With support from Capital One’s Future Edge initiative, the Center for an Urban Future has just released a study, “Breaking Through: Harnessing the Economic Potential of Women Entrepreneurs.” This comprehensive study focuses on the economic impact that women-led companies have had on New York as well as across the U.S. It also provides ways that we can all help empower and inspire the future growth of women-led businesses.
The study is both exciting and eye opening; it shows not only the amazing progress made by women entrepreneurs over the past decade but also obstacles still to be overcome. It’s a thought-provoking read that will surely ignite conversation about how we can all help keep the surge of women entrepreneurs going strong.
And that’s why Capital One helped bring this study to life with support through its Future Edge initiative, a $150 million, five-year effort to help more American workers and entrepreneurs succeed in the 21st century economy. Through Future Edge, Capital One works with hundreds of leading community and nonprofit organizations, including microfinance and micro-lending organizations empowering women entrepreneurs.
NYC: Women Entrepreneurs Opening 45 new businesses every day!
According to the study, “fueled by advances in technology, lowered barriers to entry and recession era lay-offs, women throughout the city from stay-at-home moms to fashion designers and finance pros are starting and growing new businesses at a remarkable clip. In the decade from 2002 to 2012, the most recent year for which rigorous data is available, the number of women owned businesses grew by a whopping 65 percent or 45 new businesses every day, adding more than 56,000 jobs and $3 billion in payroll to the city’s economy.”
Supporting Women Entrepreneurs = Supporting the Global Economy
Supporting women in business is more than just about advancing women; it’s about families, communities and, in turn, the entire country and even global economies. If women entrepreneurs were actually operating at full potential and on equal footing, the economic impact would be astounding on many levels. Take, for example, that the majority of women-owned businesses in New York City are “solo-preneur” companies (no employees other than the owner). Adding employees is necessary for growth, as pointed out in the study, “Unleashing the full potential of women entrepreneurs in New York would have far-reaching impact on the city’s economy. For instance, if only one quarter of the existing 376,405 women-owned businesses in the city with no employees added a single employee in the next three years, it would result in more than 94,000 new jobs.”
Overcoming 2 Common Weaknesses: This seems very doable. Especially if women entrepreneurs can overcome two common areas of weakness that hold their business back from scaling: understanding financial management and securing funding for growth. Many women who start their own business function better on right-brain issues like creativity and imagination, lacking in left-brain functions of mathematical and analytical processes (myself included). But there comes a time when we right-brainers have to move outside our comfort zone and deal with numbers.
This study says that “for women without a degree in finance or experience in budgeting or cost management, a lack of financial literacy can be a showstopper, not only limiting growth but also making it difficult to manage even the day-to-day business.” Lexy Funk, founder of Brooklyn Industries, a clothing retailer, says, “My biggest piece of advice is to learn accounting. Understand your profit and loss inside and out. Understand why you’re making money and how you’re making money. I feel that it was a huge advantage that I had. I did all of my bookkeeping for the first ten years because nobody was there to do it. That’s why we didn’t go out of business, even though we had no money.”
The study adds, “The good news is that a growing number of organizations are providing training and critical support to women entrepreneurs. Non-profits and intermediary organizations such as Grameen America, The Hebrew Free Loan Society, Business Outreach Center Network, the Business Center for New Americans, WHEDCO and industry and professional organizations all run training programs for new and seasoned entrepreneurs. And for many, the experience is game changing.”
Scaling & Funding
Once women entrepreneurs have a grasp on the basics of financial management they can begin to scale their business. Scaling usually requires funding. The study reports that, “Accion, a micro-finance organization that provides business loans and technical assistance to small scale entrepreneurs, has nearly doubled its loans in New York City since 2011, with 40% of them going to women entrepreneurs. At the Business Outreach Center Network (BOC), another microfinance organization, with several locations across the city, 683 women clients received one-on-one business counseling in 2015, and 73% of those seeking counseling are women.”
There are many local and national organizations that help women entrepreneurs learn about financial management and provide micro-loans. “Perhaps the most dramatic growth is happening at micro-lender Grameen America, which lends only to women entrepreneurs living at or below the poverty line. Since its start in New York City in 2008, Grameen has made more than 100,000 loans totaling $258 million, the majority to women starting and operating businesses not in the trendy tech sector, but in the kind of everyday industries that give life and stability to communities-beauty shops, clothing stores and food and beverage establishments. Indeed, women entrepreneurs in New York account for 58 percent of all the women in the US served by Grameen.”
In fact, Capital One and Grameen America are longstanding partners. Since 2009, the company has provided more than $1.5 million in low-interest loans to help grow Grameen America’s lending abilities. Recently, the two teamed up to launch the first U.S. Training Program for micro-finance to help bring micro-loan access to thousands of aspiring entrepreneurs in low-income communities.
