Six tips for women entrepreneurs to manage their finances well


With women increasingly choosing to become entrepreneurs, it is crucial that they understand how to make sound financial decisions.

Be it the elegant Indra Nooyi or the exuberant Kiran Mazumdar Shaw, the dynamic Chanda Kochhar or the lion-hearted Arundhati Bhattacharya, women are making headways in the corporate world like never before. They are proving their mettle by securing a position in the corporate boardrooms and becoming a voice of several industries.

India is becoming a huge market for startups and SMEs, reflecting the rise in entrepreneurial ambitions of the population. Several women are putting hard work, an envious business IQ and leadership traits to work and starting their own ventures—breaking away from the beaten track and exploring new avenues of economic participation.

Wooing investors, however, is no easy task. With more and more women choosing to become entrepreneurs, it is crucial that they understand how to make a sound financial plan. Creating a financial plan is really a feasibility study of what it takes to be successful. Getting funding for your business venture is reliant upon how enduring your business plan is. Preparing an unrealistic financial plan is usually why most entrepreneurs find it difficult to secure investors.

Most business owners often use their personal savings or money borrowed from friends and family to fund their startups. This exposes them to risks that occur due to financial instability. It is important that you take an organised approach that does not put your family at financial risk. Here are some tips for women entrepreneurs to keep their financial life in control, while going through the grind.

1. Create a financial plan and set objectives

First and foremost, you should set a realistic financial objective for your business and create a financial plan to achieve this objective. A financial plan, simply put, is a written set of goals, strategies, and timelines to achieve these objectives.

It provides direction and gives you a target that can help you evaluate progress, and prioritise the most efficient use of your financial resources.

It is also important that you periodically review this financial plan to judge the performance of various investments so that changes can be made as per the circumstances. A periodic review will allow you to calibrate investments that provide best possible returns.

2. Take professional help

Saba Adil

Getting involved in a new business can be overwhelming and you can sometimes end up making the wrong choices that create a risk of financial instability.

Financial planning requires a lot of dedicated time. Successful entrepreneurs must spare some time periodically to review their personal and business assets and liabilities. A financial expert can create a well thought-out financial plan to help you reach your goals. Having an advisor on board will only make your entrepreneurial venture a smooth and steady ride.

3. Understanding investments

As an entrepreneur, you should not rely on someone else’s decisions to build your financial strength. It is your venture, so own it. Accept your risk appetite and be aware of your preferences. It is important to increase your knowledge on investment options. Feel free to explore, experiment and invest.

4. Forecasting financing requirements

Estimating your financial requirements will show you how much money you will require and when. It will also show you where you may face a shortfall. Revenue and expense projections can then be adjusted to avoid the shortfall.

5. Prepare yourself for an irregular cash inflow

An irregular income is not unheard of for entrepreneurs, but extra funds are a must to take care of the planned expenses. Controlling your expenses and keeping them within what you earn can help you save a decent amount of money every month. This can be a good way to create a contingency fund to support your business expenses in case of an irregular cash inflow. A contingency fund alleviates the pressure on entrepreneurs and helps them maintain their focus on the success of their venture.

While a contingency fund will help you in the short term, it is crucial that you discover the reasons for the irregular income and take corrective measures.

6. Separating business funds from personal funds

More often than not, many entrepreneurs end up spending their personal savings to start a business or a contingency fund. However, you must understand that using your personal funds means exposing yourself and your family to financial liability and instability.

Entrepreneurship is adventurous and liberating, and managing financial decisions is a vital part of it. For years now, women have been in control of handling the household — ensuring that expenses and income are aligned accurately and preparing for exigencies.

So why should it be difficult to take on a new business venture? Women can do it all.

(The author is chief people officer, Aegon Life Insurance.)

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