10 Things Women Entrepreneurs Need to Know
By Rieva Lesonsky
Editor’s Note: Yes, this was supposed to post In March, during National Women’s History month. I simply ran out of time. But the issues facing women entrepreneurs are as relevant today, and sadly, will likely still be of concern months from now.
1—The Funding Gap Between Male & Female Entrepreneurs
Male and female entrepreneurs around the world report extremely similar experiences and attitudes toward starting and running a business—except when it comes to raising outside capital. According to a recent global survey of more than 3,000 entrepreneurs by graphic design marketplace 99designs, a significant funding gap between genders still exists, with men being twice as likely as their female counterparts to have raised at least $100,000 or more to fuel their business.
The 2nd annual International Women’s Day Entrepreneurship Survey shows 28% of the men polled raised at least $100K or more to start their businesses, compared to just 15% of the women. These numbers show little change from last year’s survey showing a gap of 12% vs. 6%, respectively.
More survey results: Female entrepreneurs are more likely to be operating home-based businesses (68% vs. 48% of men) and sole proprietorships (49% of women vs. 31% of men).. They were also more likely to say they put in a “second shift” at night—77% vs. 61% for men.
But male and female entrepreneurs do share some common traits. Both:
- Experience the same levels of guilt about spending time with their businesses
- Cite “less time with friends” as the biggest sacrifice to being an entrepreneur
- Say a “Hard Work Ethic” (1) and “Confidence” (2) are the top skills/traits needed to be successful
- Believe “Charisma,” “Intelligence” and “Financial Acumen” are the most overrated traits for success
- “Not asking for help” is the “biggest mistake” they’ve made
- Share the same “biggest fears”: 1) Finding new customers 2) Getting out of my comfort zone
- Have the same top 3 motivations for starting a business: 1) Passion for or expertise in an area; 2) Freedom/flexible schedule; 3) Always wanted to be an entrepreneur
There’s more information in the infographic below.
2—Global Women Leaders
The topic of gender equality in leadership roles such as C-suite positions (CEO, CFO, COO etc.) and board-level involvement is still an important one. Market Inspector created a map highlighting the percentage of female board members of companies around the world, as well as the gender diversity in management positions.
You can see the map below. But you should also check out their post, since there’s a lot more information featured.
3—The Future of Business
Last month Facebook, OECD and the World Bank released a new report, showing women entrepreneurs have less access to capital when financing their ventures. The study—The Future of Business Report: Access to Capital, also discusses what consumers, policymakers, businesses and society, in general, must to do to change this so women can achieve equity.
Women are less likely to get funding for their businesses. While 70% of both female-run and male-run firms report using their own personal savings to fund their businesses, women are significantly less likely to fund their businesses with a bank loan or venture capital.
Specifically, women are:
- 6% less likely to have relied on a loan from a bank
- 5% less likely to rely on funding from friends
- 3% less likely to have accessed venture capital
The age, size and activity of a business are important factors that can explain gender differences in bank loan rates.
- Women-owned firms are 19% more likely to run businessesin which they are the sole employee.
- Female-owned firms have a median firm size of 1 person, compared to male-owned firms, which have a median size of 3 employees.
- Women are also 10% more likely to run firms that are less than 3 years old (median age: 2 years), compared to the median firm age of 4.5 years for men.
Financing by Industry still shows a gap in women receiving loans.
Women are significantly more likely to run firms in industries like personal services, including hospitality, food and retail, as well as social services, including education, health care, art and non-profit work. Even so, female entrepreneurs in personal services and retail are, respectively, 7-10% less likely to have received a loan than men.
Women are significantly less likely than men to run businesses in technical or professional services such as real estate or financial services, in the production or repair of goods, including manufacturing, automotive repair and construction, in media or in ICT
Policymakers and banks should focus on programs that can help close gender gaps that address potential cultural barriers and promote gender-neutral lending.
Training programs to help female enterprises grow beyond single-person businesses could also be bolstered to highlight the virtuous circle between growth and access to finance.
4—State of Women-Owned Businesses
Entrepreneurial women have made a significant impact on the economy. As of 2017, there were 11.6 million women-owned businesses, employing nearly 9 million people and generating more than $1.7 trillion in revenue, according to the latest American Express OPEN State of Women-Owned Businesses report. Women are starting businesses 2.5 times faster than the national average, and there are 114% more women-owned businesses in the U.S. than 20 years ago.
To help sustain the momentum of female-owned firms, the report highlights several opportunities for growth:
Think globally: Consider expanding your business outside of the U.S. The internet has made global markets more accessible than ever. According to the 2017 American Express Grow Global Survey, 92% of U.S. SMBs that do business globally see international markets as a significant growth opportunity, and, on average, exporters anticipate an increase of nearly thirty percent (29%) over the next five years.
Get WOSB certified: Winning government contracts can be a great option for growth and a good way to stand out is by leveraging certifications. The federal government has an annual goal to award at least 5% of all contracts to certified WOSBs and notably, fiscal year 2015 was a first time they met the goal since it was set in 1994.
- The Trends in Federal Contracting For Small Businessesreport by American Express OPEN found women-owned firms reported investing $107,774 seeking Federal contracting opportunities in 2015, just 58% of the amount invested by men-owned firms ($170,621).
5—Revenues of Women-Owned Businesses
Average annual revenues of women-owned business fell from $210,000 in 2016, to $202,491 in 2017, according to Biz2Credit.com, a leading online credit marketplace.
However, they say, this drop doesn’t necessarily indicate poor performance of women-owned firms. In fact, average credit scores of women-owned businesses that applied for funding in 2017 increased among companies that applied for funding through Biz2Credit (see stats below.
