Five financial planning tips for female entrepreneurs

Building a thriving business is empowering, but managing finances can feel overwhelming. Here are five key financial planning tips to help female entrepreneurs navigate the journey towards financial security and success.

| 4 min read

Female entrepreneurs and business owners have their hands full. Building your own business, managing personal relationships, and potentially raising young children whilst trying to remain sane can feel like a juggling act for many.

It could explain why our latest research found that just over one in ten (12.5%) phoenix founders in the UK are female. Phoenix founders are a unique group of entrepreneurs who’ve experienced a business failure, but have bounced back to run their current venture.

With multiple plates spinning at once and plenty to contemplate, women entrepreneurs could benefit from a financial planner to help them keep on top of their finances and ensure all their ducks are in a row.

Financial planning tips for female entrepreneurs

1. Build an emergency savings pot

First things first, build a financial safety net for any unexpected emergencies.

For business owners, cash flow can be uncertain during the early stages of entrepreneurship, so you will want to avoid taking money out of the business to cover personal costs and emergencies.

We think around three to six months’ worth of essential spending is about right. If you intend on taking time out of work in the near future e.g. starting a family, we’d suggest around one to three years’ worth of essential spending.

Emergency savings should be held as cash in an easy access savings account. That way, you can usually access the monies within 24-48 hours.

2. Keep your personal and business finances separate

Maintain clear distinction between your personal and business finances. Open a separate business bank account and obtain a business credit card to track expenses accurately.

This approach has the following benefits:

  • Streamlined accounting and taxes
  • Improves business and personal credit ratings
  • Clearer financial picture
  • Personal and business protection

3. Review your pension

If you’re self-employed or a business owner, you might not be making any contributions to a pension. The government’s auto-enrolment scheme only applies to employees, whereby a workplace pension is automatically set-up through their employer. If you aren’t currently contributing to a pension, your savings won’t take you as far during your retirement and you risk going into poverty.

It’s estimated that women retire with an average pensions savings of £69,000 compared to £205,000 for men. Pay, nature of employment, and career breaks are all contributing factors to the gender pensions gap.

For the self-employed and business owners, it’s your responsibility to start your own pension and decide how much to save into it each month.

Open a Self-Invested Personal Pension

4. Plan your career breaks

If you intend to take time off to raise a family, then you might want to make plans to ensure the business can run in your absence. You might also want to ensure you’re financially prepared for time away from the business.

Stepping away from the business can also allow for time to recharge, reconnect, and strengthen your personal relationships with friends and family members.

Investing in planned breaks can be counterintuitive to some business owners, but it ultimately leads to increased productivity, stronger teams, and a sustainable business model.

5. Make a succession plan

Exiting the business is a step entrepreneurs often overlook. Our research suggests one in two (48%) entrepreneurs or business owners don’t have a succession plan in place.

An exit strategy is an entrepreneur or business owner’s plan for how they will sell their holding to other investors or another company. This could be part of the business or all of it. Either way it gives them the opportunity to raise capital for their next deal or to support them through the next phase of their life.

A financial planner can be there to guide entrepreneurs and business owners through the process of considering the next steps for the business and their lives, and create a succession plan for whomever is to become heir to the throne.

Find out more about our financial planning services

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Five financial planning tips for female entrepreneurs

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