INVESTING ADVICE FOR WOMEN SMALL-BUSINESS OWNERS

By Samantha Paxson, CXMO, CO-OP Financial Services

Originally Posted on The Secrets of Success Blog

Women increasingly desire flexible work schedules that free them from 9-to-5 obligations, enabling full participation in their personal and family lives – and control of their own destinies.

Numbers confirm it: Women-owned firms account for 31 percent of all privately held firms, contributing 14 percent of employment and 12 percent of revenues. NAWBO, the National Association of Women Business Owners, says that more than 9.4 million U.S. firms are owned by women, employing nearly 7.9 million people and generating $1.5 trillion in sales.

Whether they are millennials or moms who’ve temporarily taken a break from the workplace, savvy female entrepreneurs know that hard work is not enough to ensure success. Not only must business owners be on-call 24/7 and reinvest precious profits to grow the business, but they also must invest wisely for the future.

In a Money Tips column from U.S. News.com, Kimberly Palmer warns women to learn to manage their money at every stage of life. That guarantees they can develop and stick to a budget, know the importance of emergency and retirement funds, and understand the costs of education and home ownership.

Palmer notes that early in their careers women must capitalize on their earning power, never passing up opportunities to move up, work more hours or request more pay. If they are in a relationship, women must not let it sabotage their savings. Discussing money early and often ensures that potential partners are on the same financial page.

Most of us have three sources of money: Savings, a pension or retirement savings plan, and Social Security. Because women sometimes take time off to raise children, they often have lower incomes, which makes it critical to save money.

But in a New York Times article, Jeff Brown warns that the skills used in starting a successful business may not be the same ones required to make wise investments. “Sure, some small-business people are great investors. But be honest: if you devote 60, 80 or 100 hours a week to your business, do you really have time to read 100 prospectuses to find 10 good stocks?”

While risk-taking benefits businesspeople, new investors must keep things simple. “Spread your eggs among many baskets, keep fees and taxes low and tilt the odds in your favor with indexed mutual funds and exchange-traded funds,” Brown advises.

Money management for women is straightforward, writes Forbes writer Jenna Goudreau. She interviewed Maria Coyne, executive vice president of business banking at KeyBank, who offered these tips:

  1. Crunch the numbers. “Women with high-growth companies really ran the business by the numbers, understood cash flow, and had a handle on balance sheets,” Coyne says. If this doesn’t sound like you, a mentor, business partner or accountant may be in order.
  2. Form an advisory group. Working with other business owners can help women learn about finances, marketing and management.
  3. Remember, this is business. “Women business owners treat employees like family and are slow to make decisions around staffing,” Coyne notes.
  4. Make use of contract workers. Many women who want to expand use contract workers instead of hiring full-time employees. It’s the perfect time for it, since so many talented professionals have been displaced by the market and are looking for work.
  5. Embrace new technologies. Electronic deposits and transfers are time-savers and social media can be a no-cost way to reach new customers.

U.S.News.com’ contributor Tiffany Aliche warns women that to remain profitable they must reinvest in their businesses. A few smart investments can make a big difference right away:

  • Business mentors or coaches are helpful. They offer seasoned experience, business acumen and expert connections.
  • Bookkeepers and tax preparers can save owners time and money, keep the business organized, ensure the proper deductions and avoid unexpected tax bills.
  • Experienced web designers – or even budget website builders like Squarespace.com – can help ensure that the business website makes a good first impression and serve customers well.
  • Marketing specialists, such as skilled freelance copywriters or graphic designers, can create and maintain a visual brand, write scintillating copy and design usable brochures, case studies and blog posts. Quality marketing materials translate outreach into sales.
  • Administrative tasks swallow up too much time. Consider outsourcing work like scheduling, customer service, packaging, social media marketing and correspondence. “Make more time in your day to be the visionary instead of the workhorse,” Aliche advises.

Investments needn’t be complicated or even costly. Smart women business owners can use the funds they have right now to begin investing wisely. And, as they pay off debt and squirrel away emergency funds, they can consider making more money immediately by requesting the higher salaries they deserve and charging more for their stellar professional services.

About the Author: Samantha Paxson is the Chief Marketing and Experience Officer at CO-OP Financial Services, a financial technology company for 3,500 credit unions and their 60 million members. She is the architect of the company’s go-to-market strategy, managing the ways CO-OP’s brand experience is delivered through message, product and value chain. Samantha is also the Founder of THINK by CO-OP, an innovation content platform empowering the evolution of mission-driven financial services.