is your small enterprise humming along smoothly? Even if you’re quick to nod yes, there’s always room for a bit of fine-tuning, especially on the financial front.

As a small business owner, it’s super important to manage your money wisely to keep the lights on and fuel growth for the future.

Imagine pouring all your hard-won profits into areas that aren’t exactly vital while other crucial parts of your business are left gasping for funds.

The result?

You’ll find yourself scrambling to sort troubles rather than cultivating growth.

This could easily slide into a domino effect of operational glitches, sagging sales, and possibly, waving goodbye to your business.

We’re not born knowing how to manage our money perfectly, it’s why the financial software market is a BILLION dollar industry.

Here’s how I prioritize my business expenses:

  1. Spotlight the must-haves: These are the costs that keep your business running day in and day out, like rent, utilities, and salaries.
  2. Plan for tomorrow: Set aside a chunk for propelling growth like pumping up your marketing initiatives or snagging new tech tools.
  3. Flag the nice-to-haves: These aren’t critical but can add a bit of sparkle to your business, like training for your team or sprucing up your workspace.

By prioritizing your expenses in this way, you can make sure that your most important financial obligations are covered before indulging in your want list.

Explore Additional Sources of Income

You’re a small business owner. No one needs to tell you how challenging it can be to juggle all those financial balls in the air.

But there’s a way to create a financial safety net that doesn’t involve magic or a risky gamble – additional income streams.

It’s about more than just diversifying your revenue sources. It’s about weaving a financial safety net, a bulwark against those sudden expenses that always seem to make their appearance at the most inconvenient times.

Consider this fact: According to a study by the Small Business Administration, businesses with diversified revenue have a 55% higher chance of surviving economic downturns.

Imagine your extra income streams as the ‘spare tire’ in your financial vehicle.

They provide you with the maneuverability to handle the rough patches and take advantage of unexpected opportunities. They can help you weather an unforeseen slump or seize an unplanned windfall.

Here are three ways you can diversify your income:

  1. Selling related products or services.
  2. Offering online courses or webinars related to your industry.
  3. Establishing affiliate partnerships with related businesses.

As  businessman Thomas C. Corley wisely said, “The wealthiest people on earth create multiple streams of income.”

Build an Emergency Fund

Are you ready to safeguard your business against unforeseen hitches?

When you step into the world of entrepreneurship, you’ll quickly encounter unpredictable financial hurdles that could potentially sidetrack your progress.

Herein lies the practicality of an emergency fund—it’s not merely a financial buzzword; it’s an effective buffer against business risks.

Here’s a sobering statistic: Nearly 29% of businesses fail because they exhaust their cash reserves.

Hidden expenses can strike without warning, but having an emergency fund allows you to replace anxiety with assurance.

The method is straightforward: consistently allocate funds into a designated account, creating a financial cushion for your business.

View an emergency fund as the unseen armor that shields your business, minimizing the damage when unexpected expenses attempt to destabilize your financial footing. As Benjamin Franklin astutely observed, “By failing to prepare, you are preparing to fail.”

Here’s a practical three-step plan to create your emergency fund:

  1. Determine your monthly expenditure.
  2. Aim to save at least three months’ worth of expenses.
  3. Regularly deposit a portion of your income into this fund.

Starting a business involves accepting the unpredictable. However, with an emergency fund at your disposal, you can face any financial surprise with confidence.

Isn’t your ambitious vision worth protecting?

Seek Professional Advice

The stark reality for startups is that 50% of small businesses don’t survive beyond five years. But your business needn’t be another statistic.

An expert financial advisor can be your secret weapon.

  1. Minimize Financial Mistakes: An accountant provides tailored strategies to avoid classic pitfalls.
  2. Boost Financial Knowledge: Gain a deeper understanding of the financial world, empowering you to make informed decisions.
  3. Focus on Business Growth: With an accountant dealing with your bookkeeping and taxes, you can concentrate more on running your business.

Warren Buffett said, “Risk comes from not knowing what you’re doing.”

But with an expert by your side, you can navigate the unknown.

Remember: seeking help isn’t a sign of weakness, but a testament to your dedication to your business. Don’t let financial fears hold you back. Seek expert advice, stay informed, and relentlessly drive forward.

Your Not Alone

Feeling the weight of financial stress?

Many of us grapple with sleepless nights, burdened by monetary concerns. Especially in recognition of Mental Health Awareness Month, it’s crucial to highlight this frequently overlooked stressor and the significant toll it takes on our mental well-being.

Here’s a few practical strategies to alleviate financial stress and foster peace of mind:

  1. Develop and adhere to a realistic budget.
  2. Prioritize your spending, focusing on needs before desires.
  3. Never hesitate to consult with a finance professional.

We’re all in this together and your insights could be helpful to others.

How do you navigate financial stress for better mental health?

Please share your strategies in the comments section below. Let’s draw from our collective experiences to help each other sleep a bit mo

About the Author

Tracey Hrica

Tracey Hrica joined the firm in 1995 as a bookkeeper. In 2012, she earned the designation of Enrolled Agent(EA), which enables her to prepare personal and business tax returns and represent clients before the IRS. To maintain the designation of EA, she must complete yearly continuing education in the areas of personal and business taxation. Working closely with her clients, Tracey’s primary areas of concentration are new client onboarding, client communication, research, and QuickBooks support. As a QuickBooks ProAdvisor, she works closely with clients who rely on QuickBooks for the day to day running of their business. Tracey has expertise in both QuickBooks Desktop and QuickBooks Online.

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