Why are most women-owned business still smaller than $500,000 in revenue?
More than 1,000 women business owners gathered earlier this month in Miami at the national conference of the National Association of Women Business Owners (NAWBO) to identify opportunities and challenges to building their companies and having an even more significant impact on the economy.
While women are launching businesses at a rapid pace — 1.5 times higher than the national average — their companies still remain small in scope, with only 4 percent reaching earnings of $500,000 and only 1.8 percent surpassing the million dollar mark, according to American Express small business research.
Fortunately, there are myriad efforts underway to boost those percentages — from training on leadership, to new forms of financing, to laws that encourage government contacts to include women. “We have come far but we can’t take our eye of the ball,” said Julie Weeks, president and CEO of Womenable, a for-profit social enterprise to enable women entrepreneurship worldwide.
The country now celebrates 25 years since the passage of HR 5050, federal legislation known as the Women’s Business Ownership Act of 1988, which was critical in boosting women entrepreneurs’ access to capital and independence and led to a surge in women-owned businesses. Virginia Littlejohn, a former NAWBO president, said she recalls a member trying to get a loan for her business in the 1970s. Divorced, the bank wanted her to have her ex-husband co-sign the loan. When she refused, the banker wanted her to have her 17-year-old son do it.
There also have been laws passed that help women to get government contracts. But Billlie Dragoo, the 2013-2014 NAWBO National Chair, still finds that the capital available to women business owners isn’t as plentiful as it is for men. “Women still have to use their personal savings and credit cards,” she said. Dragoo considers access to growth capital the next frontier and she’s trying to do something about it. In her state of Indiana she is forming a venture capital fund for women-owned businesses to tap. “I would like to see it happen across our 60 chapters,” she said.
Speaking in Miami, Anna Colton, Bank of America’s Small Business Banking national sales executive, said the reasons why women are struggling to land venture capital may be the type of businesses they run. Venture capital firms tend to invest in high tech and life sciences, but women tend to have professional services firms, she notes. Colton feels that could change when venture capital firms are made to understand the growth and success of women-owned businesses.
Still, Colton feels women business owners wear many hats and often overlook the need for financial expertise to grow their businesses. A recent Bank of America survey found only 23 percent of women who own business feel financially savvy. Colton says her bank has personal advisors assigned to work closely with each women business owner. Bringing in that expertise, “that’s how you create work life balance,” she says.
For several decades, the top four issues for women business owners have been 1) access to capital 2) access to government contracts 3) access to expertise and mentors 4) and gaining enough respect to secure a seat at the table. Today, there are more than 8.6 million women-owned businesses who still encounter those challenges.
Meanwhile, many of Miami’s small business owners, including women-owned businesses, are optimistic, and more than half (55 percent) anticipate a revenue increase for their small business over the next year. However, they remain concerned about the health of the overall economy. Most do not expect to increase hiring efforts. Only 22 percent plan to hire new employees in the next year, according to the Bank of America survey.
American Express Open also wants to see women business owners grow their businesses and hire. It just launched OPEN for Women: CEO BootCamp. “It’s all about helping women entrepreneurs make a mindset shift to be more successful CEOs,” said Alexandra Ytuarte, an American Express Open executive. Already women are connecting online on the dedicated website, www.openforwomen.com/ceobootcamp/, tapping financial education resources and sharing challenges and solutions, she said.
An American Express Open survey found 72 percent of women entrepreneurs say their focus on growing their business is consistent, however, only 13 percent of women say they spend more time working ON the business rather than IN the business.
In Miami, American Express used the NAWBO conference to help roll out its new initiative aimed at building confidence, competence and connections for women. Charlotte Beers, former CEO of Ogilvy and Mather and author of I’d Rather Be in Charge, led a breakout from the CEO BootCamp curriculum on how to increase your confidence as a leader.
“Women need to say what we mean and speak in a way that we inspire and persuade others. This can be learned,” Beers said.
Beers, a former ad agency CEO who also worked for the Bush Administration as the Under Secretary for Public Diplomacy and Public Affairs, just wrote a book about her path of self discovery on the way to holding positions in the C-suite.
In Miami, she emphasized the golden rule of communication: It’s not what you say, it’s what they hear. As a female leader she advised: Eliminate the extraneous, don’t repeat yourself, and be willing to step out of the team to show you are convinced and committed to thinking a certain way on an issue.
“You have to master skill of being an artful communicator. One day, you will want to say, ‘this is the right thing to do’ and when you turn around, people are following you. That’s leadership!”
Miami Career Coach Casandra Roache said she encourages women business owners to dream bigger about their revenue growth. “They just need a little encouragement and help to break it down step by step.”