Making the Leap into Business Ownership
If women feel limited by their opportunities and flexibility at work, why aren’t more women chasing entrepreneurship? Seventy-five percent of businesses are male-owned, which might give the impression men are more suited to entrepreneurship than women. However, data shows that women-owned businesses are just as profitable and create more jobs than male-owned businesses.
So, what’s holding women back? Stereotypes play a big role. Despite what the data says, entrepreneurs and investors tend to believe men are more experienced, driven, and capable business owners. And it’s not just men who think that. Surveyed women share these misguided beliefs, too, which might explain why more women aren’t starting businesses of their own.
It’s normal to feel uneasy about switching from the traditional workforce to small business ownership, but a lack of confidence shouldn’t hold you back. If you’ve been thinking about entrepreneurship, the following information can prepare you to make the leap.
Small Business Ideas for Women:
Taking your career freelance is one way to become an entrepreneur. If you have an in-demand skill, start looking for work on the side to build a freelance portfolio before quitting your job and pursuing entrepreneurship full-time. Keep in mind you’ll need to charge higher hourly rates as a business owner than as an employee in order to pay for insurance, retirement contributions, and self-employment taxes.
If you don’t have a skill that’s readily monetized, entrepreneurship is still an option. Many women start businesses without prior experience, researching and learning as they go to gain skills. Remote bookkeeping, freelance writing, and pet sitting are three businesses women can get into with minimal experience and money. E-commerce is another increasingly popular option. With the advent of drop shipping, which allows online stores to sell items without a physical inventory, entrepreneurs can run e-commerce businesses out of a home.
Small Business Startup Funding:
Even a low-budget business needs some funding to get up and running. At minimum, you’ll need to file Articles of Incorporation with your Secretary of State’s office, outfit a home office, and create a website. If you can’t self-fund, you’ll need to apply for business funding. It’s more difficult to get funding when your business is brand new, but there are a few options:
* Personal loans for business: Without a business history, the easiest way to gain access to capital is through personal loans.
* Equipment financing: Equipment financing lets businesses borrow money to purchase equipment, but interest rates can be high so it’s best to stick to small amounts.
* SBA loans: SBA loans are harder to get than personal loans or equipment financing, but they’re the best option for businesses in need of large amounts of funding. There are also SBA microloans for smaller sums.
Fundera provides more information about these and other funding options.
Health Insurance and Benefits for Female Entrepreneurs:
Losing access to benefits like employer-sponsored health insurance and 401k matches is the hardest pill to swallow when becoming an entrepreneur. Prospective entrepreneurs need to be prepared for these expenses:
- Health insurance: As of 2018, the average cost of an individual health insurance policy was $440 per month for a single person or $1,168 per month for a family of four.
- Retirement savings: Your options for retirement savings depend on whether you have employees or not. Recalculate contribution needs if your previous numbers were based on an employer’s match.
- Self-employment taxes: As an employee, your employer pays part of your FICA taxes. When you’re self-employed, you’re responsible for the full sum.
Generally, entrepreneurs account for the cost of benefits by charging a higher rate for their work. Before quoting prices to potential clients, make sure you’ve accounted for all costs of doing business.
Now that you know the basics, start thinking about what your ideal business looks like and what resources you’ll need to make it happen. It’s easy to get mired in self-doubt when you’re thinking in the abstract. By getting ideas out of your head and onto paper, you can start building the roadmap to your entrepreneurial goals.
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