Although men were more strongly affected by the Great Recession, women continue to lag behind their male counterparts in small business ownership. According to the National Association of Women Business Owners, approximately 40 percent of privately owned firms are owned by women. With an estimated 50 to 70 percent of small businesses failing within 18 months, reports Business Insider, it’s essential to think smart when it comes to finances.
Create a Smart Business Plan
A rough idea of what you want your business to look like — for example, a custom letterpress studio focusing primarily on wedding stationery — simply isn’t enough for a business to succeed. Creating a strong business plan is the first step in launching your own company. Consider every aspect of the business from customer demographics, marketing and overhead costs to employees, work culture, and customer service.
Use these details to make a specific timeline for your business growth, including how long it will take to turn a profit (hint: it’s often longer than you think). Then, make sure you have more than enough start-up funds to keep your business afloat for at least six months longer than you think it will take for the company to become profitable. Check websites or professional groups in your industry to get more specific information about business overhead costs and profit margins.
Don’t Do It All Yourself
As a beginning business owner, it’s tempting to try and retain control over every single business decision. Instead, take a tip from the pros and delegate responsibilities. For example, you’ll need a competent tax professional to handle your tax liability. Remember to track all reimbursable expenses paid out of your own pocket in order to deduct them at tax time. For assistance, find a U.S. Small Business Association Women’s Business Center in your area. These centers provide access to comprehensive training from fellow businesswomen who can act as an advisory team as you get your business off the ground.
Put Your Spending Money to Work
Every business has expenses, but it’s best to start out simple, and keep track of your spending. American Express corporate credit cards provide travel insurance for business trips, while cash back cards from the same company help you reinvest a portion of your expenditures back into your company. Putting all of your business expenses on a single card also makes it easy to track purchases, manage billing, and make e-payments to vendors.
Data, Data, Data: Constantly Crunch the Numbers
In an interview with Forbes, Maria Coyne, founder of a development program for women business owners, noted that the strongest business owners were those with a firm grasp of their company’s numbers. Make sure that every decision you make is backed by data. For example, what percentage of sales growth did you see after implementing a Facebook marketing campaign? What is the profit margin for espresso beverages vs. bakery items at your coffee shop? How much could you save by employing contract workers rather than full-time employees? Crunching the numbers and keeping track of data trends ensures that you know where your business is at and where it’s going.