How To Measure Your Financial Performance As a Female Entrepreneur in 2020?

#cashflowstatement #femaleentrepreneurs #financialcoach #insurancepolicy #investmentportfolio #retirementplan #selfemployment Dec 28, 2020
How To Measure Your Financial Performance As a Female Entrepreneur in 2020?

According to studies, women-owned businesses have increased by 114% in the last decade, and women own about 39% of firms (held privately) in the United States! 

At the same time, several gender-based obstacles and unfavorable business conditions surround women. Even though they are passionate about driving change, it is not hard to see why women entrepreneurs may be struggling to maintain their businesses.

Despite the growing success of businesswomen and female entrepreneurs in the industry, studies show that women-led ventures are more likely to collapse and not meet their intended goals. This is due to several reasons: lack of professional financial assistance, an inability to follow a financial budget, or investing more resources than needed.

However, this does not mean that they can't learn and get ahead of the game! The 2019 Forbes list of America's richest women included a diverse set of women from many industries such as cosmetics, fashion, technology, and many more!

So, as the year ends, it might be a good time to look at your financial reports and assess your business performance to see how you fare in the bigger picture. This entails a detailed look at your financial stability in terms of assets and savings. 

Here are a few questions to consider when judging your financial performance as an independent female entrepreneur this year:

Have you invested in securing your retirement period?

Ensure that you have a retirement plan in check as soon as your business starts to take off. Make a plan that works well for you. Compound interest over time is likely to optimize your savings, making your retirement period comfortable for you. You can learn about an Individual Retirement Account (IRA) here.

Self-employment also offers more opportunities for business tax reductions. Hence you can save more money in investment accounts that are specially designed for entrepreneurs.

Do You Have An Insurance Policy To Fall Back On?

When you start your business, one of the first things to secure your business is a business insurance policy. Start-ups are especially prone to going bankrupt because they have fewer funding opportunities, and in case of a business deal gone wrong, they can face immense losses. A business insurance policy ensures that the costs of your business can be covered in most circumstances.

In case of a natural disaster, theft, or a collapse of a building that can cause you to lose income, an insurance policy can compensate you for all the costs of the damages and provide you with temporary income.

For a small business, any short period of income loss can cause your business to shut down. AXA Women In Insurance is an initiative that provides a 360-degree approach to increasing women's access to avail insurance policies and services and empower them according to their business needs.

How Diversified Is Your Investment Portfolio?

Before making any investment decisions, it is always a good idea to analyze how well the current market performs. Different types of funds function differently under market conditions. For example, stock markets change quickly, and if your stock investments make up more than 5% of your investment portfolio, your business is at risk of losing out in case of a stock market crash.

This is why it is crucial to have a diversified portfolio of investments such as stocks, bonds, cash, or other assets whose returns do not move in the same direction.

Diversifying your investments means that you're reducing the chance of any unpredicted risk to your capital. And if you have your assets spread across a market, the chances are that you will likely have some investments that will be performing well at any given time.

What Does Your Cash Flow Statement Look Like?

A business's cash flow statement indicates the number of money inflows and outflows for a given period. This helps know how well your company manages all its business operations with the cash available and how much net cash is being generated to pay existing debts.

A regular review of your cash flow statement is essential to assess how much profit you're making every year. You can also determine whether your net profit increases every year and, if it does, by what percent it is growing. 

Are You Prioritizing Your Savings?

It is no news that women have been increasingly outperforming men in the stock market. Successful female investors have all made long-term financial goals that involve meeting their financial targets and investing in long-term concrete and realistic saving goals.

Whether it's maternity leave or a daughter going away to care for an elderly parent, the time taken away from work often hinders her earning potential. In times like these, it is the savings fund that can be of considerable benefit.

Ideally, 15% of your total income is a good target to start investing in your savings fund. If you're young and have started your business right after college, you can opt for more aggressive investment options such as stocks. And as you move towards retirement, it is preferable to switch to more conservative options that can easily be converted to liquid cash.

However, you can take help from a financial coach who can consider your business operations and guide you towards your savings goal. I have designed a program that prepares customized budgets for you and helps you reach your savings goals faster. 

Suppose your business is generating generous profits by the end of the year, and you're meeting your debt obligations while also contributing to other goals such as an emergency fund. In that case, the chances are that your business is performing well enough to maintain stability and generate long-term profits.

Did You Manage To Expand Your Networking?

Networking may seem like a non-financial performance indicator, but it is all that matters in the long run. Good connections form the basis of a long-lasting, successful business. Most entrepreneurs will testify that a sound networking system is vital to secure business funds and get more clients. 

Thanks to advanced technology and social media, connecting with new people is not a problem anymore! Even with social distancing and virtual communications taking place worldwide, smart company leaders leverage this opportunity to be more accessible. Even if you cannot do any hiring, you can offer relevant expertise, skills, and advice to your audience, as well as to your potential investors, vendors, and agencies.

According to the Annual LinkedIn Global Survey, 80% of professionals consider a robust networking platform to be one of their significant contributions to success. A good communication strategy can go a long way in building relationships, impressing investors, and winning opportunities with potential employees and investors.

Make sure to follow industry leaders in our niche, attend conferences, join organizations, and provide valuable feedback for every discussion you have with fellow entrepreneurs.

Remember, everyone has something valuable to offer. Suppose a woman with a good idea and a vast connection of people gets the opportunity to present her business idea. In that case, chances are she is likely to secure substantial funding quickly.

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