Lack of financial literacy harms small businesses

Small business owners generally have to complete multiple jobs within their company, which can make keeping up with finances a daily struggle. 

The inability to properly manage money could potentially harm a small business. In these situations, small- to medium-sized retailers could find it difficult to obtain a loan from a bank. However, if the need arises to replenish inventory or cash flows have fallen below normal levels, inventory financing could be beneficial. 

According to the Sage Financial Capability Survey, the majority of small businesses are able to identify the cost that has the biggest impact on their company. However, 15 percent are unable to do so

Meanwhile, 56 percent of small business owners recognize that cash flow is the aspect of financial management most important to their success, but that means that the other 46 percent fail to realize this, which is troubling. 

One of the biggest concerns faced by small business owners is complying with the tax code, as 23 percent of respondents cited this as what they are most worried about. According to the National Federation of Independent Business, the tax burden continued to plague small businesses in 2013. 

"The sheer number of changes to the tax system over the past 13 years is astonishing," said Connie Certusi, executive vice president and general manager at Sage Small Business Solutions. "With more than 4,400 legislative changes to the tax code, small business owners are struggling to stay current."

Owners of small- to medium-sized retailers who find cash flow lagging or available capital at a minimum could find it difficult to operate their businesses. However, inventory financing could help them. 

This form of asset-based lending allows small business owners to use current inventory as collateral to obtain a revolving line of credit when they have been turned away by a bank.