How to Get More Women to Start a Company
Women are now playing bigger roles in small businesses in the United States. According to data from the National Association of Women Business Owners, in 2014, there were about 9 million companies run by women in the U.S. Those businesses employed nearly 8 million workers and recorded nearly $1.4 trillion in sales that year.
Despite those numbers, there is much more to be done to increase this number even further. In this article we will look at 1) why women hold back from starting businesses, 2) how to encourage women to start a company, 3) business ideas for women, and 4) successful women-run businesses.
WHY WOMEN HOLD BACK FROM STARTING BUSINESSES
Before discussing how to get more women to venture out into the world of entrepreneurship, it is important to understand some reasons that may be holding these women back in the first place. An understanding of these issues can help formulate a starting point for creating an enabling environment for women who want to strike out on their own.
Myths about Women Entrepreneurs
There are many myths about why women should not start a company that in general are not true.
Myth 1: It Is Impossible for Women to Succeed as Entrepreneurs
There is an assumption that a woman-owned business will be a small one, both in terms of revenue and in the size of the operation. The second assumption is that the business will center on craft work or other similar female- or child-centered products. A third assumption she faces is that her husband must be her partner or she could only be an entrepreneur because she is married to one. All these are false, as there are many women running a company with millions in revenue on her own while their husbands have their own business.
Myth 2: Women Are Less Entrepreneurial Than Men
Some female entrepreneurs say this is true only because women have fewer role models and can most often not see themselves as an entrepreneur. Many women want to become entrepreneurs but eventually turn back to their other jobs.
Myth 3: Women Are Less Successful as Entrepreneurs Than in Corporate Jobs
According to Facebook executive Sheryl Sandberg’s famous book Lean In women who “lean in” can be successful to a point when working in the corporate world. She then cites her own example of wanting more for herself. And when women want more than their job, they can forge their own path and play on their own field as entrepreneurs.
Myth 4: A Small Business Consumes More Time Than a Corporate Job
A long-standing assumption is that running one’s own business means having to work extremely long hours. This added pressure is at odds with the traditional role women are expected to play in running the house and raising kids. Many women entrepreneurs disagree and make the case for the opportunity to achieve a better work-life balance since one does not have to adhere to the long hours mandated by corporate work. Instead, the entrepreneur has the freedom to manage her schedule better and align it with her other responsibilities to create a harmonious work day.
Myth 5: A Woman Entrepreneur’s Children and Family Will Suffer
When managed properly, the busy life of an entrepreneur can make one a more effective parent. Many female entrepreneurs admit that work is never out of your mind when the business is your own, but you are able to create a schedule where you can be there for your kids as well as for your business. In addition, some entrepreneurs believe that the time their kids spend at her workplace helps them to see an example work ethic and to believe in it.
Issues to Consider before Starting a Business
A new business is a daunting prospect. There are special issues to consider for women in particular, but if they are clear on what is important in both their personal and professional lives, than it is easier to begin and manage a new business. There are four key things women must do and consider before taking the plunge into their new venture.
1) Define Success for Yourself
In today’s world of social media pervasiveness, there is the danger of falling into the comparison trap. Instead of getting jealous of or disheartened by others’ apparent success, you need to take the time to define what success looks like for yourself. For some it may mean the time and freedom to pick up your kids from school, others may value being present for dinner and evening times, while still others may have business ideas that will need time and patience to grow to success. Whatever the case, the business should fit in with the vision you have for your life and not the other way around.
2) Consider Family and Kids
Women are most often the primary caregiver for children as well as being responsible for the running of the household. Before stepping into the new business, it is worthwhile to consider the time commitment and uncertainty that is bound to follow, and what it will mean for your family. This is not meant as discouragement. In fact, much of the stress from being a working, entrepreneurial parent can be alleviated if there has been careful planning and adequate forethought into practical matters.
