Women-owned companies make up 39.1% of all businesses within the U.S.—a 13.6% improve within the final 5 years. While this progress is encouraging, digging deeper reveals disparities that shouldn’t be missed. For instance, the annual Biz2Credit Women-Owned Study discovered that whereas common annual income of women-owned firms elevated by 15.5% from the earlier 12 months, it trailed behind that of men-owned by 34%. And a QuickBooks survey revealed that 57% of girls who use bank cards of their enterprise have used their bank cards for emergency purchases within the final 12 months, with one in ten reporting that they did so on a month-to-month foundation. Moreover, solely half of the respondents believed that they are going to be capable of repay their bank cards with out paying curiosity.
These monetary statistics paint a extra nuanced image of the expansion that has occurred for women-owned companies, revealing that whereas there are extra feminine enterprise homeowners at this time, a lot of the expansion has been in microenterprises, and lots of of those entrepreneurs is probably not conscious of the financing choices out there that might assist them develop their companies proactively. As a end result, they’re counting on bank cards and paying excessive rates of interest that will hinder their progress.
In this text, we’ll current some methods that may assist women-owned small companies handle their funds proactively to encourage progress and scale back a reliance on costly bank card debt.
Financial Strategies for Women-Owned Businesses
1. Build a Solid Financial Foundation
Every enterprise wants a stable monetary basis. This means having a well-organized accounting system and a practical funds. Nothing derails a enterprise sooner than discovering out after the truth that your bills have been greater and your gross sales decrease than anticipated–one thing you may have averted in case your accounting was updated.
2. Separate Personal and Business Finances
One of the frequent pitfalls for small enterprise homeowners is mixing private and enterprise funds.
Open a separate enterprise checking account and bank card to trace enterprise transactions precisely. This separation not solely simplifies record-keeping but additionally ensures compliance with tax rules. Plus, it offers a clearer image of your enterprise’s profitability and monetary standing.
3. Create a Solid Business Plan
You’ve in all probability heard this recommendation numerous occasions, however its significance can’t be overstated. A well-crafted marketing strategy helps you perceive your objectives, goal market, competitors, and monetary projections.
This manner, it’s simpler to speak your imaginative and prescient to potential traders, companions, and staff. Additionally, having a marketing strategy ready prematurely positions you as a critical entrepreneur when making use of for grants and loans.
4. Keep Your Books and Numbers Up to Date
Understanding your enterprise’s monetary well being is non-negotiable as a enterprise proprietor. All too usually, small enterprise homeowners get their accounting software program arrange early on, however don’t actually perceive what the numbers imply, or get too busy and neglect to concentrate to them.
Do you realize your month-to-month income, bills, and revenue margins? Regularly reviewing your monetary statements offers you insights into your enterprise’s monetary efficiency and will help you make data-driven selections. You could take into account hiring an expert accountant to make sure accuracy in your monetary information and preserve you within the loop.
5. Build a Strong Credit Profile
Establishing and sustaining a powerful credit score profile is crucial for accessing financing and favorable phrases. To create a optimistic credit score historical past, prioritize well timed funds to suppliers and collectors, accountable use of credit score, and immediate decision of any discrepancies.
An excellent credit score profile not solely enhances your eligibility for financing but additionally positions your enterprise as a dependable and reliable companion. It can be a beneficial asset when looking for funding for enlargement or addressing unexpected challenges.
6. Implement Efficient Cash Flow Management
Cash circulate is the lifeblood of any enterprise, and managing it successfully is essential to survival. Women-owned small companies can profit significantly from implementing environment friendly money circulate administration methods.
Build your enterprise to ship invoices promptly, provide your prospects reductions for early funds, and negotiate favorable fee phrases with suppliers. If you do, you possibly can place your organization to cowl operational bills and seize progress alternatives as they come up.
7. Explore Funding Options for Women Entrepreneurs
Many organizations, including the SBA, the Association of Women Business Owners (AWBC), Moms as Entrepreneurs, and the National Association of Women Business Owners (NAWBO), provide particular assist applications, grant alternatives, mentorship, and networking alternatives.
Research and establish applications that align with your enterprise objectives and apply for the sources out there to you. Take benefit of those alternatives — grants, financing, or enterprise capital applications — to safe extra capital for your enterprise.
Empowering Women Entrepreneurs Financially
In at this time’s entrepreneurship house, women-owned small companies have the potential to attain outstanding success. But this success solely comes with placing within the work. There aren’t any shortcuts.
Sarita Ekya is aware of this via expertise. As the proprietor of S’Mac, a mac and cheese restaurant chain in New York City with three areas, she’s confronted many challenges over time—together with the extreme disruption that occurred to the meals trade throughout the pandemic. An extended-time Biz2Credit buyer, when COVID-19 restrictions threatened to shut their doorways, she had the funds she wanted to innovate and make it via.
As you develop and implement the fitting monetary methods for your enterprise, be sure you try the monetary options Biz2Credit presents. Whether your objective is short-term progress, long-term sustainability, or just benefiting from a chance to develop, the fitting financing will help you get there.