5 tips for today’s small business owners
A new nationwide survey released by Massachusetts Mutual Life Insurance Company (MassMutual) reveals that American business owners are doing a lot of things right, but there’s plenty of room for improvement.
The survey, known as the 2018 MassMutual Business Owner Perspectives Study, surveyed 914 business owners between Dec. 13, 2017 and Jan. 4, 2018. Respondents have 500 employees or fewer, they have been in business for more than a year, and they have annual revenue of $100,000 or more.
The top findings of the research lend themselves to these five tips for today’s small business owners:
1. Surround yourself with trusted advisors who have expertise and experience in succeeding the way you define success.
Surprisingly, nearly three out of five (58 percent) small business owners in MassMutual’s research turn to their spouse as their trusted advisor for financial and business advice. While this is a positive sign, business owners should look to expand their pool of trusted resources beyond their spouse for diversity of expertise and experience.
2. Know who your successor is — and prepare accordingly.
This includes telling them. The good news is that two out of three (64 percent) business owners have a succession plan in place for their business. However, 25 percent people in line to take over a small business aren’t aware they are the chosen successor. Furthermore, nearly three out of five (58 percent) family-owned business owners intend to divide the business assets up equally among all their children, regardless of the child’s involvement in the business. This opens the door to a potentially difficult yet necessary conversation.
3. Know the true value of your business.
Nearly two out of three (63 percent) say they’ve had their businesses valued in the last three years. However, 25 percent valued their businesses themselves, which may lead to unsubstantiated valuations.
4. Do not put all of your eggs in one basket.
While nearly two out of three (64 percent) say their business is their largest asset, that doesn’t mean it should be their “everything.” MassMutual’s research found that one out of three small business owners have no assets for retirement outside of the business, and 25 percent said they would have to liquidate assets — business or personal — to meet any tax or fee obligations in the settlement of their estates.
5. Take care of your key employees.
Employee loyalty spiked as top of mind for more than half (54 percent) of the business owners in MassMutual’s research. Health care, flexible work arrangements, and generous salaries topped the list of benefits offered to all employees. However, 30 percent do not offer any special benefits to those they consider key to the success of the business.
Most business owners prefer to keep their business and personal finances separate, but often find the two inextricably linked. Since the last time we took a pulse check on business owners through a similar research study (three years ago), we’re finding that protection planning for the business is continuing to become more and more top of mind, but the main thing holding them back is a lack of personal capability and/or not knowing what they do not know.
Tim Powers is president/CEO of MassMutual Wisconsin, a financial services organization serving Wisconsin and Northern Illinois.
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