Tiffany Johnson, MBA, CFP®

Jovan Johnson, MBA, CFP®, CPA/PFS

In the dynamic landscape of entrepreneurship, women—especially Black women—have emerged as a driving force over the past decade. A recent article by JP Morgan Chase reveals that Black women represent the fastest-growing demographic of entrepreneurs in the U.S., a true testament to their resilience. Harnessing their unique blend of capabilities and intuition, women entrepreneurs are equipped to navigate the complexities of building a thriving business. However, they face unique challenges and barriers, stemming from the constant juggle of business and personal life.

In this article, we discuss invaluable tips for successful women entrepreneurs seeking to continue building a thriving business.  

1.) Remember To Trust Your Instincts and Intuition

Entrepreneurs are often faced with tough situations where they must make quick decisions with limited information. One of the many superpowers that women possess is their intuition. As a women entrepreneur, it is key to lean into this strength when making business decisions. Women offer a unique and valuable perspective to entrepreneurship, often shaped by their life experiences. Trusting their instincts allows them to leverage this perspective to build a thriving business. 

Another superpower that women possess is emotional intelligence. Having emotional intelligence is critical to building and sustaining a business. Women tend to exude high levels of emotional intelligence. Women entrepreneurs can use this asset to their advantage, enabling them to understand their clients and employees better, communicate more effectively, manage conflict resolution, and build stronger relationships. 

While it is important to lean into your intuition, do not be afraid to seek advice and guidance from a strong support network. It is important to surround yourself with mentors, advisors, and other entrepreneurs to share insights and have people to lean on through the inevitable highs and lows. 

2.) Prioritize Flexibility and Set Boundaries

Whether you are the primary breadwinner, caretaker of a dependent, or take care of the home, it is common for women to manage multiple responsibilities at once. If you are a women entrepreneur, the business adds another huge responsibility to your plate. While owning a business can provide some level of freedom and flexibility, it can also be time-consuming. To manage all these responsibilities, you must take care of yourself first. 

Make sure you set realistic boundaries for yourself. As a women entrepreneur, it is imperative that you create a business that supports your lifestyle and not the other way around. Do not hesitate to limit your hours of availability. It is easy for entrepreneurs to work well into the night or work weekends. Be intentional about blocking off time on your calendar to unplug from your business. Consider making time for hobbies like working out, reading, etc.  

Another way to set boundaries in your business is to delegate work as your business continues to grow. Focus your energy on business tasks that align with your strengths and delegate the rest. 

Make business decisions based on what you want and what works best for you. You can create the lifestyle you want by actively prioritizing flexibility and setting clear boundaries. 

3.) Understand Your Business Finances (Income and Expenses)

Business financial literacy is a very important aspect of entrepreneurship. To make informed business decisions that can grow your business, you must know your business income and expenses. This information is also crucial for lenders, partners, and investors. If you ever want to seek a small business loan or grant, having an income statement (business income and expenses) is essential. An income statement is a financial statement that summarizes your business income and expenses during a specific period. This statement demonstrates your ability to manage finances effectively. 

By tracking your business income and expenses throughout the year you can identify ways to improve your cash flow in the business. In addition, this information empowers you to make informed business decisions, manage risks, plan for taxes, and plan for the future. 

Sometimes as a woman entrepreneur, you are just too busy with managing your business and other life tasks. As mentioned earlier, it is important to delegate and find a support network that can help you. Consider partnering with a Certified Public Accountant (CPA) that can help you keep track of your business finances and make sense of them. Ultimately, one of the main reasons small businesses fail is because of cash flow problems. 

Understanding your business finances is a fundamental aspect of building a thriving business. By prioritizing business financial literacy, women entrepreneurs can lay a strong foundation for business success.

4.) Protect Your Wealth

As you build your thriving business, do not forget about protecting your wealth along the way. There are certain mechanisms you can put in place now to ensure your wealth is protected in the case of an emergency. Let’s delve into some of the mechanisms below.

