Two 'avoidable mistakes' for small business owners: Bluevine

Fintech company Bluevine has released its mid-year Small Business Owner Success Survey, revealing encouraging results. The survey found that 88% of owners felt they met or exceeded their business expectations in the first half of 2024, with 73% maintaining similar levels of optimism or confidence for the second half of the year.

Bluevine CEO Eyal Lifshitz joins Wealth! to discuss these findings and offer insights for small business owners.

Lifshitz observes that sentiment among small business owners is "generally" positive despite economic uncertainties. However, he highlights several "avoidable mistakes" that small business owners often make. These include using personal credit cards for business purposes, lacking sufficient cash reserves to navigate potential cash flow crunches, and failing to establish a line of credit that can fund company growth.

To help small business owners prepare for the future, Lifshitz offers two key pieces of advice: plan ahead for uncertainty — whether positive or negative — and ensure that your finances are in order to maintain stability.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith

Video Transcript

Turning now to a slightly different take on the state of small businesses, Fintech company Bluevine, which offers banking services for small businesses out with a mid year business owner success survey and the results reveal small business owners are largely shaking off the high costs of inflation, interest rates and political uncertainty.

In fact, 88% felt that they met or exceeded business expectations in the first half of the year and that confidence is spilling over into the second half of the year here with more on the takeaways.

We've got a all ay all Lifshitz who is the CEO of fintech company, Bluevine a all great to have you here on the on the program.

So, I mean, how are you seeing small business owners feeling and projecting for the second half of the year?

Well, certainly the sentiment is positive as you noted, um strong first half of the year, almost 90% met or exceeded their expectations.

So, coming off a first strong half, the sentiment continues positive to be continues to be positive in the second half, almost three quarters as you're showing right now, feel good about the second half, even though uncertainty is increasing with the elections with inflation with taxes.

But overall, what we're seeing is that generally they are positive.

And so with that in mind, what levers do you see small business owners pulling right now to make sure that they can essentially safeguard their business from any type of broader macroeconomic trends that otherwise could put a dent in those business prospects.

You know, it's an interesting question because on one hand, you see small businesses that are quite positive, but in our opinion, they're not doing enough.

We are seeing that they're still making, in our opinion, avoidable mistakes and running their, you know, their finances and their planning.

For example, we're seeing that still over half are using credit cards as personal credit cards as their main source of financing.

Only about a third have a line of credit in place that they can utilize for smoothing out cash flow or for even growth as they need it.

And then, um um only about a half of them are in a position to weather a cash flow crunch.

And so we think they could be doing better in terms of utilizing the right sources of financing and also planning better for uncertain times.

So what are some tips for small business owners to avoid those financial pitfalls that you were just mentioning?

I'd say two things.

The first one, plan ahead plan for different scenarios right now, we have certainly uncertain times in terms of interest rates and inflation.

So plan for good and plan for bad and when it's good, be able to be position to take advantage of the situation.

But also in cases where things become tougher, be in a position where you're able to weather the storm.

And for that purpose as an example, having the right financing in place and getting that financing while things are still good and the right financing is not a personal credit card for small businesses.

We would recommend having a line of credit in place.

You don't need to draw that line of credit, but having that as a cushion for when it's needed again, not just for bad times, you know, when you need it to smooth out c but also to take advantage of opportunities as they come all at the September Foc meeting, we're all anticipating a rate cut of some sort.

How should small business owners think about rate cuts though?

It's pretty inevitable that we're going to see a rate cut at this point.

What is uncertain is the pace of rate cuts that are expected afterwards?

What I would say right now is as small businesses are thinking about financing is not to get locked in to long term financing with fixed rates.

So they're able to, um essentially if rates go down, they're able to enjoy lower rates.

But at the same time making sure that, you know, right now, if they're in a position to lock in that capital, even if it's floating rate or if it's, or if it's financing that they're able to utilize only when they need it.

I think it's a good time.

A Lishi of Bluevine, the Ceo of Bluevine A o great to have you here on the program and thanks so much for taking some time with us.

Thank you so much.