According to an article in Politico, nearly 1.8 million women have dropped out of the workforce due to the pandemic. Whether it was the result of ongoing childcare demands, a layoff, or burnout, many women are still struggling with the decision to re-enter the labor force. Others are embracing the idea of launching their own businesses and putting themselves in a position to control their own schedules, workload, and more.
Guidant Financial, a founding member of the Small Business Trends Alliance (SBTA), a group of companies dedicated to supporting small businesses with data trends and insights, recently surveyed more than 2,400 women small business owners to find out their motivations and more in Women in Business Small Business Trends: 2021. The study found 29 percent of the women entrepreneurs surveyed were motivated to launch a business because they were ready to be their own boss, 20 percent wanted to pursue their passion, 13 percent said the opportunity presented itself, and 7 percent had been laid off or their job was outsourced.
The research also showed that certain fields were especially popular among women looking to launch a new venture. For example, 14 percent of the women launched a small business involved in health, beauty, and fitness services; 12 percent were focused on business services; 11 percent opened a retail business; 11 percent ran a food and restaurant operation; and 7 percent had a business pertaining to the medical field or therapy.
One of the biggest deterrents to launching a business is a lack of capital. Many of the women (44 percent) financed their businesses with cash. Others relied on Rollovers for Business Start-Ups (ROBS) (15 percent), family and friends (13 percent), an SBA loan (7 percent), or a line of credit (7 percent). Even in the midst of a pandemic, 45 percent of women reported being very happy running their own business while 31 percent said they were somewhat happy.
While the pandemic has caused many women to re-evaluate their lives and careers, those who choose to make the leap to entrepreneurship will find an increasing number of resources to help. Melody Joy Short, an entrepreneur based in Richmond, VA, is cofounder of The Richmond Night Market, featuring work from local artisans, and cofounder of Jackson Ward Collective, a hub connecting Black entrepreneurs with resources to establish and grow their businesses in Richmond. Here, she shares some financial tips for getting started.
- Secure a relationship with a banker, certified public accountant, and financial advisor. They will be critical to your entrepreneurial journey and growth.
- Use credit cards as a credit-building tool, but be sure to avoid charging anything you don’t have cash in the bank to cover.
- Always pay yourself.
- Be prepared for the big challenges, such as ensuring access to capital. You’ll also want to prioritize continuing education, so you’re prepared to grow within your market and industry.
- Understand the importance of delaying gratification to ensure you are able to build a strong financial future for your business.
- Team up with your CPA to have a full understanding of the financials of your business.
- Save, save, save! Make sure you have a personal nest egg as well as one for your business so that you will be prepared for any unexpected expenses that may come your way. You also want to be able to take advantage of growth opportunities that require a capital injection in your business.
- Be sure to set aside money for your monthly taxes. You don’t want to be blindsided or unprepared when it comes time to file your annual return.
