Allison Sokol, CEO of Specific Beauty, needs to be a risk taker. Her marketing channel, HSN, wants her Miami multicultural skin care company to forge into new product lines. Her buyers want her to expand into Europe. Her business partner, Dr. Heather Woolery-Lloyd, wants to showcase the science behind results through infomercials. But Sokol approaches risk taking cautiously.
“I’m not risk adverse,” she says. “I’m just not impulsive. I believe in being sure and taking educated risks.”
Sokol’s caution mimics many women who run businesses. But when big risks lead to big rewards, women leaders must shift their thought processes if they are going to increase their growth prospects. How exactly, does someone become more of a risk taker?
The first step is a mindshift. A new survey shows women business owners in Florida are struggling to find an appropriate balance between risk and caution. The survey of nearly 250 women by the Commonwealth Institute South Florida found women leaders and owners are optimistic about growth for their businesses in 2014. But while they express interest in expanding product lines and moving into new geographies, most hesitate to take a financial risk.
Most telling: More than 63 percent said they plan to fund growth in 2014 with internally generated funds. That represents a startling figure when research by the Department of Commerce shows most male owners are willing to borrow money to fund their ambition and cease growth opportunities.
“Women by nature are not gamblers,” says Laurie Kaye Davis, executive director of the Commonwealth Institute. “Some want to grow their businesses and to do that, they need to take risks. But, it’s tough for them. It’s not in their nature.” That might be especially true if they juggling their business with caring for small children or aging parents.
Those women who do consider themselves risk takers generally take a studied approach. “They are not completely opposed to taking potential risks but really think carefully about taking them,” says Colleen Moore Mezler, president and CEO of Moore Research Services, which compiled the survey. The survey found women leaders who want to expand are scrutinizing the right location, right personnel and the right mix of services.
For some, visualizing the potential outcome can make risk taking less scary. Though Judy Leibovit, CEO of Sweet Endings Desserts in West Palm Beach, says she is not an inherent risk taker, she is about to take a big leap as her company expands distribution across the country. At the same time, she is augmenting her wholesale business with a retail storefront that will be operated by her twin daughters.
Seizing those opportunities would help her revenues increase by 30 percent in the next year, she says. “When you’re growing a company, there is always risk. It’s about doing it carefully, slowly and smartly and seeing clearly where the risk will take you.” Unlike some women owners surveyed, Leibovit says she has no fear of incurring debt to fund growth. “If I’m going to grow to the scale I want, I have to take on debt. I don’t think of it as risk.”
Sizing up competitors’ risk tolerance can become the necessary trigger. Risk can be critical to increasing market share, the outspoken Richard Branson founder of the Virgin Group has noted. In this competitive economy, avoiding risk can be its own gamble. Branson’s wild success in creating a culture of risk taking at his company starts with encouraging his staff to think about what could go right more than what could go wrong. “It’s important not to be put off by failure,” he has said. “More likely than not, you will succeed.”
Reframing risk as an opportunity to succeed has helped men build more million dollar companies than women. Of course, some of that may be by choice. Women business owners often work harder at juggling work and family; accordingly, they often have smaller performance expectations for their businesses, according to research by the National Women’s Business Council.
“Women are taking risk consistent with their goals but their goals aren’t big enough,” says Sharon Hadary, former and founding executive director of the Center for Women’s Business Research in Washington, D.C. “We live up to our own expectations.”
While change is slow, women are thinking more boldly as they gain business confidence, says Mary Jo Eaton, who oversees Florida for her commercial real estate firm. In her career, Eaton, executive managing director for CBRE Florida, has relocated twice and taken on difficult roles that she saw as opportunities to stand out. “I have had great male mentors who I’ve watched assess risk, take significant risk and be rewarded.”
As the head of Florida operations, Eaton has closed an office in one market and opened another. She has moved the commercial real estate firm into a new sector and made key hires. To boost her odds of success, Eaton says she weighs short term risk against long term pay off and puts the smartest people in roles around her to increase the odds of success. “Taking strategic risk comes back as a benefit, but sometimes it may take time.”
In her research, Hadary has noticed male owners tend to be impulsive risk takers looking for immediate pay off and high returns, while women seek consistent, long-term rewards.
In the Commonwealth Institute survey, women leaders reported they do not feel properly recognized by business and community leaders for their contribution to the economic health of the Florida. Yet it is big risks and impressive results that typically lead to recognition — something Sokol of Specific Beauty sees clearly. The greatest rewards, she has found, come from preparing for risk in advance and seeing short-term setbacks as a stepping stone to long-term success.
Her company’s history offers a case study. Her initial strategy for distributing her tone-evening skincare line required an unsustainable marketing budget to support sales through retail stores. She has since begun distributing the projects through doctors’ offices, med spas, the Internet and HSN.
Still, Sokol wants big rewards for her company and factors that into every potential risk: “The bottom line is I didn’t go into business to make little bit of money. I went into it to make a lot of money. If I am taking away time from family, I want to do it in big way.”