Networking & Mentoring
In addition to financial management and funding, networking and mentoring are critical in helping women entrepreneurs gain both knowledge and confidence. Connecting with experienced entrepreneurs who can help share their wisdom and contacts can make all the difference between ‘just getting by’ or thriving.
This is confirmed in the study, which states that “the importance of networks is hard to overstate. More than just relationships, they give access to mentors and role models-both men and women- who can provide advice and support and help new entrepreneurs gain confidence, avoid missteps and persevere through what is often an exhausting an isolating experience. Networks can also help entrepreneurs learn the soft skills that they would otherwise have to learn through trial and error-how to build client relationships, what to look for in employees, when to be aggressive and when to pull back.”
Not All Entrepreneurs Are Fearless & Egomaniacal!
The study also indicates that women entrepreneurs, as a whole, may not have the thick skin, big egos and fearless attitudes of their male counterparts. According to numerous reports, women are credited with less confidence than men. In the study, Janice Collins, co-founder of the Refinery, an accelerator for women-founded companies in Westport, Connecticut says, “Men walk in to pitch, saying they will have $20 million in three years and they don’t even have a prototype. Women want to make sure the prototype is out there and tested before they think even $3 million. It takes work and you have to havethe confidence to go there.”
A higher level of confidence should help women entrepreneurs improve their chances of finding funding. For the third quarter of 2015, venture capital funding to women-founded companies is only $122 million, compared to $1.29 billion for men-owned businesses in NYC. The study says that “venture capital is still very much a man’s game, the new old boys’ club” and that nationally, 6% of the partners in venture capital firms are women. With so few women on the investing side, men need to step up to the plate and go to bat for women entrepreneurs.
This sentiment was echoed by actress/activist Patricia Arquette in a recent speech about equal pay for women, stating that “when men support change, it has been shown that change comes ten times faster. We need our sons, brothers, friends, lovers, husbands, uncles, grandpas, co-workers and heroes to support our goals.”
What Can You Do to Help?
With so much work still to be done, the study offers the following recommendations that will help women entrepreneurs take their business to the next level. Is there something listed here that you could do to help your own business or let another woman-led startup know about? Could you ask your local leadership to implement one of the following ideas in your town?
(See the full list here on page 42)
- Launch a program focused on supporting and scaling up home based businesses.
- Ensure that more women entrepreneurs whose loan applications are rejected by banks get referred to a micro-lending institution for access to capital, credit building assistance and other business support services.
- Develop programs to support older women entrepreneurs.
- Recruit experienced women business owners and executives from every industry sector to be mentors.
- Increase the number of women professionals involved in SCORE.
- Create more opportunities for women entrepreneurs to team up and start companies with co-founders.
- Establish an annual showcase event where women entrepreneurs can meet and pitch the city’s top venture capital leaders.
In honor of National Women’s History month, consider making an effort to reach out to both offer help, as well as seek help. Regardless of your level of success, there’s always someone who could learn from your mistakes and/or experience.
Here are some of my suggestions:
Reach Out With Social Media: Everyone is accessible these days via Twitter and LinkedIn. Reach out to people you’ve been inspired by and connect with them to build relationships.
Join Online Groups: I participate in several Facebook and LinkedIn groups that are women and entrepreneurial-centric and can serve as meaningful platforms for crowdsourcing and networking.
Contact the Local Branch of the National Non-Profits: Organizations such as NAWBO and SCORE may offer workshops, seminars and mentoring in your area. For more established entrepreneurs peer to peer groups such as the Women Presidents’ Organization are available.
Volunteer: For years I’ve volunteered with NFTE (The Network for Teaching Entrepreneurship) which is a national non-profit organization that pairs up entrepreneurs with underserved high school students in preparation for a national business competition. Not only is it a highly rewarding experience for the entrepreneurs to help the students, the volunteers also network with each other.
Attend Conferences & Trade Shows: Although networking online works well, when it’s supplemented with a face-to-face meeting it’s even better. Most industry conferences offer great opportunities to hear from and connect with industry thought leaders. Even attend trade shows and conferences outside of your industry or niche market.
Please join the conversation online using the hashtag #StartedByHer. Let’s all engage online to help build a stronger network for sharing entrepreneurial knowledge and wisdom- a foundation to facilitate the growth of the next generation of women entrepreneurs and leaders. As Maya Angelou says, “When you learn, teach. When you get, give.”
Tweet me your thoughts (@sandyabrams) and let me know how I can help you. And for more information about Capital One’s Future Edge initiative, visit www.capitalone.com/investingforgood or join the conversation on Twitter at @YourFutureEdge.
*Thank you, Capital One for sponsoring this post. Opinions are my own and I’m thrilled to participate in this discussion!