MAKING BREAD’s Green Thumb Guide

to Growing Your Own Business

Four Tips for Nurturing Startups from Seed to Full Bloom

By Ken Segal

omen-owned businesses are sprouting up all over.  Almost half of all privately held companies in the United States are majority- or 50-percent owned by women.  In 2002, there were an estimated 10.1 million privately held companies in the United States majority-owned by women, employing 18.2 million people and generating $2.32 trillion in sales, according to the Center for Women’s Business Research  (www.nfwbo.org).  Between 1997 and 2002, the Center estimates that women-owned companies increased by 11 percent nationwide, more than one and a half times the rate of all privately held companies.

Despite their impressive growth, women-owned businesses face numerous challenges.  According to the Center for Women’s Business Research, access to capital, managing cash flow and attracting and retaining employees are the top concerns keeping women business owners up nights.  Here are four “green thumb” tips that will help your “garden” prosper.

          Create a Capital Plan: Before taking out a loan or any other kind of financing, carefully plan your capital needs and forecast your cash requirements so that you can determine what you will need and when you will need it.  A capital plan should consist of a complete review of your balance sheet to help you analyze cash flow, assets and liabilities.  Do this before you are in a financial crisis to give yourself time to explore all possible borrowing sources and negotiate the most favorable terms. The worst time to take on debt is during a crisis.  A sudden inability to meet a payroll or other emergency could force you to take on debt immediately and agree to highly unfavorable terms.

          Manage Your Cash Flow: in a weakened economy, small businesses are stretched further than usual, causing owners to juggle accounts receivables, extend their lines of credit and manage inventory creatively.  Maintaining a consistent—and increasing—cash flow becomes more important than ever, so that you can cover expenses and budget for future growth. Here are a few key ways to help increase your cash flow:

          Organize your billing schedule: The faster your receivables turn over, the more capital you’ll be able to spend on growing a business.  Accounting programs such as Intuit’s QuickBooks Pro, can automatically classify the age of accounts receivables and provide an automated flagging system that allows you to act immediately on overdue accounts.  One out of five business failures is primarily a result of bad debt, so the importance of prompt collections shouldn’t be underestimated.

          Stretch your payables: Take the maximum amount of time allotted to pay your suppliers, often 60 to 90 days.  This gives you sufficient time to collect receivables without spending money on short-term credit lines.

          Renegotiate your insurance and supplier policies:  Find the best possible deals on insurance, phone service and other regular business expenses.  Work with your insurance agent or financial adviser to review your insurance policies annually, and consider saving money by splitting your business between specialty suppliers and discounted price merchants.

          Consider leasing instead of buying:  Leasing generally costs more than buying, but the cash-flow benefits can often justify these costs.  By leasing computer equipment, cars or other tools that you need to expand your business, you will avoid tying up cash or lines of credit that might better be used running your business.

          Attract and Retain Employees: The current economy provides wise employers with a prime opportunity to build loyalty among employees.  Although there is currently a shortage of jobs, demographers and economists predict that we will soon experience a tremendous labor shortage of many years’ duration.  Now is the time to lay the foundation for a stable workforce by providing equitable compensation and benefits packages, acknowledging good work, creating opportunities to have fun and providing education and training, which will pay off in the long term.  It’s also a good idea to engage your employees in efforts to make their workplace safer and more pleasant.

          Seek Advice: The Small Business Administration (www.sba.gov) sponsors a Web site that provides access to information from more than 60 different Federal agencies created to assist or regulate businesses.  Other resources providing small-business tips and tools include:  OPEN: The Small Business Network from American Express at www.americanexpress.com and SCORE: Counselors to America’s Small Business at www.score.org. The Women’s Leadership Exchange (www.womensleadershipexchange.com) lists resources and links to women-owned business organizations. Check its Web site, too, to learn about a nationwide series of conferences targeted to female business owners with companies from $1 million to $25 million in revenues.  Finally, you can’t go wrong meeting with a certified financial adviser who specializes in financial planning for small businesses.  Practice all of the above “green thumb” techniques, and your business will be in the black in no time.

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Ken Segal is an American Express Financial Advisor, based in Philadelphia, with 13 years’ experience in compensation and benefits analysis and financial planning. For further information, contact him via phone (215-940-0123) or e-mail: kenneth.m.segal@aexp.com.

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American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer. This communication was published in April 2003 in the United States for residents of New Jersey and Pennsylvania only, and this advisor is licensed only in the states of New Jersey and Pennsylvania. This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. The views expressed may not be suitable for every situation. (10-20-03)

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