THE BLOG
09/10/2013 01:56 pm ET Updated Nov 10, 2013

Money: The Challenge for Women Entrepreneurs

You don't have to be a woman entrepreneur to know the challenges of money! But, women entrepreneurs learn early-on that their former educational experience with money may not be enough when it comes to launching, operating and growing a small business. Money problems can start early, fester and eventually become the downfall for even the savviest of women in business.

However, money problems are really the easiest of all small business problems to solve if you follow some very simple rules.

First, every entrepreneur must know how much (s)he will need for startup costs to get the business going -- and then add a cushion of at least three months to make sure there is time to collect revenues so there is cash flow.

Cash flow is a simple concept that indicates the movement of money into and out of a business. Every entrepreneur understands the need for money to be spent to launch a business, but too often (s)he has not carefully calculated the time it takes for the income to flow back into the business. Understand -- until the business has cash flow there is NO business!

Second, every entrepreneur must know the answer to this question, "Do you know where your money is?"

I ask this question of every woman entrepreneur I work with and most don't really understand that the money spent on operating the business has not gone up in smoke -- or at least, we both pray, that it hasn't.

So, where is the money of the small business owner? Look around your business. You'll see equipment, software, customer databases, inventory, key employees, brand recognition and hopefully, some receivables. All of these things are valuable assets in your small business. All of these things are actually money in disguise. Never underestimate the value of what you have built in your small business if you have invested in it wisely. Many of these assets can be leveraged to infuse money into your business. This is exactly why where you spend your money is so important. If you are not spending it on building assets then it truly will go up in smoke!

Third, although the current economic climate is lagging, there is plenty of money around for small business owners who have a feasible plan to make money. Your first place to find money is always friends and family. If your friends and family don't believe in you, who will? Next in line is to network in your industry and see where others have found investors. Again, if you truly have a business than can scale, there are people ready, willing and able to fund you. But, you won't find them sitting behind your computer and complaining about the lack of funding for women entrepreneurs. They invest in people and businesses that are hungry and aggressively motivated to win.

And, if you have spent your startup money wisely on building assets there are financial institutions that will provide you leverage for the next stage of your business. Once again, this requires you to actively investigate the opportunities available to you using every asset you have both personally and professionally if necessary to get the infusion of funds you need to keep growing.

Finally, if you own a small business you MUST understand your financials. I believe that it is a myth that women are less savvy then men when it comes to handling money. But, the myth lives on because women don't squash it every chance we get when it comes to knowing how our business operates financially. Many small businesses have a bookkeeper take care of the daily, weekly or monthly income and expenses of the business. But, this is not an excuse to not take the time to comprehend your business' feasibility for financial success.

As a business coach, I know that too many entrepreneurs are afraid to acknowledge how close to the edge the business runs financially. It is my job to assure them that their business is no different than any other and that is why we keep such a close eye on what is working and what isn't.

I believe that cash is king in every small business! But, what that truly means is that at the end of the month ,the business has more income than expenses. And, why do I say that this is simple? Because if the entrepreneur knows where every dollar of expense must go, (s)he also knows that with growth revenues will outpace expenses. (This is where the entrepreneur can see the value of a business plan).

Small businesses, just like the people that operate them, have natural cycles -- maybe even seasons. Entrepreneurs need to learn to plan for business cycles. Sometimes expenses will be up when revenues are down. But, financial planning will always get you through the down times.
So, women entrepreneurs everywhere stop paying attention to all the negative press about your lack of funding opportunities and banking relationships. What investors and banks want are small business people who know how to monetize ideas and grow businesses. The more the business grows and the more money you make, the more cash flows in their direction.

Cash may be king, but it is a woman entrepreneur that is queen.

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