8 Sources of SMB Financial Stress (+ How to Combat It)

Everyone gets stressed, no matter who they are or what type of job they have. Small business owners, however, share many of the same stressors. The good news is if you can identify the sources of your stress, you can alleviate and ideally eliminate it – stopping the stress right in its tracks. So if you’re losing sleep, money, or even friends because you’re so high-strung and anxious all the time, keep reading for more information about the eight most common sources of SMB stress and learn how to get it under control.   

1. You’re mixing your personal and business accounts.

Small business owners often make the mistake of commingling their personal and business checking and savings accounts. By commingling, we mean that you treat your business money as your own (mixing your business and personal funds together). Doing this can cause stress at tax time because it is generally very difficult to go back and unravel all your expenditures over the past year to try and figure out if they were personal- or business-related.

Stress Buster Tip: From the very beginning, make a clear distinction between your personal and business accounts. Commit to only using your business checking and savings accounts to operate your business. This will greatly simplify things when it’s time to do your taxes.

2. Your personal credit is less than desirable.

A poor personal credit score can hinder your company from qualifying for any type of capital, like a small business loan, line of credit, or corporate credit card. This can become a source of stress later on when your business takes off, you need additional capital to support the growth (perhaps you need to buy more equipment or inventory, for example), and you don’t qualify for any lending because of the state of your personal credit. 

Stress Buster Tip: If you’re in the early stages of starting a company, take action now to improve your credit score. If you’re further in, you can still work on improving your score by making payments on time, correcting any errors on your credit report, and paying down debt.

3. You’re not making enough money.

There’s almost nothing more stressful than not having enough money coming in to cover all your monthly expenses. This might be because you’re not charging enough for your products/services or haven’t yet identified what your profit margin should be. This is a source of stress you should try to understand and tackle as soon as possible. 

Stress Buster Tip: Focus on figuring out how to bring in more money. Start by learning more about profitability, profit margins, and profit drivers. Once you’ve identified the products and services that give you the best profit margins, you’ll be able to adjust your key profit drivers to increase your company’s revenue. 

4. You’re not selling enough of your product or service.

Maybe you have your pricing figured out, but you’re struggling to sell enough of your product/service. It can be very stressful when sales are down and you’re not sure why. Maybe you feel like your marketing is lacking and you just don’t know what to do. Perhaps you have not yet identified your target customer, the one who loves what you sell most.

Stress Buster Tip: Do you have a customer relationship management (CRM) system in place? If you haven’t identified your ideal customer yet, it’s hard to know where they hang out and what kinds of communication will matter to them. Analyze your CRM data to detect trends and develop a customer profile so you know who you’re selling to and where to find them.

5. You’re lacking a formal bookkeeping system.

If you don’t have a bookkeeping process in place to ensure your financial records are accurate, organized, and timely, you’re definitely creating unnecessary stress for yourself. Without pretty financials you won’t have the information you need to generate correct financial statements or tax returns – which drastically limits your ability to make educated business decisions and minimize taxes. 

Stress Buster Tip: Luckily, it’s easy to fix this issue. Simply hire a professional to do your bookkeeping. At a minimum, they will know at least the basics of accounting, not to commingle accounts (see above), and how to use bookkeeping software.

6. You’re having trouble qualifying for loans.

Maybe someone told you a couple of years back to reduce the amount of profit you were reporting on your tax returns so you could lower the amount of tax you had to pay. While this may have seemed like a great idea at the time, this strategy is probably working against you now. Why? Because if your business doesn’t appear profitable, it won’t qualify for any lending or additional capital, which will ultimately stunt its growth. Furthermore, this might prevent you from qualifying for a home mortgage; if it doesn’t appear that you’re making any personal income from your business, the bank will think you’re lacking a stable source of income.

Stress Buster Tip: Don’t report less profit on your tax returns to pay less taxes. Recognize that there are other things you can do (a tax planner can help you determine what they are) to minimize the amount of tax you need to pay. Stay away from underreporting your income and overstating your expenses.

7. You’re paying too much in tax.

You’re probably pretty stressed out, especially in April, if you find yourself paying a lot in taxes. While you might be proud of all the money your company is making, it can be discouraging to lose a big chunk of it to the government.

Stress Buster Tip: Alleviate the stress you feel by hiring a professional who can help you with tax planning. They will identify strategies you can follow to ensure you’re only paying your fair share of taxes and nothing more.

8. You haven’t filed a tax return in years.

Some small business owners get so stressed out about taxes that they bury their heads in the sand and don’t file their taxes at all – sometimes even for multiple years. This just compounds the stress and it gets worse and worse over time.

Stress Buster Tip: We don’t want taxes and finances to worry you, but if they do the worst thing you can do is ignore them. Instead, find a professional who can guide you. With their assistance, you’ll know just what you need to do, and you won’t have to suffer from ongoing anxiety or stress anymore. 

A Final Word From Tuesday P. Brooks Owner of AJOY 

If you feel stressed from running your business, please, know that you’re not alone. So many other small business owners can relate. We’ve all been there. Some anxiety and pressure are inevitable, but there are steps and corrective measures you can take (see above) that will make things easier and less stressful. And make sure to take care of your physical, emotional, and spiritual self as well. Exercising, taking breaks, and seeing friends are all great ways to keep the stress at bay too.