Small Business News
Majority of Small Business Owners Have Skipped Paying Themselves
One of the most challenging aspects of running a small business is managing cash flow and ensuring that you have enough working capital to operate. Not only can this be stressful but can also occupy a lot of time that entrepreneurs could be using to further other goals. Moreover a new report shows that many entrepreneurs will go to great lengths to assist their cash flow.
A recent study by the online small business lender Kabbage found that 51% of business owners have previously skipped paying themselves for multiple months. In fact 26% say they’ve gone more than two to six months without a paycheck, while another quarter have forgone paying themselves for more than six months. Beyond the financial toll this takes, many entrepreneurs also cited a number of other negative impacts cash flow concerns have caused. For example 63% say they regularly feel anxiety over their cash flow with 35% losing sleep over such matters. Additionally 42% say managing their cash flow has caused them to sacrifice aspects of their social life and 32% report that their family lives have been affected.
Commenting on the survey’s finding, Kabbage CEO Rob Frohwein said, “Having owned multiple small businesses before founding Kabbage, I am intimately familiar with cash flow challenges.” He went on to say, “Sleepless nights were my reality when waiting on customer checks and thinking through needed expenditures. These experiences drive Kabbage’s mission to help small businesses easily manage cash flow so they can focus on the skill or craft that allowed them to start their business in the first place.”
It’s also interesting to note what small businesses owners say they would be able to achieve if their cash flow was in order. The top response to what entrepreneurs would do with the extra time was to invest more of their efforts in sales and marketing. That plan was endorsed by 51% of respondents while 35% said they’d spend more time developing new products. Other popular business-related responses include “focus on customer service” (30%), “spend more time hiring and mentoring employees (22%), and “investigate new technology to improve efficiency” (22%). Lastly, outside of the business matters, 32% say they’d like to use the extra time to spend with family and friends.
There’s no doubt that managing a small business’s cash flow is imperative and can be a major factor in an operation’s success. Of course this also means that entrepreneurs spend a great amount of their time focusing on their cash flow and may even take less-than-ideal routes to ensure they’re keeping up. While a small business loan may not be a fix-all solution for every business owner, it’s true that it may give some entrepreneurs greater peace of mind. Ultimately the decision will depend on whether the monetary fees associated with these loans outweigh the potential mental and time benefits that come with freeing up your cash flow.
The first few mpnths of starting a business is the most crucial time, it’s either you make it or breeak it.
This is totally understandable on the first few months of the business where financial stability is still on the work.
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