3) Prepare Your Mind for Battle
Starting a business is a tough time for anyone, be it man or woman. You will be challenged in ways you never foresaw and you will need to stretch yourself further than you ever thought possible. In order to meet the challenges of the new business as well as balance your life and family, you need to take proper care of your mind, body and spirit. This is vital when you are to stand at the helm and take responsibility for the direction and success of your venture.
4) Choose Your Team Carefully
In order for the company to function well and for the entrepreneur to balance work and life, there needs to be a strong, competent and well-functioning team in place. It is a good idea to list the attributes that will be important in your chosen team. In addition, you need to be prepared to make tough decisions that people may or may not like. The line between being easy to work with and being able to set boundaries as the one in charge is a difficult one to walk. A good team should have a great attitude, a strong work ethic and a flexible approach to solving problems.
HOW TO ENCOURAGE WOMEN TO START A COMPANY
With an understanding of issues and hurdles that hold women back from starting their own businesses, there are some important ways that these women can be encouraged to step into this arena. These include providing information on the key basics of starting a new business, turning myths into strengths, and good mentoring programs.
Key Steps in Starting a Business
The number of women starting and running their own businesses is steadily growing. Whether the business idea is home-based or run from a commercial office, a few key steps can help successfully get the business off the ground.
- Planning: The first step, before anything else, is to assess how feasible the business idea is. The way to do this is most often to write up a detailed and formal business plan. However, this can also be done informally by brainstorming on a piece of paper. The main questions to ask and answer include an assessment of the need and demand for the product/service to be sold, potential competition, potential target and niche markets as well as demographics.
- Permits and Licenses: Almost all businesses will require some sort of permit or license. Businesses such as a hair salon, a medical practice, architecture firm, etc. will also require an occupational license. The exact nature of these permits and licenses will depend on the type of business as well as the exact location, since different areas have different business requirements.
- Funding: One of the biggest concerns for a potential entrepreneur is funding and where to secure it from. Many countries have business loan programs for women to help start a business. Apart from specific women-centered loans, funding options include bank loans, savings, investors and borrowing from friends and family. The amount of funding required initially will depend on the nature of the product or service, as well as the scope of the operation.
- Policies: Whether the business is big or small, home-based or commercial or with other employees, there will need to be policies in place to ensure that everything runs smoothly. These could include fees and payment policies for clients, product delivery times, return or exchange policies, or usage policies. The best interest of both clients and the business, along with safety and satisfaction, need to be kept in mind when developing these policies.
- Promotion: Once the business is set up and operational issues sorted, it will be time to bring in customers. This will require a detailed and pointed marketing and promotional plan for the business. This has become an easier task with the proliferation of social media. However, with increased and instant reach, it is also more complicated to find just the right medium of communication for your business and its target market. To meet suppliers, peers and potential retailers, networking and joining local business associations may be a good idea.
Turning Supposed Weaknesses into Strength
Despite the increasing percentage of women as business owners, there are still substantial obstacles that these women have to face just because of being female. Some of these challenges and how to overcome them is discussed below.
Women Entrepreneurs Want to Act Like Men
Women entrepreneurs and small business heads often find themselves outnumbered in industry events and meetings. To compensate for this intimidating scenario, these women often find safety in displaying stereotypical male executive behaviors. These include a competitive, aggressive and overly harsh attitude. One founder and CEO disagrees with this behavior, however. Hilary Genga of swimwear company Trunkettes, suggests that instead of this wrong approach, women should try a more natural approach.
“Be yourself, and have confidence in who you are,” Genga says. “Don’t try to be a man. You made it to where you are through hard work and perseverance, but most importantly, you’re there. Don’t conform yourself to a man’s idea of what a leader should look like.”
Another CEO, Sharon Rowlands of ReachLocal, believes that the key to success in any situation is confidence. In her early days of being appointed CEO, Rowlands felt that all her ideas were subject to more scrutiny than other male colleagues. But instead of letting this discourage her, she maintained her confidence in her abilities to run a business effectively.
