Top 3 Financial Mistakes WOC Business Owners Make – And How To Avoid Them

Our financial goal plays a very important role in achieving financial freedom, especially for women of color (WOC) business owners.

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The last 12 months have seen unprecedented rates of women of color entering into entrepreneurship. Although small business innovation is at an all-time high, women of color are at the highest risk for bankruptcy and lack of access to capital. A recent report found that minority women-owned businesses disproportionately suffer from cash flow issues--leading to business closures.

The Three Common Mistakes WOC Business Owners Are Making

As a business money expert, former Goldman Sachs financial analyst and mergers & acquisitions consultant who has helped over 10,000 diverse entrepreneurs raise over $33 million in capital, here are 3 common money mistakes I see women of color making--and how to avoid them:

1. Not having a strategic financial plan and making decisions based on emotion/gut feeling. To avoid this, start by asking yourself: How big do I want my business to be? How big do I want my team to be? Where do I want to serve? Without knowing our vision, it's impossible to ensure we are making the right financial decisions that will move us closer to our financial goals.
2. Mixing personal and business expenses. This makes it impossible to understand how your business is actually performing at any given time, leading to uninformed decisions that can lead to overspending and taking on unprofitable ventures.
3. Not understanding your key performance indicators. Every business has key metrics specific to the business--and it's imperative that every business owner understands what is driving their profitability. Understanding your key indicators will allow you to see when your performance is off track, and how to course-correct it immediately. (ex: a brick and mortar business has foot traffic as a key indicator to monitor closely, as this directly drives their monthly sales.)

As data shows, the rate of WOC-owned businesses will continue to grow, we must focus on the key levers that will close the wealth gap for these groups.