5 key financial steps for women business owners of color

Women of color have collectively taken an important seat at the table of business ownership.  While the number of women-owned businesses grew 21% from 2014 to 2019, firms owned by women of color grew at double that rate (43%). As of 2019, women of color accounted for 50% of all women-owned businesses. An estimated 6.4 million women-of-color-owned firms employ close to 2.4 million people and generate $422.5 billion in revenue.1

Keeping these 5 important financial considerations in mind can help you set yourself up for success as a new business owner.

1. Prepare back up funding plans

It’s always a good idea to have a backup plan (or a few). After determining how much it will cost to start your business, brainstorm multiple ways to get the funds. These can range from your personal savings and credit options to grants, investors, and loans from friends and family. It’s helpful to have a variety of options rather than solely relying on a startup loan from a particular lender.  Whether as a women business owner of color or another minority business owner, you can register your company as a minority-owned business (MBE). This can be helpful as certain organizations exist solely to support MBEs with a variety of resources from consulting to capital, for example, the Minority Business Development Agency (MBDA). 2

You can become a certified MBE online through the National Minority Supplier Development Council (NMSDC).3

2. Prioritize protecting yourself against risk

Along with the positive impact you get to make as a business owner comes an increase in risk. You can be held liable for damages that your business inadvertently causes (accidents, cybersecurity breaches that expose customer data, etc.). You may need to cover your expenses when business operations pause for a period. And you may incur damages that need to be repaired.

Taking preventative steps to protect your business through general liability coverage can help to keep your business afloat when life throws you curveballs.  Traditional whole life insurance is commonly known for the important core value of protection coverage it can provide for a policyowner’s family. It can also play a role in helping to protect the owner’s business too.

For many business owners, the business provides most of their income. It’s what makes their lifestyle possible. But, what would happen to your business if you became too sick or injured to work? Disability protection can help provide the appropriate coverage that meets your unique needs and priorities.

3. Network with successful business owners

Often, new business owners encounter unforeseen challenges. However, when you have the support of others who are more seasoned, you can strategically navigate those situations so they don’t slow you down. Surrounding yourself with like-minded entrepreneurs can help you gain insights, resources and connections that help to drive you forward.

A great place to start for women business owners of color is The Professional Women of Color Network (PWOCN).4

4. Do your homework on pricing

One of the common mistakes new business owners make is underpricing their products or services. To ensure you enter the market at the right price point and maximize your margins, be sure to research the “going-rates” in your industry. If your prices are too low, you may undercut the value you provide as well as your bottom line. If your prices are too high, you may lose business to your competition. Your ability to forge favorable relationships with customers, suppliers, employees, lenders, and partners directly affects your profit margin and cash flow. It can be challenging, even stressful trying to keep up with the latest competitor advancements and industry trends while keeping spend at manageable levels. Here are some tips to help business owners negotiate more confidently.

5. Manage your cash flow and call in the pros

Many minority women owned business owners are inexperienced in navigating the ups and downs of business cash flow. Keeping track of your business cash flow, building a cash reserve to sustain you for at least three (or six!) months, following up diligently on past due receivables and opening a line of credit with your financial institutions are some good ways to maintain cash flow. Remember, if you’re bootstrapping your business, do not over rely on lines of credit or credit cards to sustain your cash flow. Keep in mind that if you ever default, your personal credit will be the one affected.

While starting a business is a very exciting time in many ways, your finances will get a bit more complicated.  You will deal with many intricate tax and budget issues that never cross the mind of an employee. Working with a financial professional can help you understand how to best manage your finances. As a result, you can protect what you have while creating a secure future. Interestingly, only 33% of women rated their financial health as excellent or very good compared to 41% of men.5 Getting advice from a financial professional can help you ensure you understand your options and will empower your decisions.

Financially-well business owners build financially-well businesses

Not only can a successful business open up a new future for you but it can also create opportunities for your employees while helping you positively impact your community. Following these steps will help to ensure your financial wellness creates a solid foundation for your budding business.

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1 State of women-owned businesses, 2019, American Express

2 Minority Business Development Agency 

3 MBE Certification, National Minority Supplier Development Council 

4 Professional Women of Color Network

5 Workforce 2020: Women’s well-being study, Guardian Workplace Benefits Study, 8th Annual 


  1. Minority Business Development Agency
  2. National Minority Supplier Development Council
  3. Professional Women of Color Network


Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.