“I just made sure that any initiative I was trying to move forward was backed up by a solid business case. I was never unprepared for the questions that I knew would come. I [also] think many women naturally have extraordinary common sense, a sharp intuitive sense and a great focus on people. These are extremely valuable in business and can help to set us apart as leaders.”
Women-Led Startups Receive Significantly Less Investor Funding
Among the different methods for gathering funds for a startup, pitching to investors is one of the most difficult ones. For firms owned by women, this challenge is even greater. Less than 3 percent of venture capital funded companies have a female CEO, according to a 2014 Babson College study. According to CEO and founder of Full Circle CRM, Bonnie Crater, there is a tendency among venture capitalists to support their own tribe. This means a venture capitalist from Harvard will support a business run by a Harvard alumnus. This may apply to women as well, but there are only a handful of venture capital firms with women partners. Instead, Crater suggests offsetting this tendency through a great team and a solid business plan.
Emotions and Nurturing Skills will Affect Women’s Businesses
Where forced traits of men are not a guarantee for success, stereotypical feminine traits should not be allowed to stand in the way of getting things done. The naturally nurturing and emotional nature of women can be a hindrance to the running of a business. Delia Passi, CEO of WomenCertified, feels that where men may remain fixated only on the bottom line, women can become emotionally connected which may hold them back from making tough decisions such as being quick to fire or making similar dramatic business changes. Women tend to pay more attention to building relationships and these professional connections can be very important for success and long-term clients. However, women also need to be direct and stay focused on business goals.
Women Often Lack Support of Other Female Business Leaders
Sarah Bryar, founder of eyewear boutique Rivet & Sway, feels that the main challenge for female entrepreneurs is that there aren’t enough of them. This means a lack of women as role models, those who can act as sounding boards or do deals with. All this is needed to create a normal situation for women in leadership positions.
“Opportunities to lead do exist for women,” Bryar says. “We just need to continue to support and promote women in the limelight to encourage others to come along for the ride.”
Many Women Have to Balance Their Families and Their Businesses
For all entrepreneurs, work-life balance is a constant issue. But for mothers especially, this is a difficult situation to manage. Both new businesses and families require a lot of attention and care. Hilary Genga says that she has learned not to let shortcomings on either end bother her and to not beat herself up over little things. There are ways to balance both challenges, but there is an existing perception that you would be more successful if there were no kids vying for your attention.
Women Entrepreneurs are Afraid of Failure
The fear of failure is cited as a top concern for women who start their own business. This was reported in Babson College’s 2012 Global Entrepreneur Monitor. Delia Passi agrees that though the fear of failure is a very real possibility in any business venture, it need not be taken as a negative. Instead, there should be an effort to work through those moments of self-doubt that plague every business owner at some point.
“You need to have massive failure to have massive success,” Passi says. “You may need 100 ‘no’s’ to get one ‘yes,’ but that one ‘yes’ will make you more successful tomorrow than you were today.”
According to authors (A Rising Tide: Financial Strategies for Women-Owned Firms) Susan Coleman and Alicia Robb, women who run businesses may face hurdles that are not encountered by men. One of their findings is that women looking for first-year financing will receive 80 percent less capital than men. Generally, women feel that finding financing is the hardest part of their launch.
Resources to Use
- Personal Savings – The first place people look to fund their business is their own savings. However, women often tend to earn less so have a smaller savings amount to tap.
- Loans from Banks and Credit Unions – This is another main source for funding for women, and women are now less likely to be rejected for these loans. This makes the loan avenue a good one to explore. With a solid business plan, great credit score and credit record the chances of securing a loan are high.
- Home Equity Credit Lines or Loans – Another idea is to use a home equity loan. It is possible to borrow 75 to 80 percent of the value of the home minus the remaining owed mortgage amount. A credit line will mean money in increments, while a loan will be a lump sum.