“One thing is certain: although women are becoming increasingly strong in small business, a large gap exists between the funded amounts of male-owned and female-owned companies,” Biz2Credit CEO Rohit Arora explains.
- Average annual revenuesof women-owned business dropped from $210,000 in 2016 to $202,491 in 2017.
- The average credit scorefor women-owned companies jumped 595 in 2016 to 598 in 2017, while the score for male-owned companies rose from 612 in 2016 to 618 in 2017.
- Services(except public administration) represented 9% of the women-owned companies in the study, followed by retail (18.4%) and food/hospitality (12.4%) and healthcare (8.3%).
- The stateswith the most applications from female-owned businesses: CA, NY, TX, GA, and NJ.
Statistics: female-owned vs. male-owned businesses
- Women-to Men Borrowing Ratio: 27% (women) vs. 73 percent (men) of registrations on comin 2016.
- Average annual revenuefor female-owned businesses ($202,491) was $241,736 lower than the annual revenue of male-owned companies ($444,227) in 2017.
- Average Loan Sizefor female-owned businesses was $57,097, compared to $105,172 for male-owned companies, a difference of $48,075.
- Average operating expenses: The operating costs were 52% of revenuesfor female-owned businesses, compared to 50% for male-owned firms.
- Average credit score: The average credit score for women-owned businesses (598) was 20 points lowerthan male-owned companies (618).
- Average age of businessfor female-owned businesses was 56 months, compared to male-owned businesses that averaged 62 months.
6—Promoting Gender Equality in the Workplace
A survey from staffing firm Randstad US underscores the need for immediate change by the nation’s employers, so we can achieve workplace gender equality. The data shows:
- 56% of women and 52% of men believe their workplaces could do more to promote gender equality
- Less than half (47% of men, 45% of women) consider their company to be a diversity employer of choice
- Only 30% say they receive training on unconscious bias, and just 35% say their companies seek employee feedback on biases experienced at work
Feeling the brunt of workplace inequality:
- Only 28% say their employers offer mentor or leadership programs geared toward women
- Just 31% feel they have as many opportunities as men at their current companies
- 58% attribute a lack of promotion to leadership roles as the top reason for gender inequality in the workplace
- Consequently, 80% of women admit they would switch employers if they felt another company had greater gender equality
According to Ranstad, “Change doesn’t happen overnight, but companies that fail to invest in an inclusive workplace will find attracting and retaining quality talent to be a major challenge in the future, especially small businesses which cite finding qualified workers as their top business concern.”
7—4 Tips for Encouragement in the Workplace
Fierce, a leadership development and training company, believes, “Even today, many women struggle to be respected for their leadership qualities, often deemed ‘bossy’, while their male counterparts don’t face the same obstacles. We believe it is this stereotyping that is keeping many women out of top roles, and one that needs to change.”
“We are at a point in time where the conversations abound around gender equality, which includes evaluating and embracing opportunities for women in the workplace, from mentoring them to ensuring they always have a seat at the table,” says Stacey Engle, EVP of Fierce Conversations.
Here are some tips for business owners so they can explore “The opportunities each of us have in supporting and encouraging women at all levels to succeed.”
4 tips to encourage women in the workplace
- Give them the tools to have successful conversations: Individuals who have strong conversation skills not only communicate their needs more effectively, but they are more confident in having tough conversations, and asking for what they want. By ensuring all your employees have these tools, they will be more likely to speak up for themselves in every situation—from ensuring their ideas are heard, to asking to be put on new projects.
- Ensure they have a seat at the table: Even if you aren’t heading up a team, pay attention to who attends meetings, and who is included on digital correspondence. While seemingly minor, being involved in the decision making process is critical to women feeling empowered. Not only does this ensure diverse perspective, but will go far in encouraging women to speak up and share their ideas.
- Provide them opportunities for mentorship: Study after study has shown that mentorship is an incredibly powerful tool for employees. While implementing a formal program is one option, another is simply encouraging women, both entry level and established, to develop a mentor/mentorship relationship within the organization. Creating an environment where this is encouraged, will open the door for more relationships of this kind.
- Re-evaluate workplace policies: Women who feel respected and appreciated where they work, will not only want to stay on, but are more likely to rise in the ranks. To do so, however, the culture must be right. Review the level of transparency you provide in regards to salary, your parental leave policies, and number of women you have in leadership roles. All of these things, and so much more, play into the environment in which women come to work in every day. Ask the women in your office what they need, or would like to see more of, and do what you can to make those changes for the improvement for all employees.
8—Small Business Loans and Other Financing Options
Looking for more information about the various loan opportunities for female entrepreneurs? Check out this article from LendEDU. It also provides an in-depth analysis of many investment and grant opportunities available to entrepreneurial women.
9—Female Fortune 500 CEOs
Only 60 women throughout history have shattered the ultimate glass ceiling and ran the boardroom of a Fortune 500 company—that’s less than an average of 2%. Today, only 6.4% of such corporations are run by female CEOs. Check out this post from KDM Engineering, which examines every female-run Fortune 500 company since 1972—the first year a women was head of a Fortune 500 company. The data is fascinating.
10—Partnering to Help Women Business Owners
Women Impacting Public Policy (WIPP) and the Women’s Business Enterprise National Council (WBENC) have teamed up so they can “strengthen their education and advocacy efforts to support women business owners across the country and at the public policy table.”
The organizations have forged a National Partner Organization agreement that will make WIPP’s public policy advocacy and federal procurement education programs a key part of the benefits that WBENC’s 14 Regional Partner Organizations offer to their members. In return, WBENC will add the voices of its 14,000 certified women-owned businesses to WIPP’s national advocacy work in Washington.