Starting a business can be exciting–and downright exhilarating–but it can also be exasperating. And while entrepreneurship can be challenging for anyone, it is particularly challenging for business owners of color, and the pandemic has only exacerbated these issues.
For example, areport from the University of California at Santa Cruz reveals that 41% of Black-owned businesses closed their doors by the middle of April 2020, compared to 32% of Latinx-owned businesses, 26% of Asian-owned businesses, and 17% of white-owned businesses.
So what accounts for these disparities? We talked to several POC business owners to discover some of the challenges they face.
Funding
Overwhelmingly, the POC business owners we interviewed identified funding as the major challenge or obstacle to their success. “People of color have less access to capital—it is harder for them to obtain business loans in order to make renovations to a building they want, or to purchase the proper technology, or to build their team to be successful,” saysSherese Patton, founder and principal publicist at SLP Media Relations.
“POC are more likely to be denied a business loan or a business line of credit due to racial discrimination or because their credit score is not as high as it should be, but how can you build credit if no one will give it to you?”
Her view is shared by Nerissa Zhang, CEO ofThe Bright App, which helps studio owners and fitness instructors to manage their businesses on a smartphone. “A major challenge that POC business owners face is getting funding,” Zhang says. “Between 2009 and 2017, nearly half a trillion dollars of venture capital was raised, but just 0.0006% of that was raised by Black women, despite the fact that we’re the most educated demographic group in the United States.” (She’s referring todata from the National Center for Education Statistics, which reveals that Black women earned 67% of associate degrees and 64% of bachelor degrees, which is a higher percentage than any other group.)
One person who has firsthand experience with limited funding for minority entrepreneurs is Angelique Hamilton, founder and CEO of theHR Chique Group, which provides HR consulting, and operational planning and review services. “Bootstrapping is the main finance option for POC businesses because the level of banking and financial support to POC businesses is dismal.”
The most recent example is the Paycheck Protection Program designed to help businesses struggling to stay afloat during the pandemic. Asurvey by Color of Change and UnidosUS reveals that 51% of Black and Latinx small business owners that requested assistance sought amounts less than $20,000. Still, only 12% received assistance.
Another challenge POC business owners face is a lack of knowledge regarding the funding process. “I, like many POC, had to overcome a significant learning curve around funding, financial savvy, and business development,” says Magdy Kotb, founder ofThe Clothing Coach, a custom clothing line. “The public education system, primarily in lower-income neighborhoods like the ones I grew up in, has failed us.”
Kotb says he went to traditional banks and was turned down—even by one he banked with for over a decade. “My initial funding came from a nonprofit that supports immigrants and POC. This educated me on CDFIs (Community Development Financial Institutions) and other community resources.”
The Ripple Effects of a Lack of Funding
The inability to secure funding can also adversely affect other areas of the business. “Raising capital without financial assistance and support can be problematic to establish a profitable and viable operation,” Hamilton explains. “It's vital to have adequate funding to maintain a sustainable business, and a shift is warranted in lending to transform how POC businesses are evaluated and valued to level the competitive landscape.”
The challenges of accessing capital mean that POC businesses will struggle to compete with their non-POC counterparts. “And this can ultimately affect their ability to scale their businesses and attract larger contracts and deals,” says Tiffany Williams, CEO and principal consultant ofOrganized Energy Coaching and Consulting.
The inability to access capital can also manifest in other ways. “It can affect the ability to tap into strategic software, tools, programming, and services that would aid in operating more efficiently, effectively, and strategically,” Williams explains. “Without these things in place, the client experience may suffer slightly as well.”
POC business owners are also more likely to work alone—usually due to a lack of funding—and this can lead to a variety of problems. “It has been reported that 95% of Black small business owners are solopreneurs,” says Williams. (Recall that the PPP was designed to help small business owners continue to pay their employees during the pandemic; however, most POC businesses don’t have enough funds to hire employees.)
Williams conducted her own survey to find out how POC entrepreneurs were faring. “Many who responded to my recent survey shared that they often feel overwhelmed in their businesses due to the lack of staff/team,” she says. “Because they wear several different hats within the business, they suffer anxiety, frustration, and burnout.”
A Lack of Respect
Another challenge that stood out among our respondents: a lack of respect, which can manifest in various ways. “A lot of times I do feel like people don't take our business seriously, and that is where the lack of support starts to take place,” says Michael LaVan, owner ofHomes By LV, a real estate investment company, and the author of I Got the Keys, a step-by-step book for first-time homebuyers. “It's almost like they expect us to fail or not give great service for some reason.” He’s had firsthand experience with consumers searching for a particular service and becoming skeptical when they find out that it’s a Black-owned business.
Williams says she also sees people making assumptions based on skin color. “Many times, before they are given opportunities in a fair and equitable manner, their character, competency, and level of performance/quality are questioned and doubted,” she says. “POC business owners are sometimes slighted opportunities for work simply because some misinformed people equate Black business with poor quality, poor service, being unqualified, and so forth—and of course, these assumptions are simply not true.”
Business owners of all colors can provide excellent, good, fair, or poor service. But our sources found that poor service seems to be an expectation for them, and Black businesses aren’t given the same benefit of the doubt as non-POC businesses. “I’m sure there have been cases in which a POC business was a scam or the customer service was terrible, but it should not be a black eye for POC business owners across the board,” Patton says. In essence, she’s asking for POC businesses to be judged by the same standard as non-POC businesses.
And a lack of respect can come from all sides. “Another challenge I’ve faced as a POC business owner is everyone from investors to clients to employees not respecting me as a leader,” says Zhang. In fact, she says that she’s fired employees who weren’t comfortable having a boss who was a woman of color.
A Lack of Support
Closely related to a lack of respect is a lack of support. In the wake of George Floyd’s death, there was a surge of support for Black businesses, but it remains to be seen if that level of support is sustainable.
However, another challenge is a lack of support from those closest to these entrepreneurs. “You have people who want the ‘friends and family discount,’ which makes it harder to make money on a regular basis,” says Patton. This is something that LaVan routinely sees. “Black business owners are frequently asked for discounts from their close friends who wouldn't dare ask the same thing of another business owner from a different culture offering the same service.”
He says this lack of support also takes the shape of people willing to debate costs. “When we price our service or products to where we think it should be, people sometimes don't believe it's worth the number we value it at.”
A Failure to Protect Intellectual Property
Intellectual property can include patents, trademarks, copyrights, and trade secrets. “In my area of expertise, a primary challenge that POC business owners face is access to trademarks,” says Radiance W. Harris, Esq., founder and managing attorney atRadiance IP Law. “Many do not understand the importance and value of securing trademark protection to ensure legal ownership and exclusivity in their industry as they grow their brands and businesses,” she says. Even among those who take this step, she notes another problem: as a result of limited cash flow, Harris says some POC business owners will use a DIY method or a cheap document filing service instead of hiring experienced legal counsel.
A Lack of Confidence
As a result of their personal experiences and the stats surrounding survival rates, it’s easy to see how some POC entrepreneurs might have a negative view regarding their chances of success. “They face overcoming self-doubt, limiting beliefs, and scarcity mindsets,” Harris explains. “However, the key to business success is believing wholeheartedly that you can achieve your business and income goals.”
Studying POC pioneers likeMadam CJ Walker can provide insight and inspiration for this generation of entrepreneurs.
You’ve probably heard jokes about the reliability of Ford vehicles. There are lots of reverse acronyms floating around out there, such as “Fix Or Repair Daily,” “Fast Only Rolling Downhill,” “Fails On Race Day,” or “Found On Road Dead.”
But do people really think Ford cars are inferior? Some of the most popular cars on earth have rolled out of Ford factories, so there don’t seem to be any wide-scale issues. Perhaps the derisive jokes originate from jealous folks working over at Chevy or Hyundai.
The Ford Motor Company never would’ve existed if it hadn’t been for Henry Ford’s penchant for tinkering with machines. His first gas-powered vehicle was called the Quadricycle, which he created in an old shed jam-packed with gears, tubes, and other gizmos.
Five years after establishing the Ford Motor Company, Mr. Ford was ready to release his Model T on the market. Reaching that point required ingenuity and zeal. Using 1908’s top technology, Ford managed to invent the first moving assembly line. The company’s innovations meant that it only took about 45 minutes to complete each Model T, with a new car rolling off the line every minute or so. Ultimately, they produced over 15 million of these “Tin Lizzies.”
“The Model T was actually affordable, and it became so popular at one point that a majority of Americans owned one, directly helping rural Americans become more connected with the rest of the country and leading to the numbered highway system,” says History.com. “The manufacturing needs of the Model T went hand-in-hand with Ford’s revolutionary modernization of the manufacturing process.”
While Ford doesn’t dominate the market like it once did, it still sells millions of cars each year. And the brilliance of Henry Ford continues to play a role in the company’s methods and products.
Even if you prefer Honda, Toyota, Subaru, Tesla, or some other manufacturer to Ford, it’s hard to deny the brilliance of its founder. Let’s look at some of Henry Ford’s business advice to see what it can offer modern entrepreneurs.
"Education is preeminently a matter of quality, not amount."
This quote teaches us that it doesn’t matter what’s in your past. What matters is that you have a great idea and the expertise to bring it to life.
"The short successes that can be gained in a brief time and without difficulty are not worth much."
No entrepreneur sets out to create a flash-in-the-pan company—we all want to build businesses that become legacies. So don’t shy away from challenges and failure, as they’re both part of the long game.
"Nothing can be made except by makers, nothing can be managed except by managers. Money cannot make anything and money cannot manage anything."
Henry Ford was a creator of the first order. He understood that all the money and resources in the world can’t produce exceptional results—only the right person can. Your goal should be to be that type of person.
"Most people think that faith means believing something; more often it means trying something, giving it a chance to prove itself."
The best small businesses are founded on risks. If the outcome of each of your decisions was always a guaranteed success, all your competitors would be making the exact same decisions, and it’d be impossible to stand out. Don’t be afraid to come up with new ideas that deserve the chance to prove themselves.
"Be ready to revise any system, scrap any method, abandon any theory, if the success of the job requires it."
There will inevitably be times when you pursue a bold idea and it fails to deliver. Such is the nature of innovation. Just make sure to move on when it’s time, rather than clinging to your precious idea and compounding the negative impacts.
"Many people are busy trying to find better ways of doing things that should not have to be done at all. There is no progress in merely finding a better way to do a useless thing."
The life of a business owner often feels like a crash course in multitasking, not unlike the amazing plate-spinning acrobats seen in this video. By focusing your efforts where they’ll have the most impact, you can usually save time and secure a better ROI.
"Businesses that grow by development and improvement do not die."
As the old saying goes, you’re either green and growing or you’re ripe and rotting. In order to keep your business healthy, you’ll need a mindset of improvement.
By applying the wise words of Henry Ford, you can put yourself on the path of innovation and progress. It’s no coincidence that the forward-thinking Ford installed assembly lines in his factories that literally never stopped moving. Your business probably won’t ever feature an assembly line, but it can certainly benefit from the idea of constantly marching toward greatness.
(Featured Image: Unknown author, CC0, via Wikimedia Commons)
Accumulated depreciation refers to the total amount of depreciation expenses related to your business. Your business likely has multiple assets that appreciate or depreciate over time. By tracking changes in the value of your assets, you can get a clear view of what your business is worth. Here are a few common questions about accumulated depreciation.
What Are Some Examples of Depreciating Assets?
Each business has its own assets that appreciate and depreciate. Depending on the type of business you have, types of depreciating assets might include your equipment, fleet of vehicles, furniture, and/or technology.
For example, if a restaurant buys a couch for customers to sit on, it will start to depreciate in value as soon as someone sits on it. Stains from spilled food, wear from people sitting on it, and general interior design trend shifts will decrease its resale value. This is no different from the couch in your living room at home.
Conversely, some assets may increase in value, or appreciate. The most common example of this is real estate. A business might buy a property and pay it off over a decade then significantly profit from selling the space because the land value appreciated.
What Type of Account Is Accumulated Depreciation?
You can find accumulated depreciation under the fixed assets column of the balance sheet. Even though depreciation is considered a loss in business, you still track it under your assets to get a clear value of what your company is worth.
For example, if you spend $30,000 on a delivery van, you would record that amount under “fleet” in your balance sheet. After a year, the depreciation might be $2,000, meaning the true value of your fleet asset is only $28,000.
Why Should You Track Depreciation?
Tracking depreciation gives you an accurate idea of what your company is worth at a given point in time. If you need to take out a loan, you can use the value of your business as collateral. If you want to sell your company, then you can value your assets accurately.
Can You Control the Depreciation in Your Assets?
There are some factors to depreciation that you cannot control. For example, cars almost always depreciate in value unless they are rare antiques. However, you can take some steps to slow the rate of depreciation. In the case of cars or trucks, this means performing regular maintenance, driving carefully, and avoiding accidents. These activities will help the resale or trade-in value when you need to upgrade.
How Can You Track Deprecation?
You can track basic industry trends to understand what your assets are worth. Kelly Blue Book is a good tool for tracking a car’s value. You can also see what other pieces of equipment sell for online.
Some companies set up formulas for asset tracking. For example, they might reduce an asset’s value by 10% during the first month (because the item is no longer new) and then subtract a percent of the value each quarter. This makes researching accumulated depreciation easier, but it means it’s not always accurate.
As a business owner, you want your accounting statements to be as accurate as possible to help you make sound financial decisions. Use a tool like Lendio's software to track your expenses and invoices to get a clear view of your company’s finances.
The first thing to know about subsidiary companies is that they can offer tax advantages. In this rocky business environment where financial strain has forced more than a few small businesses to permanently close their doors, any positive tax news should be greeted with open arms.
But before we get into those details, let’s back up and look at what defines these companies. A subsidiary is a company that belongs to a separate company that controls more than half of the subsidiary’s stock. The company holding the controlling interest is known as the parent company (aka the holding company).
Basically, if more than half of your company’s equity is controlled by a separate company, you are likely a subsidiary. In this arrangement, the parent company plays a key role. They help elect the board of directors for the subsidiary and can exert influence on multiple aspects of the business operations.
“Subsidiaries are common in some industries, particularly real estate,” explains a report from The Balance Small Business. “A company that owns real estate and has several properties with apartments for rent may form an overall holding company, with each property as a subsidiary. The rationale for doing this is to protect the assets of the various properties from each other's liabilities. For example, if Company A owns Companies B, C, and D (each a property) and Company D is sued, the other companies can not be held liable for the actions of Company D.”
Now let’s look at some of the tax implications for subsidiaries. Because a subsidiary is a separate legal entity, it must often do all the things that a normal business would. This includes maintaining financial records, recording all liabilities and assets, filing tax returns, and paying income taxes. This level of independence is noteworthy because it opens the door for financial benefits for the parent company. For example, if a parent company in Canada owns a subsidiary based in Germany, the subsidiary might pay taxes on its profits according to the laws of Germany rather than lumping its financials together with the parent company and paying in Canada. This dynamic can often provide tax benefits for the parent company.
Similar tax savings might also be available at the state level. For example, let’s say a parent company in California wanted to use a new trademark. If the trademark taxes were particularly high in the Golden State, the company might create a subsidiary in Wyoming in order to take advantage of that state’s more favorable tax rates.
This is not to say that the financials of subsidiaries and their parent companies are completely separate. There are times when a parent company will consolidate things in order to save money.
“However, many public companies file consolidated financial statements, including the balance sheet and income statement, showing the parent and all subsidiaries combined,” says The Balance Small Business. “And if a parent company owns 80% or more of shares and voting rights for its subsidiaries, it can submit a consolidated income tax return that can take advantage of offsetting the profits of one subsidiary with losses from another. Each subsidiary must consent to being included in this consolidated tax return by filing IRS Form 1122.4.”
While this type of consolidation can be a shrewd approach for a parent company to offset losses among its subsidiaries, special rules apply. Tax returns and financial statements from multiple subsidiaries can only be merged when the parent company owns 80% or more of each of the companies in question. And the parent company would need to notify the IRS in advance of the plan to consolidate tax returns.
As you can imagine, it’s complex and burdensome to manage the accounting for multiple companies. Add in the tax element and things get even more difficult. For this reason, the owners of parent companies and subsidiaries should always invest in the services of a reliable and trusted accountant. Additionally, they should consult with attorneys in order to understand and adhere to all relevant laws.
It’s understandable that some business owners might balk at the idea of paying for accounting and legal help. After all, the price tag is never cheap for quality advice. But it’s a wise investment that will help them maximize the unique financial benefits of their business structure. Failing to do this would be like owning a high-performance sports car but never learning how to shift into its 2 fastest gears.
Subsidiary corporations also need to ensure that their day-to-day bookkeeping is consistent and accurate. It’s a best practice to use bookkeeping software that can automate recurring tasks and help to ensure tax compliance. This proactive approach to your finances will save you time, hassles, and money.
The information provided in this post does not, and is not intended to, constitute tax advice; instead, all information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their tax professional to obtain advice with respect to any particular tax matter.
A diverse workforce speaks volumes about your company’s values and your desire to create an inclusive workforce. Recruiting people of color (POC) is one way to show that your organization is committed to embracing the best talent from multiple ethnicities.
So how can companies recruit diverse employees in general—and POC in particular? Below, we offer 7 helpful tips to get you started.
1. Recognize the benefits of diversity.
Some companies may decide to recruit POC because they feel pressure to be politically correct. However, it’s also advantageous to your company. Research reveals that diverse companies are more creative and profitable than homogenous organizations. In fact, astudy by McKinsey found a direct connection between racial and ethnic diversity among senior leaders and financial performance in the US.
“Recognizing that having a diverse team of different genders, races, ages, religions, ethnicities, sexual orientations, and education is a massive advantage is the first step of integrating diversity into a business structure,” says Ashwin Sokke, cofounder ofWOW Skin Science, a vegan beauty brand.
2. Actively seek diversity.
If your standard recruitment efforts aren’t producing POC applicants, you may be fishing in the wrong pond. Expanding your efforts to such sources as historically black colleges (HBCUs) can provide a plethora of candidates. Another tip is to reconsider what you’re looking for in job applicants. “It is extremely important that each new employee matches the company’s core values but also offers a completely new set of unique skills, perspectives, and experiences,” Sokke says.
“The beginning stages of developing a system of hiring that is heavily focused on diversity and inclusivity is the most challenging part of the process,” he says. Blind-hire practices, which include removing identifying characteristics from the job application (race, age, gender, etc.), can ensure that unconscious biases do not play a role in hiring decisions.
3. Promote POC
Another way to recruit POC is to show them that your company will reward their hard work. “The most effective way to attract and recruit more people of color is to have people of color in leadership positions at your company,” advises Nerissa Zhang, CEO ofThe Bright App. She points to 3 reasons why she says it’s the most important factor if you’re trying to diversify your company.
“It shows prospective POC talent that they’re less likely to face bias during the hiring process and afterward,” Zhang says. “Also, it shows them that they are more likely to truly have the opportunity for advancement at your company.” In addition, Zhang says promoting POC shows applicants that they’ll have a greater chance of finding mentors for professional development.
Her views are shared byDr. Ti’eshia Moore, a CliftonStrengths coach and researcher who focuses on organizational learning and culture. “Specifically, top-tier applicants are looking to see if diversity is a true organizational commitment or simply an organizational statement,” she says. “They are interested in things such as the presence of key leaders and decision-makers of color and opportunities for advancement and mentorship.”
4. Include POC in recruitment efforts.
In any scenario, nothing beats a real-world example, and this is also true when recruiting POC. “One of the critical ways that companies can recruit people of color is by utilizing people of color from the team in the recruiting efforts,” says Moore.
“Now, more than ever, they are looking for real feedback and experiences from members of the actual team,” she says. “If you want to recruit people of color, show them that the environment is making an intentional effort to foster or increase the quantity and quality of applicants of color.”
5. Create a culture that embraces diversity.
One way to show applicants that you’re making an intentional effort is by creating the right type of company culture thatsupports POC employees. “Applicants of colors are used to working in environments where they are the minority, but now more than ever, a diverse workforce is a key factor in employee satisfaction,” Moore explains. “This is important as we investigate the difference between recruitment and retention.”
In addition to diverse work teams and leadership, Moore says POC are also looking for action-oriented organizational commitments to diversity. “And while organizations may still be recruiting people of color, future statistics may reveal a higher turnover when a company’s culture doesn’t match its rhetoric.”
6. Provide diversity training.
Creating the right type of environment may require diversity training for your employees. “Moving from the design stages to implementation can cause resistance within the organization,” Sokke says. “Offering diversity training that demonstrates to employees how to adopt diversity through inclusion efforts and team exercises is crucial to developing a culture of diversity.”
7. Make your intentions known.
The last tip for recruiting people of color is to make sure that everyone knows this is one of your priorities. “Promoting the implemented culture of diversity initiatives on social media, career pages, and print content will attract those diverse candidates,” Sokke says.
“Inflation” is one of those economic terms Americans hear about from childhood onwards—but if quizzed on its exact definition, many might have a hard time coming up with the correct answer.
Most often, we probably think of inflation as the reason why goods cost more and wages are higher today than in the past. For example, you could buy a glass of beer for a nickel in the late 1800s, and the federal minimum wage in 1980 was just $3.10 per hour.
But to understand how inflation works and how it can impact your small business, it’s critical to look at the concept from several angles. Wages, supply, demand, and monetary supply all play a role in inflation.
“Inflation can be defined as the overall general upward price movement of goods and services in an economy,” according to theDepartment of Labor.
This upward trend is generally caused by 1 of 2 reasons: cost and demand.
Cost-push inflation is caused by the rising cost of producing goods and services. If the cost of labor, land, or raw materials go up, businesses will usually increase prices to maintain their profit margins.
Natural disasters provide an extreme example of cost-push inflation. If production facilities are severely damaged, prices go up because production becomes more expensive.
On the other hand, demand-pull inflation is caused by an increase in demand. If demand exceeds production, inflation will likely occur because prices will rise.
While it’s not wise to overgeneralize economic trends, demand-pull inflation is sometimes thought of as “good” because it typically happens in an expanding economy with low unemployment.
When the national money supply, which includes cash as well as credit and loans, is overextended, a type of demand-pull inflation occurs. If there is too much money being produced for not enough goods, the price of goods will increase. This situation also lowers the value of the overproduced currency in comparison with other global currencies, causing import costs to rise and, in turn, causing overall prices to increase.
Overproduction of the money supply, in some cases, can lead to the extreme devaluing of currency. Famously, hyperinflation occurred in Germany following World War I and in Venezuela during the 2010s.
Because small businesses areless financially stable by their very nature, inflation has an outsized impact on smaller companies. Increasing your prices by just a few dollars can make you far less competitive. As a small business, your profit margins are likely very tight anyway.
Unfortunately, when it comes to macroeconomic forces like inflation, there is not much you can really do except for plan. When doing yourlong-term financial forecasting, you should think about both demand-pull and cost-push scenarios.
If your cost of production rises year after year or demand starts to overwhelm your supply,how much can you raise prices and still stay competitive?
Let’s not beat around the bush. Today’s small business environment makes it incredibly difficult for female entrepreneurs to build successful startups. No matter how much talent or hustle they have, the game is stacked against them. Already, 90% of startups fail, and you can imagine that percentage is even higher for female-founded businesses struggling to find venture capitalist funding and small business loans.
The struggle is real. And it’s also unjustified, especially considering women-led businesses have greater profit potential than businesses with mostly men in the driver’s seat. Because of this, we want to give every woman entrepreneur the resources she needs to level the playing field.
Unfortunately, women-only business loans don’t exist. However, a few lenders and loan programs prioritize supporting female small business owners. On top of that, women-only mentorship programs, business grants, and other resources are available to give women the support they need to build successful companies.
To help female small business owners reach the top of their game, we’ve compiled the best-of-the-best resources available.
Accelerators for female founders.
Accelerators offer startups invaluable mentorship, networks, seed money, and more, but they’re notoriously difficult for female founders to join. That’s where women-only accelerators can help.
Female Founders Alliance (FFA), a relatively new network of female startup founders, has built a free five-week accelerator for women, by women. This program goes beyond finding female entrepreneurs—it also caters to their specific needs. Many competitive accelerators require founders to relocate for three to six months, a feat often impossible for women, who are more often caregivers. FFA’s Ready, Set, Raise, program consists of remote workshops followed by a one-week immersion in Seattle, designed intentionally so women don’t have to uproot their families.
FFA is not the only one giving women a chance to start businesses. There are a number of other women-only accelerators to consider:
SheStarts offers a three-month program in Australia for women in tech industries.
MergeLane helps startups with at least one female founder connect with mentors and investors.
Aviatra Accelerators (formerly Bad Girl Ventures, Inc.) trains and mentors female entrepreneurs in Ohio.
These are just a few examples of the many accelerators available specifically for female entrepreneurs. It's important to do research and find the one that best fits your business.
And women-only accelerators aren’t your only option. A few of the most successful seed-stage investors happen to be accelerators who have a proven track record of supporting women-led businesses. The following are leading the pack:
Mentorship can be a game-changer for entrepreneurs, especially for women who may not have as many role models or connections in their industry. Luckily, there are numerous mentorship programs and networks specifically designed to support and connect female founders.
SCORE provides free business mentoring services to all entrepreneurs, but also has a dedicated Women’s Entrepreneurship Program with specialized resources for women.
Springboard Enterprises offers a variety of programs and events for women-led businesses, including mentorship networks.
Astia provides mentoring and access to investors for female entrepreneurs in high-growth industries.
The Boss Network offers online resources and networking opportunities for professional women of color.
EY Entrepreneurial Winning Women provides education, resources, and networking opportunities for high-potential women entrepreneurs.
The Next Women hosts events and offers mentorship and resources for female entrepreneurs in Europe.
The Vinetta Project supports women-led businesses through mentorship, pitch competitions, and funding opportunities.
WBENC certifies women-owned businesses and provides resources and networking opportunities.
Venture capital for women-owned businesses.
It takes money to start a business, and it unfortunately often takes more effort for women to secure that money. If you look at the $130 billion paid out in venture capital in 2018, businesses owned by women only accessed 2.2% of the pie.
Despite the bad press and dismal statistics, there are VCs committed to supporting women on the road to success.
Here are some notable examples:
Fika Ventures: Eva Ho and TX Zhuo lead this California-based seed fund. If your business involves automation, data, or AI technology, they’ll be particularly interested in chatting with you.
Urban Innovation Fund: As the name implies, this firm offers seed capital to entrepreneurs who will improve cities with their ideas. Sector examples include housing, education, transportation, and recreation.
SoGal Ventures: Led by Elizabeth Galbut and Pocket Sun, SoGal Ventures has an international presence and often invests in innovative technologies that solve problems.
500 Startups: If your business is in the retail, fashion, or beauty industries, you should consider 500 Startups. This global VC firm is dedicated to investing in businesses led by women and other historically marginalized individuals.
Glasswing Ventures: Aside from having an absolutely gorgeous name, Rudina Seseri’s firm is always on the lookout for startups with great AI solutions.
Halogen Ventures: This early-stage VC fund invests in consumer technologies that push the limits of what’s possible. They’re known for giving ample support and development resources to the businesses they fund.
Small business loans and grants for women.
Securing a small business loan or grant can be a game-changer for women entrepreneurs, providing vital funding to help their businesses grow and thrive. This section will explore some of the loan programs and grants available to women.
SBA loans.
The Small Business Administration (SBA) offers several types of loans designed to assist businesses with various needs. SBA loans are provided by lenders like banks and credit unions, and they are guaranteed by the SBA. This means if a business defaults on the loan, the SBA will cover the majority of the lender's loss. SBA loans are available for most business purposes, such as to purchase equipment, inventory, or real estate, to acquire a business, or to provide working capital. These loans are known for their lower down payments, flexible overhead requirements, and no collateral needed for some loans.
Business line of credit.
A business line of credit is one of the most flexible forms of financing. With this type of financing, you have access to a certain amount of money (the credit limit) that you can draw from as needed. You only pay interest on the funds you use, and once you repay the funds, they become available again. This is great when you need cash for emergencies or unexpected expenses.
Small business grants for femal entrepreneurs.
Small business grants can be an even better resource for women business owners. Essentially, a grant is free money that you don’t pay back, ever (unlike a small business loan or credit card). So, you’d guess these grants would be extremely competitive—and you’d be right! But each small business grant is unique and has its own set of requirements, so you never know when you’ll be the most qualified candidate.
Although there are a ton of available grants, a few focus specifically on women. These grants are definitely worth looking into:
Amber Grant awards $4,000 each month to a woman-owned business
IdeaCafe Grant has a $1,000 grant for startups and young businesses
GrantsforWomen.org provides a comprehensive list of grants available to women entrepreneurs.
FedEx Small Business Grant awards grants and other resources to small businesses with a compelling story and potential for growth.
The Halstead Grant offers a $7,500 grant and other opportunities to jewelry designers.
Educational programs for women.
Knowledge is power, and there are plenty of programs educating women to become the most powerful entrepreneurs in the world. These are just a couple of the incredible resources available for female entrepreneurs.
Women’s Business Centers
Beyond loans, the SBA has a few different programs to help female small business owners learn to run a business, secure financing, and create valuable networks. The SBA’s Office of Women’s Business Ownership (OWBO) manages a network of Women’s Business Centers (WBCs) across the entire U.S. There are more than 100 of these centers giving women entrepreneurs a fighting chance by providing management training, technical assistance, certification courses, consulting, and much more.
NAWBO Institute
The National Association of Women Business Owners (NAWBO) is the unified voice of more than 10 million women-owned businesses in the U.S. With the NAWBO Institute, women get access to online virtual courses to learn best practices, network, and ultimately get ahead of the curve. The best part is that you can learn at your own pace and focus your attention on growing your business while studying on the side.
Despite the vast challenges female entrepreneurs face, the rate of women-owned startups has been growing close to double that of their male counterparts in recent years. Although these incredible resources don’t completely erase core obstacles, they take a big step in alleviating the hurdles female small business owners face along their entrepreneurial journeys.
Why would anyone want to lock their small business down into a business structure? Just the term “structure” might be enough to give some entrepreneurs the heebie-jeebies. After all, modern folks value flexibility. It’s why so many of us own personal vehicles instead of relying on public transportation, why we prefer to book hotel rooms with free cancellations, and why we don’t purchase lifetime subscriptions to streaming services like Netflix or Hulu. We enjoy the freedom afforded by a variety of choices and want to be able to reverse course on decisions whenever the need arises.
This love for flexibility extends to our professional lives. While workers in prior generations often chose a career and stuck with the same company for decades before ultimately claiming their pensions, many Americans now experiment with various options and avoid being tied down to 1 company. This approach often means freelancing for your entire career or taking a meandering journey through the entrepreneurial jungle.
The benefits of a malleable career include fewer constraints on your creativity, pursuits, and accomplishments. If you can dream it, you very well might be able to do it.
“In my case, when I worked as a writer in my full-time job, I was only writing about my beat—articles and features,” explains entrepreneurial guru Mukti Masih. “When I started freelancing, I learned blogging, which was quite different from in-depth articles that I was used to. Thereafter, I co-founded a video production company with my brother so I got the exposure to script and screenplay writing. I have also written scripts for audiobooks, website content, copies for ad films and TVCs, product descriptions for e-commerce websites, white papers, and e-books. I am quite sure, a few jobs down the line wouldn’t give me the freedom to write all these kinds of things.”
At the same time, there’s something to be said for structure in the business world. And there are compelling reasons to set your small business up as an entity. Here are some benefits to consider:
Tax savings
Growth opportunities
Financing qualifications
Personal liability protection
It’s also worth noting that when you set up your business as an entity, you don’t completely surrender your flexibility card—you may actually have the opportunity to change structures if necessary.
Setting the stage for your business structure decision.
Some business decisions bring limited consequences. For example, let’s say you decide to put most of your marketing budget toward a Facebook campaign. After running your ads on Facebook for a few weeks, you might decide that you’d get a better response on Instagram. No big deal: you simply discontinue the Facebook campaign and then start advertising on Instagram. The cost is minimal, and there are no long-term complications.
It’s a different story when it comes to your business structure, however. While there might be the possibility of switching your structure down the road, you certainly won’t be able to hop from one to another like you would in the social media advertising example given above.
“Of all the decisions you make when starting a business, probably the most important one relating to taxes is the type of legal structure you select for your company,” explains a business report from Entrepreneur. “Not only will this decision have an impact on how much you pay in taxes, but it will affect the amount of paperwork your business is required to do, the personal liability you face, and your ability to raise money.”
You might be wondering which structure is ideal for small business owners—and there’s no boilerplate answer. Your best match will depend on a wide range of factors, including your business model, your industry, your growth goals, and your patience for procedural red tape.
These details, and many more, are best distilled through a business plan. This document outlines why you’ve started your business, how you’ll structure it, how you’ll run it, and where you want it to go.
If you’ve already assembled these details, putting a business plan together is merely a process of assembling your research and goals into a centralized place. For those who have yet to begin, you’ll want to start with some crucial questions. Here are some examples:
What do I want to accomplish with my business?
What problems does my business solve for customers?
What is my mission statement?
What are the financial projections?
What are the financial needs?
What makes my business different from the competition?
What did my competitor analysis reveal?
What did my industry analysis reveal?
What did my marketing analysis reveal?
Each question you answer will provide the information needed to build your plan. The process takes time, so don’t expect to cobble together a plan over a single weekend. As you can see from the questions above, conducting the competitor analysis and other research required could easily take several weeks. Put the time in so that you can get the best results out.
“Research and analyze your product, your market, and your objective expertise,” explains the Houston Chronicle. “Consider spending twice as much time researching, evaluating, and thinking as you spend actually writing the business plan. To write the perfect plan, you must know your company, your product, your competition, and the market intimately.”
Completing your business plan is a major accomplishment. It will guide all your subsequent business decisions, such as how to structure your business. Additionally, it’ll serve as a representation of your vision and abilities as you seek financing (more on this later).
Choosing the best structure for you.
Armed with the information from your business plan, you can choose a structure that aligns with your goals and maximizes your financial strategies. The 6 main options chosen by small business owners are general partnership, limited partnership, sole proprietorship, corporation, S corporation, or a limited liability company (LLC). Each has unique strengths and limitations, so let’s take a look at the highlights:
1. Partnership
Also known as a general partnership, this structure is a great option if you’re going to share ownership with other individuals. Each of the partners in these entities has an equal stake, helping to run the operations and sharing the burden of financial liability. If problems arise and the business incurs debts and losses, the partners would all be on the hook from a personal perspective. This means that assets such as homes, vehicles, real estate, and inventory could be in jeopardy.
One of the biggest reasons small business owners choose partnerships: it simplifies your tax situation and can save you money. With this structure, you can take advantage of “pass-through” laws that mean your business doesn’t have to pay taxes on profits and losses. Instead, those profits and losses pass through to the personal taxes of each partner.
Another benefit: partnerships are simple to form, and there aren’t too many costs associated with the process.
2. Limited partnership
This structure shares a lot of common DNA with partnerships, as they’re both fairly easy to set up and the costs are modest. Additionally, limited partnerships also qualify for “pass-through” laws, making tax season more enjoyable—you can simply account for your business’s profits and losses on your personal taxes and potentially save a lot of money in the process.
The chief difference is that limited partnerships allow for a hierarchy among the partners. Rather than everyone sharing in the profits, having a voice in decisions, and sharing liability for losses, some of the partners can serve in an investor role, where they don’t take on personal liability for the business.
The clear advantage here: partners can take on a role that aligns with their priorities, whether that’s a full-fledged seat at the table that brings higher risks and rewards or a safer position that comes from the “limited” role.
3. Sole proprietorship
For those who like independence and flexibility, a sole proprietorship is the next best thing to freelancing. This type of entity is convenient to set up and is one of the most inexpensive options available—no wonder it’s the most popular business entity in America.
As the name implies, sole proprietorships are intended for business with 1 owner. If you have partners involved, you’ll have plenty of other viable options, such as a partnership, limited partnership, corporation, S corporation, or limited liability company (LLC). Given the independent nature of a sole proprietorship, there are no business agreements to wrangle or outside approvals to seek.
The risks and rewards of a sole proprietorship are high-stakes. All profits come directly to you, but if things go south for your business, you alone will be liable for debts and losses. Personal assets could be at stake in these situations, including if you’re sued.
The tax arrangement for sole proprietorships is similar to partnerships, as the profits and losses pass through to your personal taxes. In the eyes of the government, you and your business are a single entity. The good news: sole proprietorships have low tax rates.
4. Corporation
While sole proprietorships create a structure where you and your business are a single entity, corporations essentially put a rock wall between you. This legal separation offers liability protection if your business struggles, preserving personal assets. Your house, ranch, Winnebago, or boat will be safe from anyone seeking compensation.
Of course, it takes a lot more effort and paperwork to create a separate entity. Corporations can be complex, and the setup costs are substantially higher than many of the other options on this list.
Another potential drawback of corporations: you might be required to pay business taxes twice (as if tax season wasn’t already difficult enough). The first payment would be state and federal corporate income tax. If any business earnings were given to shareholders in the form of dividends, you would then need to pay personal taxes for those payments.
5. S corporation
Perhaps you find the sophisticated nature of corporations intimidating. Much like how limited partnerships are a more user-friendly version of partnerships, there’s an option called an S corporation that provides more flexibility than a corporation.
S corporations offer a similar degree of personal liability protection, which is obviously a major benefit. If your business incurs debts or losses, you’ll be considered a separate entity and won’t need to worry about anyone coming after your personal assets.
Where S corporations differ: you can add more shareholders than in a corporation. This makes it easier to attract investors. Also, you won’t need to deal with the same complications when tax season rolls around. Your business’s profits and losses will pass through to your personal tax return, which is always the easiest method.
While S corporations are more streamlined than corporations in many ways, they still bring their fair share of challenges. You will be required to hold meetings for your directors and shareholders and keep detailed minutes from each of these meetings. Your shareholders must also be allowed to vote on key business decisions.
6. Limited liability company (LLC).
While sole proprietorships are the most popular business structure in America, LLCs might be the most beloved. This structure merges some of the best perks from corporations and partnerships into 1 entrepreneur-focused entity.
An LLC advertises its liability protection right in the name. This is a big deal for small business owners who have no interest in a structure that doesn’t shield them on a personal level from business debts and losses.
Another big benefit of LLCs: your business earnings and losses are handled on your personal tax returns. This pass-through arrangement is simple to handle, but it also means that you will owe self-employment tax. Be sure to plan on self-employment tax as the year progresses, so that you won’t be caught by surprise when you receive your tax bill.
You can have an unlimited number of shareholders in an LLC. And unlike a corporation or S corporation, you won’t need to deal with all the red tape associated with shareholder meetings and distributing meeting minutes.
As you can see, there are plenty of nuances to consider with each of these business structures. Your unique situation might immediately rule out some of the options, but you should consult with a tax professional to identify the structure that will best serve your needs and set you up for future success.
This is also a prime time to meet with your mentor and get an insider’s take on the situation. An experienced mentor can alert you to red flags and offer tips for streamlining the setup process.
Business structures and financing.
As mentioned earlier, a substantial benefit of structuring your business is that you can boost your credibility and qualify for financing. Considering the fact that financing is an essential source of capital for most of America’s small businesses, this element of the decision shouldn’t be ignored.
Your business’s financial needs will vary wildly based on your industry. If you have a consulting business, you might be able to operate out of your home and only have moderate costs associated with your operations. On the other end of the spectrum, you might have a restaurant or construction business that would typically require a business location, utilities, equipment, supplies, insurance, licenses, permits, and other various expenses.
Based on the intel in your business plan, you can home in on the amount of money your business needs and the timeline to acquire it. You can then work with your mentor to identify the best financing option for your needs. Popular examples include:
You should also research other sources of capital. Many entrepreneurs prefer microloans because they’re easier to acquire, though the dollar amounts are typically much smaller. Some of the most reliable microloan providers are Kiva, Opportunity Fund, and Accion.
Another possible option is a business grant. This is one of the most challenging of all funding sources to qualify for, but the fact that the money is free certainly helps to justify the effort required to pursue them. Look for federal grant opportunities at Grants.gov, then check out some private sector options from the Halstead Grant, Amber Grant, Idea Café Grant, and National Association for the Self-Employed (NASE).
Whether you’re applying for a business term loan or scoring a grant from the federal government, your business structure will be an important part of your resume. The fact that you’ve set up your business as an entity shows how serious you are about its performance. It doesn’t matter whether it’s an LLC or S corporation or sole proprietorship—the point is that you’ve followed the necessary steps to legitimize your business in the eyes of the government and/or private lenders. And that seal of approval can really boost your odds of getting approved for financing and ultimately reaching the goals you outlined in your business plan.
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Email marketing is one of the most powerful tools for small businesses—when done right. This guide covers everything from building your email list to crafting engaging campaigns that drive results. With actionable tips and step-by-step guidance, you’ll learn how to connect with your audience, boost sales, and grow your business through email.
Digital marketing doesn’t have to be overwhelming. This guide simplifies the essentials, from building an online presence to leveraging social media, email, and SEO. Packed with practical tips and step-by-step strategies, it’s designed to help small businesses succeed in the digital world without a big budget or a full marketing team.
Let’s face it. There’s a lot of bad marketing advice out there. Or great advice that’s far too in-depth for a small business owner who isn’t looking to start a full-time career in marketing. We created this guide to cut through the clutter and provide you with principles, direction and the applicable step-by-step how-tos to get the job done.
Your brand is more than just a logo—it’s the heart of your business. This guide walks you through the essentials of small business branding, from defining your identity and crafting your message to building a strong, lasting impression. With clear steps and actionable advice, you’ll create a brand that resonates with customers and sets your business apart.
Hiring for small businesses doesn’t have to be complicated. Your business can achieve success when you understand relevant legal requirements and find the right job candidates for your open positions. This comprehensive guide covers everything from finding the right employees to hire to employee training and development.
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Have a business idea but not sure where to start? Our comprehensive guide to starting a business has everything you need to know. From legal requirements to market research, we’ve got you covered.
Running and growing a business is no easy feat. Our guide to running a business has everything you need to know to keep things running smoothly. From managing employees to marketing your business, we’ve got you covered.
Take your business to the next level with our Accounting Guide. Master the language of numbers, understand financial statements, and make informed decisions based on accurate financial data. Discover the power of sound financial management.
Master the art of cash flow management with our comprehensive guide. Learn strategies to optimize your cash flow, forecast revenue and expenses, and keep your business financially stable. Take control of your finances and achieve long-term success.
Streamline your billing process with our Invoicing Guide. Learn how to create professional invoices, manage client payments, and maintain a healthy cash flow for your business. Get paid faster and efficiently track your revenue.
A great marketing strategy is the foundation of small business success. This guide takes you step-by-step through defining your goals, identifying your audience, and choosing the right channels. With practical tips and clear direction, you’ll build a tailored strategy that drives growth and delivers measurable results.
Navigate the complex world of taxes with our Tax Preparation Guide. From understanding tax obligations to maximizing deductions and filing quarterly taxes, we’ll help you stay compliant and minimize your tax burden. Unlock the secrets of tax success for your business.
Stay on top of your business finances with our Bookkeeping Guide. Learn the art of tracking income and expenses, maintaining financial records, and keeping your books in order. Unlock financial success with our expert tips.
Need help securing funding for your business? Our business loans guide simplifies the financing process, explains key terms, and walks you through your loan options.
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