- Relatives and Friends – Family members and friends are a good source of funding as this can mean an interest-free or a low interest loan. A legal contract to ensure no issues at a later stage is a good idea when using this mode of funding.
- Angel Investors and Venture Capital Firms – In return for equity or fractional ownership, a venture firm will provide financing. These investors are approached often and are very careful with money, making them tough sells when it comes to a business. Very few women rely on this form of financing, however. One reason for this may be that the field of venture financing is dominated by men and it is hard to break into this club.
- Crowdfunding – Many successful products have found their financing via crowdfunding campaigns run through various crowdfunding platforms. People who believe in the project put in small amounts in return for small rewards and tokens. There are many different types of crowdfunding websites and the right one should be selected based on careful consideration of all rules and regulations.
- Economic Development Programs – With some research this can be a great avenue for funding. Getting certified as a women-owned business can allow access to specific funds designated for women in business.
- Grant Programs for Women – Business grants for for-profit and nonprofit businesses can also be a good source of funds for women starting their own venture. These can be explored on local business association websites as well as government websites.
Resources to Avoid
There are also two sources of funds that should be avoided at all costs. These are:
- Credit Cards – The double digit interest rates of most credit cards make them an unfeasible method to fund businesses. It is also very easy to get into credit card trouble.
- Retirement Funds – No matter how exciting or lucrative a business opportunity may appear, it is not worth dipping into any retirement funds. This may lead to owed income taxes and other penalties. Apart from this, your future financial security will be compromised.
Many women lack strong, positive female mentors and role models. This translates into a lack of proper direction and guidance that can otherwise prove invaluable to a new business owner. To achieve this, women need to attempt to find a few different mentors to help them manage their personal and professional lives effectively.
Choosing a mentor is a very important endeavor made difficult by the lack of pool to choose from when it comes to women. However, with the rising tide of female entrepreneurs in the market, this is set to change. A good mentor should be one whose work you admire, who shows strong leadership abilities and is an inspiration to both you and others that she encounters. In addition, she should be able to offer solutions to and insights into obstacles and opportunities. These women are experts within their fields and can share their experience as well as cheer you on toward your finish line. Five good reasons to have a mentor are:
- Accountability – A good, strong mentor will hold you accountable to ensure that no vital aspects of the business are neglected. She will hold you responsible and answerable for your actions as well as help you set realistic goals and manage time.
- Defining and Reaching Goals – A good mentor will be able to help you not only define what goals are to be achieved, but also help you reach these goals. Goals may be both short-term and long-term.
- Provide a New Perspective – The mentor is close enough to be invested in your decisions but far enough to remain objective in her views, advice and opinions. If there are roadblocks or plateaus in the business, the mentor will be able to bring a fresh pair of eyes to the table to help you see a clearer picture of the future of the company.
- Sounding Board – A mentor becomes a trustworthy confidant with whom to discuss problems and find solutions. The mentor becomes a brainstorming partner.
- Advisor – With a wealth of experience, the mentor can help grow the business through various situations and challenges. A veteran can help come up with new ideas when a mental block is reached or help you make key business decisions.
BUSINESS IDEAS FOR WOMEN
Women can set out and make any sort of business idea a success if they move ahead with proper planning, dedication and perseverance. Some ideas to get started are listed below:
This is a rising industry, especially through online sales. The online aspect can help keep costs low by eliminating the need for a brick and mortar establishment. This market is predicted to see a 5.4 percent growth from 2012 to 2016. Experienced mothers or not, the right research can help design the perfect product, from eco-friendly products to organic baby food or unique clothing and accessories.
Blogging is picking up as a profitable line of work with the increasing popularity of social media. If you are a parent, a parenting blog that discusses key issues with raising children in today’s society could be the right idea for you. Apart from this, there are millions of topics the blog can be centered around. The idea is to pick what you are an expert in or have a passion for.
