Financial Literacy For Small Businesses

In honor of Financial Literacy Month, we had the pleasure of interviewing Nonso Maduka. Nonso is Head of Small Business at NerdWallet, an American personal finance website that helps people make and manage financial decisions by comparing various products available from various banks and insurance companies.

 

1. April is National Financial Literacy Month. What are some tips you would recommend for small business owners to stay on top of their businesses?

Small business owners wear many hats – from being a manager, to running payroll to finding the right insurance for their company, on top of being in charge of the business’s bottom line. For many it can be a huge learning curve, especially if it’s their first business.

Make sure you set yourself up for success by truly understanding all the aspects that go into being a successful small business owner. It’s also important to remember that your personal finances will be evaluated as part of your business’s - everything from your credit score to personal expenses will play a role in what loans you’re able to secure. We also have a quiz at NerdWallet where consumers can evaluate their financial health in honor National Financial Literacy Month.

2. What are some ways small business owners can get access or learn more about financial education?

At NerdWallet, we think about small business finance and personal finance very similarly. Whether consumers are looking for the best credit cards, insurance, loans or investment options – consumers (and small business owners!) lack the clear, unbiased information they need to make the best financial decisions. Whether they’re dealing with traditional banks or an alternative lender, they’ll evaluate how you’ve managed your personal finances as well as your business finances before approving you for a loan.

Nonso Manduka, Head of Small Business at NerdWallet

Nonso Manduka, Head of Small Business at NerdWallet

It can be confusing for small business owners to compare small-business loans, so we try to make the process as straightforward as possible by providing clear information for financing products on our Small Business Loan Tool. We also spell out how rates and fee structures work for various products offered by multiple lenders so that owners can make informed decisions.

Beyond finances, we also tackle a variety of other topics that small business owners need to know including structuring and naming your company to creating a solid business plan to choosing the best location for your storefront and much more.

Small business owners can also find great information on the basics of starting a business from organizations like the U.S. Small Business Administration which are dedicated to helping small business owners start or grow their business.

3. Are there ways the private sector can help or does the government need to take on a larger role in teaching financial literacy?  

We’re excited to see personal finance and financial literacy come to the forefront of conversations in the public and private sectors. I think entrepreneurs and consumers alike have realized the need for a better and more transparent system when it comes to finances, and the market has worked to fill that void through better access to capital and new companies cropping up in the financial technology industry in the last few years.

4. What groups are most affected by a lack of financial literacy, and what resources exist to help them?

Our recent survey on Financial Literacy and Health found that only 1 in 10 Americans are hitting the basics of personal finance literacy - underscoring the fact that there should be more emphasis on financial education, as well as resources, for all consumers.

5. Can you tell us more about NerdWallet? What is the mission of the company?

NerdWallet is a personal finance company that offers consumers clarity for all of life's financial decisions.

Most consumers make financial decisions in the dark or based on the recommendations of friends, family or financial advisors who may not have their best interests in mind. We’re on a mission to change this by providing clarity to consumers through unbiased information, tools and resources to help them make the best decision for their individual needs.

Small-business owners are often thought of as the backbone of our economy, but they are also consumers who make financial decisions on a daily basis. We spend hours researching these topics, so that small business owners can get back to doing what they do best – running their business.

6. How is NerdWallet helping spread the word about Financial Literacy? 

Our mission is very closely aligned with financial literacy – all of our content, tools and resources we create aim to bring to clarity to personal finance. We started with credit cards, but soon realized, that consumers need information across a variety of financial decisions so we expanded our focus to include financing education, saving for retirement, buying a home or paying for life and auto insurance, and more.  

We always want to best serve our consumers and understand that a lot of this information is hard to find and understand. From lending options, to business credit cards to new human resource services – navigating all of this information can be overwhelming and time-consuming. At NerdWallet, we’ve aim to do all the research for small-business owners so that they’re confident in their decisions while also saving time and money.

7. What are some simple lessons you can pass along to business owners looking to be more aware of how they spend their money?

Doing some upfront budgeting and planning can save small-business owners time and money in the long-run. It can be easy to be wrapped up in the day-to-day work of your business, but setting aside time to think about the next three months, six months or the next year or so could ensure you’re not spending money on the wrong marketing campaign, or making the wrong move to increase sales.

Understanding your business cash flow is also important. Knowing the money coming in and out of your business can help you better plan for seasonality, or identify potential sale dips or demand. Not having sufficient cash flow is one of the major challenges we hear about often from small business owners.