Financial management and budgeting are crucial elements of any successful business, and every entrepreneur must be on top of these things. However, they will face many challenges along the way.

In particular, minority, women, and veteran business enterprises (MWVBE) may have difficulty getting the funding they need.

In this article, we will discuss how MWVBE can simplify the financial management process and monitor their funds accordingly.

Challenges in Financial Management and Budgeting for MWVBE

Financial management can be challenging for any business owner. However, minorities, women, and veterans have more hurdles to overcome.

What are these challenges?

1. Access to Funds

Discrimination still abounds, and that is the main reason why entrepreneurs who are minorities have difficulty getting access to funding. If they are granted loans, they get less than what they applied for and have to manage higher interest rates.

In a 2018 report, Forbes wrote that minority-owned small businesses grew by 79% between 2007 and 2017. This entails millions of dollars injected into the economy, with thousands of people, many of them minorities, gaining employment, too.

However, a separate report noted in 2019, 38% of Black and 33% of Hispanic entrepreneurs didn’t get the financing they applied for. For Caucasian business owners, the rejection rate was only 20%.

Women also have the same access problems, with only 7% of women-owned businesses getting venture capital funding and 17% getting small business loan funding. Veterans run into similar issues when they pursue entrepreneurship.

2. Financial Literacy

There is a racial gap in financial literacy , with Caucasian and Asian people scoring higher than their Hispanic and Black counterparts. It is the same across nearly all age groups—these statistics are reflected even in teenagers.

This discrepancy makes it even more challenging for aspiring entrepreneurs to get the funding they need to launch their businesses.

3. Lack of Mentorship

MWVBEs are oen endeavors that benefit their own communities and those who are similarly underserved. For example, service-disabled veterans make it a point to help others in their situation, either with their products or services or with employment opportunities.

These business owners may be pioneers in their sectors, with very limited opportunities for mentorship. It can be difficult to break through some industries without a certain level of inside knowledge and assistance.

Strategies to Manage Business Finances

Many MWVBEs may not get the funding they applied for, and have to make do with low capital and high interest rates.

So, what can they do about it?

Learn, Learn, Learn

Passion will take you a long way when you start a business. But it is not enough. Financial literacy and business acumen are critical for future success.

Attending tutorials and workshops can help tremendously in filling knowledge gaps regarding running a successful business. Look for programs that deliver specific lessons on financial management and budgeting. Start with the basics, so you can understand the language of business finance and navigate the complex concepts.

Pursue technology-centric courses because they are a critical stepping stone for all modern businesses.

Create a Detailed Business Plan

Before you can open a business, there are so many things to do and take care of. You should have a clear strategy and road map to get you from the planning phase to launch day.

With a detailed, clearly outlined business plan, you will know exactly what you need to do and when. You can prioritize specific tasks based on the plan you have created for your business.

Take Advantage of Cloud-Based Workflows

Technology can be a game-changer in the business workflow, and it usually impacts finances positively. How? Automation and other cutting-edge tools increase productivity and maximize efficiency. Leverage these technological advancements to manage your budget and cash flow.

Monitor Financial Position

When you monitor your finances regularly, you also get better at managing them. Studying your sales and expenses daily will help you understand your cash flow and develop ideas to streamline your finances.

Update Accounting Records

Real-time updates of your accounting records will help you keep track of all payables and receivables. Meet all deadlines to ensure efficiency in your operations.

Pay Taxes on Time

You will incur fines and interest if you fail to pay your tax dues before the deadline. These are unnecessary expenses that should be avoided. An experienced accountant with advanced tools will help you navigate business taxation.

Take Advantage of Tax Breaks

Minority- and women-owned businesses are eligible for tax benefits to help with financial management. Tax support is also available for veterans .

These and other similar opportunities can facilitate your access to capital and improve your ability to manage your business finances.

Learn Better Financial Management and Budgeting

Ready to master finances and budgeting for your MWVBE? Contact Fayetteville-Cumberland Regional Entrepreneur & Business Hub (or email us at /Blog/Financial-Management-and-Budgeting-For-MWVBEs) to schedule a meeting with a business counselor to assist with financial projections.