How women-owned businesses can overcome hurdles
Women-owned businesses are on the rise. Between 2002 and 2012, the number of women-owned firms increased at a rate of 52%, two-and-a-half times the national average of 20%, according to a report from the聽.
That statistic sounds sunny, but聽starting a business isn鈥檛 as simple as putting an 鈥渙pen鈥� sign on a door, and the challenges are聽multiplied for female entrepreneurs. Here are a few key hurdles:
Lack of capital
Women start their businesses with about , according to the NWBC 鈥� an average of $75,000, compared to an average of $135,000. Male business owners frequently have trouble raising necessary capital, too, but industry-specific factors make the process even harder for many women. For example, women are more likely than men to start service-based or retail businesses, which tend to have聽larger operational costs than software companies, for example, which might have fewer employees and less overhead. Banks are generally hesitant to loan to businesses with high cost-to-profit ratios right from the start.
The resume gap
Another stumbling block for some women is a lack of聽management or executive-level work experience. Apart from any gender bias that might come into play in corporate hiring and聽advancement, many female business owners took time to start a family, removing them from the workforce around the time people start making big jumps in their careers. Because of this, many women鈥檚 backgrounds don鈥檛聽resonate with bankers and other decision makers 鈥� and that can work against them聽when they鈥檙e seeking .
Societal pressures
My female clients often think they have to have a certain aggressive聽mindset when it comes to business. I teach young girls to have confidence in their abilities: Running a business doesn鈥檛 mean forgetting who you are, but rather showing off the best aspects of your business sense.
On the flip side, some women don鈥檛聽ask for the聽loan amount they need out of fear that they鈥檒l be rejected. Playing it safe can result in securing less聽startup capital.
Despite these hurdles, there are ways women can get the support and they need to build their dream businesses.
Make your business plan shine
If your聽business leadership experience doesn鈥檛聽shine through on a resume, it鈥檚 important to showcase your聽experience and talent in another way. You can聽do that by mastering the art of the business plan.
All lenders require a business plan with each聽loan application. It聽must include an executive summary, company description, financial projection statements, market analysis, and cash flow and balance sheet.
Investors and lenders will be looking for reasons to say no to businesses that require high overhead, such as high labor or facilities costs. Head that off by showing you鈥檝e聽put thought and analysis into your business聽and聽have a plan to keep labor and facilities costs low.
Find alternative funding聽and resources
If one of my clients is聽turned down for a loan, I encourage her聽to consider smaller loans or sources such as crowdfunding. The 聽also has information on alternatives to bank loans, which could include government loans or grants, and angel or venture capital financing.
If you need support during聽the application process, contact the聽nonprofit organization聽,聽which connects聽women with mentors who can help them develop聽business plans.聽The National Association of Women Business Owners also offers 聽that women can use to network and find advisors.
The National Women鈥檚 Business Council has , along with news about women in business.
Starting a business is never easy, and women face even more challenges than men do. But with determination and an analytical approach, women who own businesses聽can overcome these hurdles and soar.
is chief executive of in Rockville, Maryland.聽Learn more about Rita on NerdWallet鈥檚聽. This article first appeared at .
