9 essentials for boss babe entrepreneurs to consider when launching a start-up business.
Whether you’re thinking about turning your side hustle into a full-time job or launching an entirely new business, there are many factors to keep in mind as a female business owner. It’s crucial to be both strategic and proactive about business finances and personal finances. Since your personal finances depend on the success of your business, it’s important to nurture both.
Have you considered what type of entity to start (sole proprietorship, S-Corp, C-Corp, LLC)? What are the differences between these entities? Who are your competitors, how do they charge, and what are they doing to promote or grow their businesses? Do they have an e-commerce website, what technology does it use? Have you considered how you can scale quickly if sales are wildly successful?
All these questions make it essential to spend some time charting a course for success. It helps to have a team of experts available to help, as well. It may help to consult with a wealth advisor, lawyer, and accountant to help you understand how to form your entity, position your business for growth, save for retirement, and thrive. We’ve put together a list of nine essential considerations for launch.
A business financial plan should include business goals, budgets, cash flow projections, and revenue targets; and will help you stay on track to reach those goals. A Boston Consulting Group study found that female-owned or co-owned startups produced more revenue than male owned/co-owned startups.1 A business plan is also a must for exercising business loans or financing.
As a small business owner, it’s easy to get into the habit of moving money back and forth between personal and business accounts. Be sure to pay yourself a salary from your business to help keep your personal finances on track and remove the temptation to go into the business account if cash flow is tight.
Like a business financial plan, a personal financial plan is a road map that will help you get to where you are going. Your personal financial plan should include cash flow and budgeting for lifestyle expenditures, savings targets, investment allocation, and estimated sources of income. Your personal financial plan should also help your net worth grow over time. Be sure to revisit the financial plan annually. For more information on how to plan and budget based on your age, read our blog, “Women: How to Slay Your Money Dragons at Any Age.”
82% of small businesses fail because of cash flow problems2, so emergency cash reserves are important. On the personal side, there should be a minimum of three months of lifestyle expenses in a cash reserve. On the business side, there should be one month of business expenses in an emergency fund. Be sure to review your spending habits and do monthly accounting in both personal and business accounts.
Women need to be proactive about financing and funding sources. Women are less likely to ask for funding compared to their male counterparts. Female-led businesses typically receive less funding for their business than male led businesses. With less funding available, planning for contingencies takes precedence. This is why an emergency fund is so important. There are many small business loans and grants available to female business owners. It’s also important to establish a line of credit at your banking institution. This will help finance new growth strategies or handle short term cash flow issues.3
A solid credit history and credit score are both important. According to an Experian “Women in Business” Credit Study,4 only 46% of female business owners have a credit score of 750 to 849, compared to 51% of their male counterparts. A favorable credit rating will provide better terms on loans and other forms of credit.
Taxes are complicated, and many don’t understand the complexity of the tax codes. Your CPA should not only be competent in tax code but should also be able to explain your tax situation in a language you understand.
As a business owner, you are everything from the CEO right down to the kitchen help. Whether you are balancing breadwinner duties along with shuttling kids to soccer practice or simply the household laundry, you can’t properly care for others without first caring for yourself. Be sure to schedule time for solitude and regeneration as well as time away from your business, even if it’s only for an afternoon once a month.
Hire a financial advisor who is a CERTIFIED FINANCIAL PLANNER™ professional (CFP®) and works as a fiduciary. Create a wealth plan and active investment plan. As a female business owner, you may feel more comfortable working with an advisor who mirrors your own drive — perhaps a boss babe with an entrepreneurial spirit just like yourself. At Mercer Advisors, 51% of our client-facing employees are women, which far exceeds the industry average of 21%.
At Mercer Advisors, your wealth advisor is sort of like a conductor leading the symphony of in-house specialists who can help you position your business for success. With a collaborative team, we tailor services to your unique needs with in-house investment strategists, CFPs, CPAs, estate planning attorneys* and trust specialists** to strategically manage wealth — all under one roof. If you’re already a Mercer Advisors client, talk to your wealth advisor to learn more. If you’re not yet a client, let’s chat.
*Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning documentation preparation and other legal advice is provided through its affiliation with Advanced Services Law Group, Inc. Tax preparation and tax filing are a separate fee from our investment management and planning services.
** Trustee services are offered through select third parties with which a client would engage directly.
Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional