Q: What is the major motivator for women to start their own business?
A: The primary motivator for women to start their own business is the opportunity to be their own boss (33 percent), according to a recent MasterCard survey conducted by Ipsos. This is followed by the opportunity to generate household income and having more time and flexibility in their schedules for family and personal interests.
Q: What trends are we seeing in women-owned small businesses this year compared to 2005?
A: The major trend we’re seeing is the growth and impact of women-owned small businesses on the economy. Currently, there are an estimated 7.7 million majority women-owned firms (firms at least 51 percent owned by a woman or women), which is an increase of 42 percent (almost double) from 5.4 million in 1997. Additionally, 91 percent of those firms employ at least five employees, up from 84 percent in 2005, generating more than $1 trillion in revenues and employing more than 7.2 million workers.
Q: What is the top management tip you have for women who own small businesses?
A: Separate business and personal finances. Two out of three women small business owners (63 percent) identify personal savings as the primary source for funding the start of their businesses; a large majority of women (86 percent) did not seek external funding from a financial institution to start their businesses; and only slightly more than half of women small business owners (53 percent) say they completely separate personal and business finances.
Separating these expenses allows you to:
- Track your business finances more effectively. By separating your business and personal expenses, you create a more accurate picture of your business’s performance.
- Establish a business credit history. By establishing a business credit history, that is separate from your personal credit history, you are more likely to qualify for business-lending sources when the need arises.
Q: What are the benefits of using a business credit or business debit card to help manage your small business finances?
A: Financial services companies such as MasterCard Worldwide have developed special programs for small business owners to help them manage their financials and provide rewards for incremental spending. Small business cards, for example, often offer flexible and valuable rewards, including reward air travel with no blackout periods, discounts at retail locations and even cash back on purchases. An additional benefit to using these cards is that business owners can provide employees with their own business cards, while dictating spending controls and restrictions. The cards offer detailed, timely and accurate reporting tools that help to manage and track employee spending online. In addition, business owners can receive comprehensive daily, weekly or monthly financial reports.
Q: What specific challenges do small businesses face with managing their finances?
A: Managing finances can be tough for a business of any size. Recently with small businesses we’ve seen a shift from the use of accountants to money management software. MasterCard Worldwide’s survey reported that this year one-third of women small businesses owners (33 percent) are using money management software rather than an accountant to manage their business, up from 27 percent in 2005. The increase likely resulted from a desire to reduce labor costs. With the help of companies such as MasterCard, small business owners can access payment solutions and streamline processes—leaving more time to concentrate on growing their businesses and spend with family and friends.