Did you know that the Lean In and McKinsey & Company found that one in four women are considering downshifting their careers or leaving the workforce due to the impact the recession, per the “Women in the Workplace” report? These statistics will have more women considering their options and likely looking at the possibility of starting their own business.
Women in business ownership is a viable option for many women because it allows for a more flexible schedule and allows them to be in charge of their careers.
How do you ensure success when you are setting up your own business?
Better financial management equals better business. The first goal of any organization would be to get revenue coming in the door. However, how you manage that money will be the difference in whether your business survives or thrives.
The top ways women thrive financially in their business:
1. Charge what you’re worth
Women are often hesitant to charge what they are worth or premium prices for fear that nobody will want their offer. Traditionally, women undercharge for their services with the belief that they will attract more clients and gain more revenue from this practice. However, consider the type and quality of clients that you would attract if you were to do this, and the message that you would be sending. Would you be attracting the right clients if you charged less?
2. Good business decision making
Women will thrive in their business when they make sound business decisions, and profitable business decisions are backed with a solid understanding of their business finances. Understanding your business finances means you know your profit margins and how your decisions affect your business’s profitability. And higher profits means more money that goes back into the company or to the owners of that business.
3. Effective cash management
Mapping out a good cash management system that considers the timing of cash inflow and outflow allows for planning and reduces the urgency and expense of cash shortages. Cash is the lifeline to a business to meet financial obligations and ensures the continuous flow of business operations.
4. Planning ahead with finances
Having a business plan and ensuring you are working towards your goals and meeting them is essential. When you monitor your progress, it will give insight into where your business performs well and what you need to improve on. This feedback is critical to receive as it helps you to make adjustments to improve operations. It is common to plan ahead for one-year and up to five-years in business.
5. Don’t forget to plan for your taxes
When you are managing your business finances well, you will have a clear understanding of your business’s income and how much you should put aside for taxes. A common complaint that business owners have is that their year-end tax bill often comes as a surprise. However, with proper financial management, you can avoid this.
The bottom line is that being in business for yourself can be an inspiring venture, and it can have its challenging moments. However, when you are aware of the critical components of running a business that you need to focus on to make it more successful, you will reap more financial benefits.