Why Financial Planning Is Necessary For Women Entrepreneurs?
Looking into the future, once women are able to break through the challenges underlying their entrepreneurial aspirations and begin to acquire the essentials of financial planning, they can become even better managers of the future
With the rise in nuclear families wherein both men and women are busy making ends meet, it is becoming crucial for women to take active interest in financial planning. Surprisingly, even though more and more women are joining the workforce today, looking at the need to shoulder equal responsibility along with their partners for taking financial decisions for the family, they continue to be risk-averse and hesitant in undertaking investment decisions. However, women, who are looking to start their entrepreneurial journey, can no longer afford to be ignorant or passive in understanding their finances. Whether women aim to start a business on their own or decide to get into a partnership, the fundamentals of financial planning that are necessary for women entrepreneurs bear no change.
When starting one’s own business, the foremost step towards financial planning is to understand your net worth, your savings and your investment potential. We may have several different business ideas in our mind; however, we must have a clear assessment of our financial position before deciding to invest into any new venture or scheme. As an entrepreneur it is important that women separate their personal finance and establish a dedicated fund to finance the new business. Having a separate fund allocated to the business helps manage two primary concerns, which is (a) to minimize personal liabilities by securing your personal finance and for family members who may be dependent on you, (b) when seeking funding from external sources it helps your investors understand the seriousness and see your business as more genuine and credible having a focused approach.
The most fundamental aspect of financial planning is that it helps an entrepreneur to stay focused on their goals and operate the business successfully. A well-detailed financial plan acts as a road map to guide you into taking well-calculated decisions and can enable woman entrepreneurs to identify the different sources available for funding the business. Once funding is secured, the plan can help entrepreneurs to better prioritize their financial resources and utilize them efficiently, while keeping timeframes in check to achieve the desired business targets. Therefore, financial planning facilitates improved decision making to answer questions, sometimes precisely in yes and no, while allowing other queries to get answered and make adjustments to the strategy as and when required for the growth of the business. Furthermore, planning for finances is highly necessary to manage the cash flow of the business. When an entrepreneur sets out a detailed business plan, it allows them to pre-empt the cash flow that would be required to realize their targets. With an appropriate cash management strategy, which is customized to their business needs, women can do much more with the resources in hand.
From an investment point of view, starting out a business can seem daunting when we analyze the numbers and begin to calculate the possible returns and the time it would take to realize those returns. To assure minimal risk and profitable returns on investments, women entrepreneurs must know that the key is to have a clear understanding of the investment opportunities available to them for operating the business. Once we get an understanding about the pros and cons of the various investment opportunities, by gaining complete information on them, we can step ahead into making systematic investments that can ensure continual flow of funds to prepare for expansions and exigencies. When we think of an idea for starting a business, we often end up budgeting or start to count on personal savings as we aim to work things out based on our existing financial reserve. However, when we think of investments at the onset we move a step ahead of budgeting, by calculating our financial needs rather than depending on savings and risk exhausting them. Women entrepreneurs must therefore be actively engaged in understanding the importance of financial planning and investing in the right place at the right time to secure the future and take complete control of the business in their hands.
As entrepreneurs, women need to realize that in order to run any business independently they must have complete understanding of their existing and required financial health and must plan for it thoroughly. To summarize, it would enable them to (a) realize all business goals effectively, (b) analyze sources of funding required to run the business, (c) know where to invest and how much, (d) manage and mitigate risks depending on the appetite, (e) understand re-investment opportunities to minimize debt, and (f) ultimately be ready to finance future growth and expansion plans with the returns earned from the various business activities. Women must be prepared to seek the right advice in terms of financial planning to make sure there are no lose ends and that it is doing the job it is meant to do for the business.
Looking into the future, once women are able to break through the challenges underlying their entrepreneurial aspirations and begin to acquire the essentials of financial planning, they can become even better managers of the future. To achieve this they will need to start taking control of their finances, gain confidence in financial knowledge by referring to mobile apps, web portals, news and specialized publications to educate themselves regularly and start investing their savings into the right schemes for the future.
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
Around The World