What does Financial Literacy Month mean for small businesses?

Officially established by U.S. Senate Resolution 316 in 2004, April is recognized as National Financial Literacy month. While many use the month to focus on individual financial wellness and education, it also makes sense to examine what financial literacy means for the small businesses that are the backbone of the modern American economy.
 
According to a recent study completed by Intuit, 42% of small business owners identify as financially illiterate. Shocking, right? Perhaps it’s not when you consider that most entrepreneurs are not financial experts, but instead are people who have a talent for identifying new ideas and nurturing them into businesses. It’s also true that most entrepreneurs are exceptionally busy people, responsible for wearing multiple hats and responsible to several stakeholders. During the business day you may be the CEO, but at home you’re just mom or dad, and maybe even the plumber.   

Nevertheless, financial wellness is key to business success, and this is especially true for small fledgling enterprises. We encourage you use the month of April to take a step back and evaluate how you are doing financially. Here are our top 5 tips for prioritizing your business’s financial wellness.

1. How to use Financial Literacy Month to keep learning

This April, look for opportunities to continue your financial education. Check out your local Small Business Development Center or even your bank for finance workshops. You can also seek out online financial literacy tools to stay sharp when it comes to managing your business finances.

2. Get professional accounting help

Choosing the right accountant is a big decision, and you will want to consider several factors. Some are obvious, like their degree and specialty. Others may be less intuitive, like their proximity to your office, your rapport, and whether they’ll represent you in the event you’re audited. Once you decide on the best fit, be sure to schedule regular check-ins to ensure you are on the right track.

3. Make Financial Literacy Month count for your business

While it can be easy to get overwhelmed by the sheer volume of purchase orders and invoices, it is impossible to control your finances unless you have a sense of who you owe and who owes you. Create a  and make sure that you have a sense of your business cash flow each month. Also, watch employee spending and look for opportunities to eliminate waste.

4. Separate business spending from personal spending

It’s generally a best practice to keep your business spending separate from your personal spending. Doing so can help you avoid tax problems while also saving you time when it comes to balancing your books. We suggest finding a small-business friendly bank, credit union, or other financial institution which can help you manage your business funds at an affordable cost.

5. Start a financial wellness program for your employees

Increasingly, small businesses are  for employees. When employees are under stress from their personal lives it can impact their performance in the workplace. In the spirit of financial literacy month, consider what you can do to help your employees become more financially well. 

Part of business financial literacy is planning ahead for unexpected expenses. Having the right insurance for your business can help protect you from the financial implications of an accident, a lawsuit or even a data breach. Visit hiscox.com to get a quote on the right insurance for your business.

Frequently asked questions

What is Financial Literacy Month?

Financial Literacy Month is a nationally recognized observance held every April in the United States. Established by U.S. Senate Resolution 316 in 2004, it is dedicated to raising awareness about the importance of financial education and encouraging individuals — and businesses — to take steps toward greater financial health and confidence.

When is Financial Literacy Month?

Financial Literacy Month is observed every year in April. It's a great time for small business owners to audit their financial habits, seek out educational resources, and put new money management practices in place.

Why is financial literacy important for small business owners?

Financial literacy is the foundation of a successful business. Understanding concepts like cash flow, budgeting, profit margins, and tax obligations allows small business owners to make smarter decisions, avoid costly mistakes, and plan for long-term growth. The stakes are high: according to a recent Intuit study, 42% of small business owners self-identify as financially illiterate — a gap that can put a business's survival at risk. Financial Literacy Month is an opportunity to close that gap.

Is financial literacy only about accounting and bookkeeping?

Not at all. While accounting and bookkeeping are important components, true financial literacy for small business owners also includes understanding business insurance, risk management, employee benefits, tax planning, and long-term financial resilience. Being financially literate means being prepared — not just for day-to-day operations, but for the unexpected events that can threaten your business, such as accidents, lawsuits, or data breaches.