Tips for Women Entrepreneurs
According to the National Women's Business Council, nearly 8 million women-owned businesses exist in the United States. Women-owned firms comprise 28.7% of all nonfarm businesses and generate more than $1.2 trillion in revenue. Interestingly, 88.3% of women-owned businesses have no employees, indicating that many women strike out on their own, perhaps to better balance work and family.¹ If you're considering the launch of a new venture (or know someone who is), the following information may be helpful.
Facing unique challenges
Although there are no gender differences in the steps involved in starting a business, women may indeed face unique challenges when it comes to implementing those steps.
According to a Babson College study, women entrepreneurs tend to have less confidence than their male peers. Among those who have identified new business opportunities, 34% of women admit to a fear of failure, compared with 29% of men, and less than half of women believe they have the capabilities to start a business, compared with 63% of men.²
Women may also face challenges in securing venture capital (VC) funding. In a different study, Babson researchers found that 85% of all VC-funded companies have no women on the executive team, and only 2.7% of VC-funded companies are led by a woman CEO. However, VC firms with women partners were more than twice as likely to invest in firms with women on the executive team and more than three times as likely to fund a company with a woman at the helm.³
Overcoming the obstacles
So what should a woman with a great business idea do?
First and most important, define what success means to you. Do you want a thriving operation with dozens of employees, or are you looking for self-employment to bring in additional income while allowing more time for family needs? Or maybe it's something in between? Be sure you have a clear vision of your dream before you launch.
Understand that preparation and knowledge are keys to building confidence. Develop a written business plan that describes your business's products and/or services, target market, marketing and sales strategy, opportunities and challenges, competition and how you will address it, and other key success factors. This document and the hard work involved in preparing it will be especially important if you plan to seek financing from lenders, angel investors, VC firms, or other outside sources. The required research will help prepare you to answer the tough questions from potential financiers.
Know that successful entrepreneurs are typically willing to take calculated risks. Don't let fear drive your decision making. Once again, preparation is important, but don't let your analysis end up in paralysis.
Be sure you have enough funds set aside to survive the start-up phase, which can last as little as a few weeks or as long as several years, depending on your business. Having enough money to live on during this period may further bolster your confidence, reduce fear of failure, and support wise risk taking.
Finally, take heart in knowing help is available. The Small Business Administration,Women's Business Centers, and Community Development Financial Institutions (CDFIs) across the country provide resources and information especially for women business owners.
¹ National Women's Business Council fact sheet, June 2015
² Babson College, Global Entrepreneurship Monitor, 2013 United States Report
³ Babson College, Women Entrepreneurs 2014: Bridging the Gender Gap in Venture Capital