Let’s start with safeguarding your business credit. Just as it is recommended to check your personal credit report at least once a year for fraud or errors, it is also recommended to do the same for your business credit report. This enables you to promptly address any errors or discrepancies to protect your credit. A good business credit score is essential for accessing financing, securing favorable terms with suppliers, and demonstrating financial stability to lenders, partners, and investors. 

It is also a great idea to monitor your business bank accounts and credit cards frequently for fraud or unauthorized activity. Consider setting up fraud alerts via your bank and the business credit reporting agencies. According to a Motley Fool article, in 2022, the most common type of identity theft was credit card fraud. To protect themselves, women entrepreneurs should implement robust security measures such as using secure passwords, regularly reviewing account statements, setting up fraud alerts, and using a VPN server. 

Now, let’s turn our attention to insurance products. Entrepreneurs often overlook three types of insurance: business liability insurance, disability insurance, and life insurance. 

    • Let’s start with business liability insurance. Business liability insurance is a way to protect you and your company from potential lawsuits. There are various types of business liability insurance to consider based on your industry or type of work such as E&O (professional liability) insurance, business income coverage, product liability insurance, or general liability insurance. Women entrepreneurs should access their insurance coverage needs and work with an insurance professional to tailor coverage. 
    • Now onto disability insurance. Disability insurance provides a level of income replacement in the event of illness or injury that prevents you from working. I recommend purchasing both short-term and long-term disability insurance. Women entrepreneurs should purchase disability insurance coverage to protect their income and maintain financial stability during periods of disability. This enables you to continue living a similar lifestyle as before. 
    • The last type of insurance that I would like to discuss is life insurance. In addition to coverage for personal debts and wealth transfers to heirs, consider increasing your policy to cover business-related debts and succession planning needs. This will help to ensure business continuity in the event of your passing. 

Another key mechanism is an estate plan. Once you become an entrepreneur it is important to update your estate planning documents to include your wishes for your business in the event of your passing or incapacitation. You should work with an estate planning attorney and financial advisor to update your estate planning documents frequently to account for changes in your business over time. Learn more about the essential estate planning documents in one of my prior blogs. 

The last mechanism that I would like to discuss is a disaster plan. Listen, climate change is real. According to the National Environmental Satellite, Data, and Information Service, the US experienced 20 named storms in 2023.  Having a plan set in place in the case of an unexpected event such as a natural disaster or cybersecurity threat is critical, yet many business owners have no emergency plan. 

If your business is your bread and butter, you want to ensure that your business can continue to thrive in the event of an unexpected event. Women entrepreneurs should assess potential risks, develop contingency plans, and implement measures to mitigate the impact of unexpected events on business operations and finances. 

Ultimately, you hope to never have to use some of these mechanisms. However, having them in place enables you to focus on growing your business and serving your customers. This will allow you to safeguard your wealth and build a thriving business. 

5.) Establish a Business Emergency Fund (Separate From a Personal Emergency Fund)

Creating consistent cash flow is a challenge for most new business owners. Consider establishing a business emergency fund. A business emergency fund consists of 3-12 months of business expenses saved in an FDIC-insured high-yield savings account or money market account. These account types enable you to keep your emergency fund liquid and easily accessible, while also earning some interest along the way. The amount needed to save is dependent on your risk tolerance and specific financial situation. We typically recommend 6-12 months of business expenses to our business owner clients. 

Another strategy to safeguard your business against low cash flow months is to have access to an emergency business line of credit. This may serve as an extra line of defense in case your business experiences some financial challenges. 

Even the most successful companies face financial challenges at some point. Consequently, it is essential to develop a few lines of defense in preparation for potential financial distress at some point. 

Final Thoughts: 

Successful women entrepreneurs are essential contributors to our ever-evolving economy. They help drive innovation and job creation while also contributing to economic growth. Their unique perspectives and capabilities enrich the dynamic landscape of entrepreneurship. As we continue to celebrate the achievements of women entrepreneurs, let us also recognize the importance of continued support and empowerment.

 

Disclosures

None of the information provided is intended as investment, tax, accounting, or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Piece of Wealth Planning LLC does not promise or guarantee any income or particular result from your use of the information contained herein.