How's your small business's financial situation? If you're like most entrepreneurs, there's good news and bad news when it comes to money. The most recent Small Business Health Index from CAN Capital found about half (49 percent) of small business owners expect business growth in the next 12 months, down from 58 percent who predicted growth in the last survey in September 2014. Rather than growth, entrepreneurs in the survey are expecting stability in the coming year; 40 percent expect their businesses to remain the same.
However, there are some worrisome factors on the horizon. Small business owners face concerns such as increasing competition, the growth of digital marketing and rising regulation and employment costs.
The good news: As they tackle these challenges, only 30 percent of respondents expect to need outside capital to run their businesses in the next 12 months. That's a big drop from 43 percent in the prior survey. What's more, those who seek capital, are finding it substantially easier to access. Only 38 percent say it's "quite" or "extremely" challenging to obtain working capital—down significantly from 61 percent who said the same thing in the prior survey.
In fact, outside capital has become so much easier to get that traditional bank loans are the number-one way small businesses access financing/working capital. This is the first time loans have topped friends and family financing in popularity.
Now for the bad news: While getting financing has become much easier, small businesses are struggling with a new financial challenge—the shift to mobile and digital payments. The survey found:
- Fewer than half (44 percent) of small businesses currently accept payments online.
- Just 13 percent accept mobile payments such as Apple Pay.
- Over half (55 percent) are aware there will be a transition to EMV (chip & PIN) credit cards starting October 1. However, just 19 percent have taken any steps to update their point-of-sale systems for EMV compatibility. And only 18 percent have plans to invest in new payments technology in the next 12 months.
Most of us are used to making most of our payments online. And if you've ever done business with a company that uses mobile payments, you know how much easier it makes your life—no need to carry cash or be limited in what you purchase. This technology isn't limited to big businesses, either. Just in the past week, I used mobile payment technology to make purchases from a small retail boutique, a food truck and a crafts vendor at an outdoor event.
In short, updated payments technology helps your small business compete with the big boys. But if you don't make those updates, you risk falling drastically behind. It's important to make wise investments in updating your technology. If you haven't already planned ahead for the EMV transition, now is the time.
Your SCORE mentor can help you determine the best ways to invest in updating your technology—and also guide you in seeking capital if you need financing to keep pace. Visit www.score.org to get matched with a mentor today.