Let’s be honest… the business of running a business is complicated.
Most entrepreneurs are experts in their core products or services, but few begin with the business and financial knowledge they ultimately need to succeed.
For women in particular, there still exists a financial literacy gap. According to TIAA, men correctly answered 56% of questions designed to measure financial literacy, while women correctly answered 49%. Sixty percent of men correctly answered over one-half of the questions, while women correctly answered 25% or less.
Know What You Don’t Know
The good news is you don’t have to know it all. One of the keys to success is knowing what you don’t know, so you can get help from people who do.
Here are five ways you can improve your financial know-how and bolster your chances of personal and professional success:
1. Know your limits
You don’t have to be an MBA or CPA to run a successful business. You simply have to be willing to ask for help when you need it. For women, this can be hard. Accustomed to performing the balancing act of work, home, family, friends, and hobbies, women tend to want to or feel like they must do everything themselves. But asking for help is really a strength, not a capitulation to failure.
2. Know your industry
Most entrepreneurs will need a business loan at some point, and getting a business loan requires a business plan. Though this can be one of the more daunting challenges of starting a business, doing the research that’s necessary to build a business plan is both highly informative and essential. It’s also one of the things that a good financial and business advisor can help with.
3. Choose wisely
One of the best investments of your time and attention is the process of finding the right advisor and partner. Like finding the right doctor, you want to find financial advisors you connect with, trust and can form a partnership with. Financial planning is a dynamic and lifelong journey, changing as your life and your business change. You need to feel connected to whoever is walking that journey with you. So, meet with as many financial advisors as it takes until you find the right partner for you.
4. Think local
An excellent place to start for financial resources is at a local community bank. They are invested in and depend on the communities they serve and have a strong interest in the success of local entrepreneurs. It’s a symbiotic relationship––your bank’s network of connections and resources becomes your network of connections and resources, and your success is also their success. Community banks can focus on developing close partnerships with their clients to help them reach their goals. If your business does expand regionally, nationally, and internationally, your local bank can work with you to find good partners at larger institutions if needed.
5. Work with a fiduciary
A financial advisor who is a fiduciary is obligated and committed to work in your best interest–always. For example, if your financial advisor is handling investments for you, be sure to understand how their fee structure works. It should be fair, and transparent, and have no conflicts of interest like commissions or quotas. Remember, financial planning goes well beyond a business plan; it encompasses your loans, investments, retirement plan, estate plan, succession plans, taxes, and other financial considerations. It’s a sometimes complicated and continuing process and finding trusted fiduciary advisors who are committed to doing the right thing for you is critical.
Building and running a successful business is a journey full of ups, downs, failures, and successes and most people can’t do it all. Focus your time and energy on what you do best and partner with trusted advisors for the rest. It really does make all the difference.
Vesna Dodge, JD serves as the Executive Vice President, Wealth Management and Trust for Baker Boyer, a nationally chartered bank. She brings an exceptional background as a practicing estate planning attorney prior to joining Baker Boyer, and her expertise in law and her experience in various roles at Baker Boyer has given her a strong foundation with which to lead Baker Boyer’s Asset Management Division and the Tri-Cities branch. She is licensed with both the Oregon and Washington Bar Associations and is a member of the Benton Franklin Bar Association and the Tri-cities Estate Planning Council. She also serves as a board member of the Tri-City Development Council (TRIDEC).
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