Growing complexities in life and uncertainties in the economy make matters related to money and investment extremely important for all. The prevailing scenario makes financial planning even more important for women entrepreneurs. As more and more women are making their presence felt in the country’s entrepreneurial eco-system, they must be wise and act wise with money, given the risks involved in the journey of developing entrepreneurial ventures.
So, on International Women’s Day, while celebrating the indomitable spirit of women entrepreneurship and their determination to penetrate the erstwhile male-dominated business domains, we should look into why women entrepreneurs must take control of their financial destiny. Financially-empowered women entrepreneurs can play a pivotal role in developing a truly inclusive entrepreneurial eco-system, as they understand the challenges a women entrepreneur faces during her journey and create an enabling environment for other women-led enterprises to succeed.
Experts and decision-makers – all agree with the fact that women entrepreneurs can play an important role in employment generation and economic growth if they are given equal opportunities. It is crucial for them to bring their inherent money-managing skills into practice to run their business. It is the need of the hour to combine money-managing skill sets with financial planning.
A sound financial planning helps in coming to terms with the evolving market dynamics. Financial planning helps them show financial foresight in the time of crisis. Women entrepreneurs usually adopt a realistic view while investing, say the experts. So, for them, the margin of error is minimal.
In addition, an intelligently-planned financial planning projects a woman entrepreneur as a smart business leader to the investors and other business stakeholders. So, financial planning acts as an impactful confidence building measure as well. Investors evaluate both the business plan and financial plan of an entrepreneur before investing. Investors tend to assess the financial prudence of the entrepreneur and her/his ability to absorb the possible financial challenges arising out of difficult times in future. Financial planning gives investors the confidence to stay invested with the entrepreneurs.
Given that it is statistically proven that funds are always a little harder to come by for women entrepreneurs, it makes it even more critical for them to go for financial planning, as it will help them diversify their business at the opportune time. A carefully thought-out financial plan helps them self-fund their growth path as well as attract strategic investment to fuel business growth.
While preparing the financial planning, a woman entrepreneur must assess her risk appetite and take a call independently instead of depending on the advice of other family members. Even if you are running your business along with your husband, it’s important to have your say during discussions on financial planning. In this era of digital media, it won’t be a bad idea to read up on various investment options specially designed for women entrepreneurs and consult experienced financial advisors to get a better perspective.
Another important thing to remember is to project the fund requirements for business and personal affairs in the financial planning. One needs to predict the timelines when the business will require further growth capital and calculate the approximate figures while planning. In addition, controlling expenses is also an important part of financial planning. The financial planning should factor in the recurring and fixed expenses as well as projected expense.
Another thumb rule for crafting effective financial planning is to have a distinction between business and personal funds. It will help you plan your investment and manage your funds better.
At the core of the idea to have well-calculated financial planning in place is to ensure financial security. But, more than that, it gives women entrepreneurs the freedom to power their entrepreneurial destiny.
Thae author is Founder Partner, Vertices Partners