This flexible business opportunity can be a good idea for those parents who want to balance their home life with a small side business. Key traits required are patience and an interest in the success and failure of others. Tutoring sessions can also be offered online via Skype.
If you are creative, organized and a people person, then this may be the best business for you. This business can be started small by first working for friends and family, moving on to referrals and then eventually growing the business further.
If you have the right training and like to help people, a career as a coach may be the right one. Depending on your area of interest, you could become a life coach, a health coach, a career guide or many others. Great communication skills and a compassionate listening ear are important traits for this job.
With extensive experience in a particular industry, a business consulting gig may be a great one for you. A consultant solves issues, identifies problems before they escalate and provides advice for decision-making.
IT consulting is now relevant to almost any type of business out there. Everyone needs IT support at some point in time, but not everyone is keen to hire a big budget firm for this help. A tech background is obviously key here, and a small trouble-shooting and support business can be started from home. Apart from this, a consultant could help businesses transition new software or hardware into everyday operations.
A very small percentage of app developers happen to be women. This does not mean that women should stay away from this line of work. Instead, apps can be developed on contract for others, or on an independent basis and then sold to others.
Most women have a great eye for color. Add this to working knowledge of color psychology and a business idea is born. Businesses with branding needs, architects and interior decorators are a good place to start finding clients.
With an interest in reading and writing and skills in editing, a home-based editorial job can be the right place for you. Work could include copywriting, web content generation and writing for magazines and other media outlets. Editing work can include books, websites, periodicals and more.
SUCCESSFUL WOMEN-RUN BUSINESSES
A nonprofit membership group, Women President’s Organization, released a list of the 50 fastest growing women-owned companies in the United States. These businesses made a total of $3.2 billion in revenues in 2012, with an average of 612 employees each.
“Women are growing very substantial businesses, and not in the traditional areas that you’d expect women to be in,” says Marsha Firestone, president and founder of WPO, citing a concentration of manufacturing, staffing and consulting businesses on the list. “Women don’t just bake cookies and make crafts. They’re starting businesses that can be scaled.”
Shazi Visram – Happy Family (New York, NY)
This company makes organic packaged meals and snacks for a range of ages. The company was launched in 2006 and generated $63 million in revenue in 2012.
Kathy Mills, Strategic Communications (Louisville, KY)
This company provides communication and IT services to clients that include businesses and government agencies. The company reported gross revenues of $42 million in 2012, which was an 80 percent growth in revenues since 2010.
Shelly Sun, BrightStar Franchising LLC (Gurnee, IL)
This company is a health-care staffing franchisor, created in 2002. It has offices in 250 locations around the US and reported $212 million in gross revenues from 2012-2013.
Tiffany Crenshaw, Intellect Resources (Greensboro, NC)
This company provides consulting, recruiting and hiring solutions to businesses in the healthcare IT market. Gross revenues grew from $1.5 million in 2010 to $30 million in 2012.
June Ressler, Cenergy International Services LLC (Houston, TX)
This company provides workforce solutions to clients in oil and gas. Services include consulting and logistics management. Begun in 1996, the company reported gross revenues of $250 million in 2012.
Sue Bhatia, Rose International Inc. (Chesterfield, MO)
This company provides IT professional services and consulting services. It was started in 1993 and gross revenues rose 50 percent from 2010 to 2012 to $360 million.
Kathleen Croddick, Suite K (South Brunswick, NJ)
This company manufactures beauty products such as fragrances, creams and lotions. Revenue grew 150 percent to $13 million from 2010 to 2012.
Lani Hay, Lanmark Technology (Vienna, VA)
This company provides professional services such as IT and admin support. Clients include those in the government as well as commercial sectors. In 2012, gross revenue was reported as $35 million.
Ranjini Poddar, Artech Information Systems LLC (Cedar Knolls, NJ)
This is the largest IT staffing company in the United States that is owned by a woman. Gross revenues were nearly $350 million in the 2012-2013 period.