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Bala Parthasarathy

Bala Parthasarathy, CEO & Co-founder, MoneyTap.

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Financial Tips for Women Entrepreneurs

"Success is journey, not a destination. The doing is often more important than the outcome" - Arthur Ashe.

Women entrepreneurs may have been few and far in the previous decades, but their tribe has steadily increased, and has reached an astonishing number today. Driven by a wish to exercise more control over their career and be their own boss, women are putting their skills to good use successfully. Not only are they multitasking, they are now more confident and not afraid of taking risks.

If you are one of those self-willed women, desirous of starting or expanding your business unit, this article is for you. Handling a business is not an easy task. Apart from the inflow of ideas and planning of resources, a major part of any business is dealing with finances.

Here are some finance options available to grow and sustain your business.

After starting off with personal funds, you will find the need to look for more funding and as your business grows.

Bank Loans: Taking finance from banks is one of the safest options. Various schemes are being implemented by banks and financial institutions to cater to the financing needs of the Micro, Small & Medium sized businesses. Several banks even have special cells for female entrepreneurs. They provide on-ground training and counseling to women entrepreneurs and show them avenues for promoting and marketing their businesses.

A well-prepared business plan is all that the banks look for. It is important to note that the business plan must be based on realistic assumptions and must not be over ambitious or designed merely to secure bank loans.

Angel Investors/ Venture Capitalists/ Private Equity Players: Angel investors are affluent individuals. They take on the business from the seed stage and facilitate mentoring for budding entrepreneurs. VCs finance for start-ups and do the project financing of large projects including purchase of company. They take active part in the management of the company and provide the expertise of good bankers, technologists, planners and managers. If you are set out for enterprise level business growth, you can explore this avenue.

Crowdsourcing through The Internet:
If you think you have a publicly viable product, you can kick start your business through online crowd funding platforms. They offer quick solutions to your financial needs that save your time of months-long deliberations with investors. In the absence of a proper regulatory framework, there are certain potential security risks as is the case with all other internet transactions.

Incubation Centers: Some of the Govt. agencies such as NSIC and SIDBI provide incubation-cum-training for technology intensive enterprises.

Managing Your Money

For any business enterprise, you need both short-term and long-term funds.

• Long-terms funds are needed for purchase/ repairs of machinery and fixed assets etc. Banks/ FIs provide long term loans based on the viability.
• Short term funds are your trade credits (credit allowed by your creditors) and cash credit/ overdraft sanctioned by banks to meet working capital requirement.

If you have an existing business, it is prudent to retain a portion of your profits and build reserves for long-term requirements of any capital expenditure. Thus, you can reduce your dependence on external borrowings. As the adage goes, funds are safe in a woman's hands, be it household management or micro finance or SME Unit. However, no matter how prudent and intuitive you are, managing an SME unit has its own challenges. They usually suffer cash crunch due to unfavorable market conditions and bad debts. Financial institutions regularly monitor your funds by verification of the financial statements and suggest ways to overcome such difficulties.

If you are facing shortage of short-terms funds, it could be because of your lack of experience resulting in the underestimation of funds. Do remember to plan for the extra cash that you might need later. Manage cash flows by managing inventories and receivables efficiently. Have a proper reporting system in place. You could also consider strategic management by using cost-cutting techniques. Outsourcing many of the non-core businesses viz., housekeeping, security, IT services, payroll etc. can help in reducing the costs.

Owning a business is a dream for many. However, it also takes a strong heart, unfaltering passion and deep vision to become an entrepreneur. There might be many obstacles in the journey, but always remember why you started in the first place and keep your goals in mind.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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