I am a relatively new entrepreneur with Luminary, a female-identifying professional development hub, opening just 18 months ago. Every day I receive queries on everything from raising money and scaling a company, to customer acquisition and creating a business plan. I was able to leverage my more than twenty years of corporate leadership and finance experience with the complementary skills of my broader team to get the business off the ground.
No matter how many times I answer these questions, the requests continue to come. It’s no wonder when, in the 2019 State of Women-Owned Business Report produced by American Express, women are starting an average of 1,817 new businesses each day in the U.S., down slightly from 1,821 in 2018, there are 13 million women-owned firms, and 4 out of every 10 businesses are now women-owned. Further, firms owned by women of color grew at 43% between 2007-2019 and account for 50% of all women-owned businesses. Staggering, right?
However, in total, women-owned businesses employ only 8% of the total private sector workforce and contribute roughly 4% of total revenues, with little change from 2018. Further, only 12% of these women-owned firms generate more than $100K in revenue and approximately 2% generate more than $1 million annually.
According to the report, “women continue to harness their entrepreneurial spirit and it’s critical to encourage and support this behavior, eliminate obstacles, and facilitate growth of their businesses. Unlocking the potential for women-owned businesses represents a powerful opportunity for economic growth.”
However, women tend to face more obstacles than entrepreneurs in general. Creating opportunities to accelerate growth with access to better tools, education and networks can help these business owners create jobs, build wealth and grow the economy.
I recently started teaching a 2-hour workshop called “Business Plan Bootcamp,” a masterclass in building and/or revising your business plan along with financial projections. As someone who has created business and strategic plans for the better part of two decades, and managed significant P&Ls, I was amazed at how many business owners didn’t have business plans, projections (which would help them better understand the need for capital or investment) or a detailed P&L.
Given all the questions I receive about building a business, I was puzzled at how entrepreneurs can grow their business – and their management skills – without additional support or developmental tools. How do we unlock the potential and accelerate the development of these founders and their businesses?
1. It all starts with a business plan. A pitch deck is not a plan. Since I self-funded, people ask me why did I write a business plan if I have no investors? There is significant value of a business plan beyond raising money. It is your “North Star” in your strategy and overall business model, and it helps you understand cash needs and overall manage the business. It also evolves as your business does. If you want to execute on an idea, you need a plan. I would add that it helps narrow your customer focus and market opportunity, your differentiating proposition and how to project whether you need outside capital.
2. In order to grow, you need access to broad networks. Whether you are looking to build your customer base, investor opportunities or marketing awareness, it’s critical to leverage your (and your team’s). You will be able to engage early on around your business, targeted audiences and where you need support and additional access, particularly if you are raising outside capital. Most introductions come from your network. Clearly define the networks you can lean into immediately and those you need to build. Entrepreneurship is lonely and you can’t do it all nor do you know it all. Your network can also act in an advisory capacity as you continue to grow and scale.
3. If you can’t “bootstrap”, or have self-funded and now need further investment, there is a greater need to educate about access to capital and those options. Not all roads lead to venture-backed funding, nor should they. But first things first, understand from your business plan and financial projections what kind of capital you need in order to build and grow your business. While there is still not enough access to venture capital for female founders, not all companies need venture funding, nor qualify.
Take some time to understand what options you have after you know the number you might need. Can existing resources be stretched? Are you operating as lean as you can? Whether you investigate small business loans, lines of credit, business credit cards, crowdfunding, family offices or others, there are options out there. In an article last year in Marie Claire, “How to Start a Company, According to Female Founders Who Did Just That,” there has to be a better way. There are many. Educate yourself on what it is you need now and as you grow.
4. Hiring the right team. Should you need to hire, determine what support you need to grow and how to leverage your different networks in hiring. Understand what skills you have and those you don’t have. Whether you are looking at full-time, part-time or freelancers, know what you need. I love what Gina Hadley and Jenny Galluzzo at The Second Shift are doing to support companies as they grow in hiring female talent and providing options for each stage of your company. If you’re unsure, call on people in your network. Ask them to help craft job descriptions based on their knowledge, obtain feedback on compensation benchmarking, and leverage them to interview for roles or skills that you don’t necessarily have. This can start with building a team, from your first critical hire, to also knowing when to fire.
5. To scale or not to scale. We often think of scaling in terms of accelerated growth or expansion; however, scale can look different for many businesses, it’s also not necessarily the path to profitability either. As a solopreneur, scaling might mean making your first hire. If you’ve got a side hustle, scaling may be the decision to quit your full-time job. The idea of scaling may just be building a profitable and sustainable company creating impact with your product or service. Define your own terms, don’t let the noise drown out what you set out to create.
Whether you consider yourself a woman-business owner, an entrepreneur, a solopreneur or sidepreneur also known as a “side hustle”, women-owned businesses are driving economic growth. We need to support these businesses that not only contribute to the success of their business but also the overall economy.