Capital: The Reason Women Get Less of It author Geri Stengel recently wrote a feature about the disparity among male and female entrepreneurs in obtaining capital to get started, citing a key Department of Commerce survey of women-owned companies across the U.S. in which women-owned firms started life with only 64% of the capital of male-owned firms. The report also indicates women were less likely to tap outside financing over their lifetime, including loans, angel investments and venture capital. But is it just gender bias at work here? Not really. Perhaps part of it could be that, unless finance is their background, some women tend to shy away from the numbers? As a CPA, it speaks volumes to the banks to do the math to prove you will be able to pay back what you've borrowed. Stengel goes on to insist that this doesn't mean that you need to prepare your own financial statements, just that you must understand them well enough to make sound decisions—and that you go to your fund raising meetings able to state your case with confidence and clarity. Here’s a minimal level of knowledge you’ll need:
  • You must be able to grasp the impact any decision you make has on cash flow.
  • You should be able to articulate your financial position well enough that a banker can be confident you understand the consequences of taking out a loan (or giving up equity).
  • Learn your credit score, and know how to raise it so that you qualify for the least expensive financing.
  • Keep revenue projections realistic.
  • Be clear about when funders will start to see a return on their capital.
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