Starting and running a business isn’t a cakewalk, even for the most passionate and determined entrepreneurs. It can even be more challenging if the odds in the small business ecosystem are stacked against you. While the gender gap in entrepreneurship is closing gradually there are some areas where it remains stubbornly wide.
This is particularly the case for growth-focused female entrepreneurs. From gender and cultural biases to a hostile business environment and the difficulty of balancing family and business responsibilities, there’s no shortage of challenges that women have to overcome to become successful entrepreneurs.
But the biggest challenge women face is a lack of small business financing. The high-growth support and investment eco-system remains resolutely male. Growth funders tend to be male and the businesses they support tend to be male. Luckily, things have been changing in the digital era. Different groups have marched to close the lending gap by providing business loans for women.
State of Women-owned businesses in the UK
Women are making a footprint in the UK’s small business ecosystem. According to a UENI study, 32.37% of businesses in the UK are women-owned. Per the 2019 Rose Review, that’s roughly one woman for every three entrepreneurs.
While their number is still small compared to male entrepreneurs, their contribution to the economy isn’t. According to FSB data, women-owned and women-led businesses provide 23.83% of the total private sector employment and contribute up to £221bn to the UK economy, 13.3% of GVA.
Unfortunately, women entrepreneurs have to succeed against all odds. According to the Telegraph, only 9% of startup funds in the UK go to women entrepreneurs. Again, women face rejection from investors, even if they have a proven record of a successful business.
Tips to take care of your finances to boost your business
Business finances are the fuel of your business. You need money to buy inventory, cover payroll, fund your marketing strategy, daily pivot operation, and adopt modern tech to streamline business operations.
Thus, improving your business finances helps ensure that there’s enough cash flow to meet immediate business obligations and jump into growth opportunities to expand your business.
Here’s a rundown of things to do to improve and take care of your business finances.
1. Build a cash reserve
All businesses go through ups and downs, especially in the early days. You are much more likely to survive this period if you have some kind of buffer fund to insulate the business from any unforeseen shocks. This is a viable option if you’re still employed but plan to launch your business idea in the future. Start saving money early so that you’ll have enough capital to start your business without borrowing.
2. Plow back
Savvy entrepreneurs use business revenues to keep their businesses growing. That means reinvesting part of their profit into the company to pursue growth opportunities. Industry experts advise that 30% of business profits should be used to purchase income-generating business assets.
3. Use rigorous cash flow management practices
Cash flow gaps are a bane for small businesses. To avoid cash crunches, you have to nail your cash flow practices. Master your accounts receivable and accounts payable, and have clear deadlines on when customers should remit debts and when suppliers and other business expenses should be paid.
For instance, you could collect customer dues on the 30th of every month and pay suppliers after 45 days. Thus, you can maximize business revenues to float operations without hurting your clients or suppliers.
4. Automate bookkeeping
Manual accounting systems are not only riddled with errors but also tedious and time-consuming. Automating your bookkeeping is a great way to avoid financial stress in your business. Modern accounting systems connect with your bank accounts and also with your payment terminal, syncing sales and suppliers’ data to updated accounts in real-time.
Again, they make it easier to share business records with your accountant for regular bookkeeping. Monthly management accounts and end of year summaries are available at the click of a button.
5. Take advantage of business programmes
Different government programmes, organizations, and nonprofits have come forth to collapse the support and lending gaps that exist for small businesses. These programmes tend to be localised. Check out your Local Enterprise Partnerships (LEP) to see what is available in your area.
Do your research and see whether you could be eligible for free business grants or qualify for business loan programs that offer business loans at favorable terms. If you qualify, it’s a great way to finance your business without the stress of dealing with banks and VCs.