Six Tips for Women Entrepreneurs
More women than ever before are grabbing the reins and starting their own businesses. The number of women-owned small businesses is growing approximately twice as quickly as the national average for all start-ups. Despite some long-held and inaccurate stereotypes of women tending towards makeup sales or Beanie Baby businesses, in truth there's no such thing as a typical "woman-owned business."
Who Are the Women Entrepreneurs?
Women are starting businesses of every type and size, and in every industry — from construction to technology to professional services and from one-person consulting firms to Fortune 500 companies. The reasons women are jumping into the world of small business are as varied as the women themselves.
Some women entrepreneurs come from the corporate executive world and are simply ready to take a crack at running things themselves. Others have faced layoffs from a downsizing economy. Still others are re-entering the workforce after taking time off to raise children or pursing long-held dreams of running arts- or crafts-based businesses.
Tips for Entrepreneurs
For entrepreneurs of all stripes — women and men included — the pre-start-up phase is typically characterized by a flood of questions about what exactly it takes to make it in business. Are there different answers to these questions for men versus women? Not really. Every business needs to be based on a solid idea, aimed at a profitable market or niche, have solid systems management, and market itself effectively. And of course, the legal and bureaucratic rules facing women entrepreneurs are exactly the same as those facing men.
But as many women business owners will tell you, the road to success for women often involves its own unique set of curves. Surveys of women business owners show that women's business concerns tend to skew towards issues such as financing; negotiation and sales; finding a balance with family life; and marketing. The following tips address some of the issues and concerns that are most commonly faced by women entrepreneurs.
1. Start a business that works for you and fits with your personal life. There are no rules as to what a "real" business looks like. For some businesspeople, success might mean an international operation with hundreds of employees and annual revenues in the tens of millions. For others, a small consulting firm or artisan business that pays a healthy salary and allows generous personal freedom might be considered the pinnacle of success. The key is to take the time early in the planning process to consider this question and decide for yourself what your ideal vision is for your business and personal life.
Remember also that small businesses can be quite profitable, particularly if they target an untapped (or undertapped) niche. It’s almost always possible to find profitable niche markets if you look carefully.
2. Don't sweat the bureaucracy. A lot of would-be entrepreneurs, women and men alike, find themselves stuck on the verge of taking the leap into starting a business, confused about how to tackle the legal rules of getting started. This hang-up is always grounded more in fear than reality; the truth is that clearing the bureaucratic hurdles isn't usually big deal.
You can usually start a sole proprietorship (the legal term for a one-owner business) or a partnership (a business with more than one owner) by registering with just one government office. And for business owners who want protection from personal liability for business debts — often referred to by the legal jargon "limited liability" — the simplest corporations or limited liability companies (LLCs) require only a couple more registration tasks to complete. In other words, once you've got your business idea developed to a certain degree, all you need to do is visit a few government offices, fill out some forms, and pay some fees — and suddenly your idea will have become an actual, legitimate business.
Of course, there's a lot more to launching a successful small business than dealing with bureaucratic requirements. For starters, you'll need to have a sound business idea, and you'll need to be able to develop good management skills to guide it to success. This is where you should put your mental energy and good ideas; don't waste precious brain cells worrying about the legal hurdles.
3. For businesses with moderate to significant overhead, it is crucial to start the business with adequate funds. Starting a business without enough money to ride out the early lean days (described as "undercapitalization") is the most common reason that businesses fail. Undercapitalization is less of an issue with small service-based businesses that don't have many fixed expenses. But businesses with overhead such as rent, salaries for employees, utility bills, inventory, equipment, insurance, or other fixed costs absolutely need to plan carefully and pull together enough funding to support the fledgling business as it works up to speed.
Also, though it's important to start your business with enough capital, that doesn't mean that every business needs piles and piles of money to get off the ground. Plenty of mega-successful businesses were started on a shoestring: Apple Computer started in a garage; Hewlett-Packard started in the dining room of the Packard home; the list goes on and on. Generally speaking, a business that can find creative, thrifty ways to provide its product or service — especially in its early days — will typically find more success than a business that adopts a "spend more money" approach.
4. If you need start-up or expansion financing, consider sources other than traditional banks. One of the concerns most commonly cited by women entrepreneurs is difficulty finding start-up financing. And it's little wonder: traditional banks typically don't lend money to new ventures that don't have a track record of success or creditworthiness. Instead of focusing on conventional big-chain banks, start-ups should instead look for local community banks, credit unions, and other local financial institutions that have a vested interest in the health of the local economy. Often, their application processes and criteria are softer than the big banks.
Also look into community development financial institutions (CDFIs) in your community. CDFIs, which are certified by the U.S. Treasury, are a fast-growing segment of the business financing market specializing in loans to underserved communities and populations. These funding organizations can be especially helpful for start-ups, businesses with poor credit, and businesses seeking relatively small loans, generally up to $100,000. CDFIs usually — but not always — have a specific focus such as improving economic opportunities in blighted communities or supporting women- or minority-owned entrepreneurs. Even better, CDFIs often offer guidance and expertise to your business in addition to financing, which will help your chances of success.
5. Don't worry if you don't consider yourself a "sales" type. Often (but certainly not always) women report feeling intimidated or turned off by the task of sales and negotiation. But despite what many believe, you absolutely do not have to aggressive or sleazy to be an effective salesperson or negotiator. In the real world, the common thread among effective salespeople is that they are good communicators. They provide clear information, listen to their customers, and use good judgment as to when to back off and save the pitch for another day.
Certainly there is an art to selling and negotiating, and every businessperson should work on developing these skills. There are countless books and online resources on the topic which can be very helpful as you refine your approach. Just remember that the stereotypical pushy, aggressive salesperson is not the model to work towards. Instead, focus on developing your communication skills and keeping your own personality in the mix as you develop your own selling style.
6. Network like a social butterfly — it is one of the best ways to market your business and create profitable opportunities. Networking involves actively cultivating relationships with people, businesses, community leaders, and others who present possible opportunities for your business — not just as potential customers, but also as vendors, partners, investors, or other roles. Networking is not the same thing as sales: Rather than the simple goal of making a sale, a huge goal of networking is to inform other businesspeople and influential people about what you do in hopes that they will recommend your business to their circle of contacts.
Forge relationships with contacts before you need help from them. For example, if you need the support of a local politician on an upcoming city zoning decision, you'll have a better chance of getting the politician's vote if he or she already knows you and thinks favorably of your business than if you place a call to his or her office out of the blue.
Lots of folks new to the world of business fear that successful networking requires unsavory schmoozing or pandering. These concerns are unfounded. In fact, if you adopt a sleazy, wheeler-dealer approach, you risk alienating the very people whom you want to make your allies. Instead, successful networking is little more than sincere communication with others about what you do. You are "networking" every time you attend an event held by a local trade association, get to know other business owners and community leaders, write a letter to the editor, participate in an online discussion group, or have lunch with another local business owner.
