Assured LGBTQ small companies haven’t any succession plans
MoMo productions | Stone | Getty Images
According to a new CNBC + Acorns and NGLCC Small Business Owner Financial Health Survey, LGBTQ small business owners are confident they will recover from the pandemic, but more than 78% have no succession plan.
With so many small businesses being passed down from generation to generation, that’s really terrifying, said Justin Nelson, co-founder of the National LGBT Chamber of Commerce.
“We have a number of same-sex couples who may or may not have children, so there may not be a hereditary succession plan,” he said.
“It is very important to think about a succession plan for your company and what happens if you decide to retire or retire from a senior management role.”
When it comes to saving for retirement, about 70% of LGBTQ small business owners do so on 401 (k) plans, individual retirement accounts, SEP IRAs, or similar plans. Meanwhile, 23% are not saving at all, they found.
Formstack’s online survey was conducted May 12-21 among a national sample of 2,361 adults. Respondents were selected from more than 1,600 certified LGBT businesses as well as thousands of LGBT business owners from the NGLCC’s 50+ local member organizations.
For 46-year-old NiK Kacy, financing a retirement plan is currently not an option. Kacy, a transmasculine, non-binary, queer Asian, quit Google in 2013 to start an eponymous shoe store that addresses the lack of options for the LGBTQ community.
NiK Kacy, founder of NiK Kacy Footwear, has a 401 (k) from a previous job but has not saved for retirement since starting her business.
Photo: Nicolette J-Pownall
“I would love a lot of the men’s shoes, but whenever I tried to find something similar for myself I was told I was in the wrong department or they weren’t making my size,” said Kacy, who was assigned female at birth.
Fortunately, Kacy has a 401 (k) plan from her time at Google. Nowadays, however, any money that comes in goes into their business or living expenses, which are very scarce.
With business plummeting 60% during the pandemic, Kacy wonders if it would be wiser to get a full-time job with perks and keep NiK Kacy footwear with employees on the side.
“I wonder what will happen to me when I get older?” said Kacy.
More from Invest in You:
Startups boomed during Covid. How some entrepreneurs found a niche
Shoe company Birdies soared during the pandemic and learned a hard lesson hard
This is how these small businesses evolved to survive during the pandemic
This is a very real problem for many small business owners who may need to figure out the best vehicle to save as all 401 (k) plans would come from former employers.
However, you should remember the old adage, “Pay yourself first,” said certified financial planner M. David Goldstein, CEO and chief investment officer of Washington-based Kalorama Wealth Strategies, a financial planning firm that focuses on members of the gay community. and lesbian community focused.
“Once the company has enough excess cash flow beyond your basic living needs, it should become part of their business and personal spending plan or budget,” he said.
Debt and Credit Concerns
The survey also found that 45% of LGBTQ small business owners don’t keep a personal budget every month.
More than half carry personal debt to support their business, but 45% say their company is not in debt.
Nearly 20% have credit card debt of $ 10,000 or more.
NGLCC’s Nelson sees a discrepancy between what LGBTQ owners should access and what they can actually purchase for their business.
Of those surveyed, 40% had an exceptional credit rating (800-850) and 28% had a very good rating (740-799).
“We tend to have these exceptional levels of credit, but there are still small business credit crises,” he said.
Just over 40% said they have been denied credit in the past, and more than 30% are not optimistic that the Equal Opportunities Act will give their company better access to credit. The law passed by the House of Representatives in February would add gender identity and sexual orientation to existing civil rights laws.
Yet there was what Nelson calls great progress. When asked if they believe their sexual orientation or gender identity could cause them to lose a contract, just over 56% said no. That number has doubled in the past 10 years, he said.
Like business owners across the country, LGBTQ business owners have been hit by the pandemic. Just over 32% said they lost 50% or more of their business due to Covid.
Still, they are optimistic. About 78% expect a full recovery in 2022.
“Although small business owners were knocked down, they weren’t knocked down,” said Nelson, who welcomed the resilience of the LGBTQ business community.
“You are ready to get to work.”
Join Now: Invest in Pride: Ready. To adjust. To grow. with Suze Orman. She will discuss the most pressing issues small business owners are currently facing and answer their questions about how to manage their personal and business finances.
SIGN IN: Money 101 is an 8-week financial freedom learning course delivered to your inbox weekly.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.