Responsible Financial Management

Financial management is one of the main foundational principles for small businesses success. Effective bookkeeping; making projections based on data; accurately interpreting financial statements and learning how to finance business needs leads to logically sound business decisions. Part of financial management is also being cognizant of and budgeting for bottom-line expenses — all expenses deducted from revenues including interest charges paid on loans, general and administrative costs, and income taxes — in which demonstrates your business’ capability and adaptability with spending and managing operating costs.  

Unfortunately, financial fragility is now the reality for many small, U.S.-based businesses because of the economic impact of COVID. A 43-question survey about basic company characteristics, COVID response and beliefs about the future of the crisis was given to more than 5,800 small business that are members of Alignable, a network of 4.6 million small businesses, between March 28, 2020 and April 4, 2020 by “Proceedings from the National Academy of Sciences (PNAS) of the United States of America,” a multidisciplinary, scientific journal. The following statistics were found:  

• Businesses with more than $10,000 in monthly expenses had only about two weeks of cash on hand at the time of the survey.  
• Three-quarters (3/4) of survey respondents only had enough cash on hand to last two months or less.  
• Fifty (50) percent believe the crisis would last until at least the middle of June 2021. 
• The fate of 48 percent of American workers who employed by small businesses is closely tied to the resilience of the small business ecosystem.  

While these statistics can seem a bit daunting, Guidant Financial, a founding member of the Small Business Trends Alliance (SBTA) — a group of companies dedicated to supporting small businesses with data trends and insights — found in their annual trend survey of over 2,400 current and aspiring small business owners nationwide that 78 percent expect to survive COVID, identifying their biggest challenge over the last 12 months outside of COVID-related issues to be lack of capital or cash flow. 

ESA Members have some recourse against economic and financial downturns through ESA’s member-only Member Savings Program (MSP), that when leveraged in a strategic way, can literally save your company hundreds, if not thousands of dollars … dollars that can be reallocated to help offset any negative bottom-line expenses.  

“Total savings for 2020 is estimated at over $100,000,” says Mark Schiavone, founder of Member Savings Program (MSP). “The most popular programs are office and facility related including Ace Hardware, Batteries Plus Bulbs, Sherwin Williams, gasoline, and shipping with FEDEX and LTL.” 

Two of the lesser-known programs available to ESA Members that could add significant value are:  

• TransAmerica 401K Plan – In September 2019, Congress passed an act allowing groups — including associations — to pool together their assets of a 401K program to help keep fees low.  

“Typical 401K programs charge an administration fee that is based on volume,” Schiavone explains. “Now members of an association can come together under one umbrella and save money.”  

A three-employee company with $50,000 total assents in their 401K will pay a higher yearly administrative fee than if that company was part of a $10 million aggregated 401K plan, for example. 

“There’s no difference in who manages it or what stocks or mutual funds are available … that’s all the same,” reminds Schiavone. “It’s just that the aggregation allows us to drive down the cost for the individual member.” 

• Card Connect – When deciding on a credit card processing company to trust with your small business, choose wisely!  

“Members can feel very comfortable with Card Connect that the rates are their rates,” Schiavone says. “They’re not going to change, and members won’t see in 60 or 90 days on their statements that their rates have increased,” adding that when MSP negotiated with Card Connect, he ensured Card Connect would treat members with total respect, as he feels part of his job is to protect members.  

Card Connect reasonably compares rates and then allows ESA Members to decide which payment processing solution — protected by patented, PCI-validated security defenses — best fits their needs.  

When talking with members about Card Connect, Schiavone will ask, “what’s the effective rate that you’re paying?” A common answer he receives is 2.7 percent to which he responds with, “wow, how much volume do you do?” Let’s say the answer is, “about $5,000 per month.” He then asks the member to take out their last statement and divide their total amount of transactions by the total amount of all the fees they paid. 

“Some will discover that they’re actually paying a higher percentage than they realize because after a certain period of time, they start getting charged fees,” explains Shiavone. 

Another ESA Member-only program to keep on your radar is Hewlett Packard (HP) for business and personal use. As more and more people are working from home and their children are schooling from home, more hardware — such as laptops, docking stations, desktops, monitors, printers, etc. — is needed. 

“If you’re a business and you want to buy for your business, just call our national HP technology consultant who assess your needs and recommends the best products and pricing quotes,” Shiavone says. “If you’re a consumer, you get to go to an employee link that gives you best prices for member employees.” 

This is but a thumbnail of all the valuable MSPs available to ESA members. To help determine what you could be saving just on a few common business services and products you more than likely already use, do the following:  

1. Make a list the following business expenses: gasoline, payroll processing, shipping, office supplies and credit card processing.  
2. Beside each, list the total amount, on average, you spent over the past year for each.  
3. Once you have the dollar amounts, go to esaweb.org/membership. Scroll down and on the left side of the page, enter each amount into the box beside each expense.  
4. Scroll down to “Total Savings” to see your estimated savings as an ESA member.  

“If member companies can save a couple hundred dollars per month, that adds up,” says Shiavone.  

To learn more about ESA’s MSPs, visit the Member Savings Program.