Many women dream of starting their own business. And there are plenty of advantages. First, you are your own boss, and in control of your own destiny. Then, you get to produce that product or service that no one can do as well as you. You get the satisfaction of seeing your business grow. And there are plenty of tax advantages, too, including lucrative deductions, credits, writeoffs, and income-splitting opportunities.
Last, but not least, you stand a good chance of gaining true financial independence. Yet most of the successful businesswomen who consult with me on financial planning put the possibility of great wealth at the bottom of the list for starting a business. Mostly, it’s about the independence, flexibility, and challenge.
Where to start
The first item of business in starting a business is an intangible: confidence. Above all, successful businesswomen are overflowing with confidence. It may be trite. It may be a cliché. But it’s nonetheless true. To start your own business, you have to crush any doubts and trepidation (and there will be plenty of that) with an overwhelming “can-do” attitude.
Most businesswomen I know started by doing what they love to do best. Whether it’s selling real estate, managing investment portfolios, running a bistro-bakery, or selling rare books or baby booties online, they started with something they knew how to do really well or were really good at. A good many had already started small businesses on the side providing services to friends, relatives, and colleagues part time, while working at that drudge day job in some cubicle farm. With a little proven success already in hand, they decided to “go it alone” and make their part-time business their full-time work.
Another common trait of successful businesswomen is that they sought advice and support from their existing network of experienced business or professional colleagues who can offer invaluable insight into the ups and downs of self-employment. They expanded that network to include professional financial planners, accountants, and lawyers who are experts at business planning and financial management.
And networking through like-minded business groups, associations, and professional bodies can provide a goldmine of contacts, marketing know-how, and tricks of the trade to help get your business off the ground and keep it flying.
The two “Cs” of business finances
Most small businesses will almost immediately run up against what I call the two “Cs” of money: capital and cash flow. Some small businesses can get started with very little in the way of start-up capital (most any home-office desktop service operation, for example). Some will require more, for manufacturing and marketing a new product, for instance, and for inventory storage, distribution, and so on.
Small businesses with a good idea and not much else have a tough slog ahead of them. So lining up start up seed capital is essential. Most small businesswomen dip into personal savings, apply for bank loans, or approach investors drawn from family and friends, or sometimes those appalling venture capital types (of the sort you see on TV reality shows where the word “shark” or “dragon” figures prominently in the title). Rest assured these people are not representative of all venture investors, many of whom prefer to call themselves “angel” investors.
Even so, in order to really take care of capital and cash flow, you have to have a professional plan – a business plan. This is actually quite a rigorous document (you can find templates at the BDC website) that sets out quite explicitly what you hope to do and how you hope to do it, including research and study of your market, competition, and plans for your marketing, management, operation, and financing. Armed with this, you’ll know very quickly whether your business is viable and if so, you’ll also have a strong business presentation to make to your bank manager or potential investors.
Starting and running your own successful business is challenging, but it’s also hugely satisfying. To determine whether you’re financially ready to commit to your own business, talk to your financial planner. Not only is she a businesswoman in her own right, but also she’ll be able to give you valuable insight and advice as well as guide you through many of the technical details of business start-ups.
Courtesy Fundata Canada Inc. © 2018. Robyn Thompson, CFP, CIM, FCSI, is president of Castlemark Wealth Management. This article is not intended as personalized advice. Securities mentioned are not guaranteed and carry risk of loss. No promise of performance is made or implied.