The U.S. Small Business Administration designated October as Women’s Small Business Month to recognize the contributions of women to small business in our economy.
Women-owned businesses are one of the fastest growing segments of the small business community. In fact, the number of small businesses owned by women is growing 50 percent faster than the total number of small businesses. And the numbers don’t seem to be slowing down anytime soon.
Based on projections by The Guardian Life Small Business Research Institute, women-owned companies will produce one-third of new U.S. jobs by 2018, compared with 16 percent now. And of the 9.72 million new small business jobs expected to be created by the same year, women are projected to contribute over half.
When it comes to women-owned businesses, Detroit is a leader with 49.7% women-owned businesses according to the SBA. This compares to 25% nationally. And in Michigan, women-owned businesses contribute approximately $30 billion in revenue.
Even more powerful is over a ten-year period, from 1997 to 2007, women-owned businesses grew twice as fast as men-owned businesses. According to the U.S. Department of Commerce, 500k jobs were generated nationally.
Why such a success rate with women-owned businesses?
While any entrepreneurs have certainly built their foundation in the corporate world, Aubrey W. Lee, Jr. first vice president, Merrill Lynch, says, “Many women are dissatisfied with corporate jobs and are turning to entrepreneurship as an alternative route to a successful career. Women business owners tend to seek out new ways to stand out from the competition and utilize networking more than male business owners.”
He notes several factors which contribute to their overall success including community support, increased networking, minority programs and business development training. Additionally, women tend to be more customer-focused, community-minded and more likely to create opportunities for others and help others, including their employees, to succeed.
Many women feel like they’ve hit the ceiling in corporate and as Lee says, “By starting their own business, the glass ceiling is removed and women become free of office politics.”
Despite phenomenal growth, critical challenges remain.
Finances: Having a strong understanding of the financial aspect of business is crucial and can often make or break a business’ success
Multitaskers: Women are more likely than men to be primary care givers for aging loved ones while trying to start or maintain a business-so, how does one balance personal versus professional needs?
Retirement: The August 2012 Merrill Lynch Affluent Insights Survey (MLAIS) found that 66 percent of affluent women are concerned about their retirement assets lasting throughout their lifetime, compared with only 54 percent of men.
With these challenges, what do you do?
Lee states, “Working with a trusted financial advisor on different options that are available can help ease this confusion. It is also important to discuss goals related to personal finances and business finances, and determine how you will meet those goals.”
In doing so, Lee offers the following advice:
• When starting or working to revitalize a business, it’s important to speak with key professionals and gather as much knowledge as possible.
• Get credit reports in check so any errors are removed before you need to provide to it to lenders.
• Discuss which benefit plans are applicable to you and your situation so you are prepared to bring on employees when the time comes, and
• Businesses whose growth has stalled should consult the appropriate professionals.
In a nutshell, small business owners should have a plan and strategies for meeting their day-to-day expenses and focused on long-term growth.
This is where a financial advisor can help.
Lee says a financial advisor can help with developing a plan, particularly in the areas of establishing lines of credit, acquiring commercial real estate financing, obtaining appropriate insurance for your business and assisting in setting up suitable tax professionals and mentor you to make the financial decisions necessary to help you grow your business and succeed.
Most entrepreneurs are risk adverse and cash flow is a concern.
Lee says, “A financial advisor can suggest low-risk investment options that will not deplete your savings if any unfortunate circumstances should occur. Small businesses may be more reluctant to tie up money in investments.
However, this does not mean they should not consider investing. A financial advisor can help small business owners with these conflicting issues.”
Have you thought about how to grow your business and do you have a plan? If not, consider reaching out to professionals, such as a financial advisor who can help.
You can reach Lee at (248) 348-3990 or Aubrey_LeeJr@ml.com.