Jenn Flynn leads Capital One Small Business Bank and is a highly respected corporate finance executive with 20+ years of experience.
Another year brought another complex series of challenges for business owners to navigate. Fortunately, neither record-breaking inflation nor ongoing supply chain issues were a match for the resilient, entrepreneurial spirit of the small-business community.
It’s encouraging to see that commitment reflected in the number of new business applications in the last quarter of 2022, which has held steady at around 400,000 applications per month for the past two years. Reasons for this sustained growth in new businesses vary. A recent survey from Capital One Business found that business owners who started their business during or after March 2020 were motivated to do so because their free time had increased, they were laid off from their job or they were able to scale their side hustle into a business, among other factors. These business owners share that they feel rewarded for taking the leap into entrepreneurship with a more flexible schedule, and by having the ability to spend more time with their families.
I love hearing from business owners about how empowered they feel since starting a business, despite the inevitable obstacles that crop up along the way. I recently had the opportunity to speak to and meet with some of the fastest-growing businesses in America at the Inc. 5000 conference. They shared the challenges they wrestled with in 2022, their goals and aspirations for the year ahead and some of the best practices that allowed them to scale and grow in such an unpredictable economic environment. From those conversations, I identified three major takeaways that resonated with me. These are lessons that I believe will help contribute to success for emerging and established businesses alike.
For those starting a new business, establishing separate personal and business banking accounts is critical. I’ve heard tax season horror stories from business owners in the past who used a personal credit card for some of their business expenses throughout the year or intermingled their bank accounts. In addition to streamlining tax filings, a business credit card can also help establish or build business credit.
A business credit card, or an analyzed business checking account, can also simplify the process of tracking expenses and can pull specific summary reports that can help you better manage cash flow. Plus, finding either a card that earns rewards or a high-yield savings account can generate cash flow to reinvest in your business.
It is never too soon to start—so many business owners tell me they wish they had started saving sooner. I always advise that small-business owners contribute to a business savings account from the start. While it can be difficult to prioritize setting money aside when juggling the everyday expenses involved with running a business, a business savings account can help business owners build their nest egg and safeguard their businesses from any unexpected financial challenges in the future.
You could start small by setting aside 1% or 2% of earnings or whatever amount makes the most sense for your business. As savings start to grow, you can slowly increase the percentage, keeping in mind the goal of what you are saving for to provide clarity and motivation.
Focus On Digital
It’s natural for many businesses to try to identify any and all areas where they can cut costs or rein in expenses. Among the business leaders I spoke to at Inc. 5000, one area where they have no plans to slow spending is technology. Investment in digital tools can unlock efficiencies in a variety of areas of your business, from payroll and inventory management to advertising and customer relations. Many banks have partnerships with these digital tool providers to help you better streamline your accounting or marketing workflows.
A Digital.com survey from December 2021 found that 23% of small retail businesses don’t have a website. The pandemic accelerated a shift toward increased online interaction between businesses and their customers over the last few years. And while expanding your business’s digital presence to social media may not be the right fit for every industry, for some it can help increase their brand’s visibility.
Similarly, adopting an e-commerce platform is another channel for retailers to pursue. Today’s economy is very accommodating to customers who shop online, and retail businesses share that they are expanding their customer base exponentially through e-commerce while simplifying logistics for tasks such as returns and deliveries.
Burnout was another hot topic among the Inc. 5000 entrepreneurs. An October 2022 study from Capital One Business found that 48% of business owners were either currently experiencing or had experienced burnout in the past month.
From another perspective, research from Gallup found that fewer than 1 in 4 U.S. employees felt strongly that their organization cared about their well-being. And guess what? Happy employees are loyal employees. This study found that when employees feel cared for, they are less likely to look for a new job and are more productive and engaged.
Like putting the oxygen mask on yourself first before helping others on an airplane, it is difficult to care for your business if you are not caring for yourself. Finding and maintaining your own version of work-life balance will also go a long way in improving a team’s dynamic. Establishing healthy work-life boundaries has been essential to safeguarding myself against burnout, and my team members are also able to prioritize their own well-being.
One business owner I spoke with instituted regular no-meeting days and set strict boundaries around vacation time, encouraging employees to thoroughly disconnect so that their time away is restorative. Another business owner scheduled regular team-building activities to allow for networking outside the office walls. Business owners can use this as an opportunity to get creative in a hybrid environment as one size certainly doesn’t fit all.
Each new year brings a new set of challenges and, more importantly, new opportunities. I have no doubt that business owners are ready to face whatever comes their way. I look forward to watching, supporting and learning from business owners in the year ahead.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.