Women mean business, and the world needs more women in business. While women have long been under-represented in the business world, this trend is clearly changing. In fact, the number of female entrepreneurs in this country is increasing, and today, 37 percent of all U.S. businesses are female owned, according to the National Women’s Business Council.
Recent research suggests that women-founded businesses perform better over time and deliver higher revenue – more than twice as much per dollar invested – than men-founded businesses. In addition, women-founded start-up teams create more jobs for women – they employ 2.5 times more women than all-male start-up teams.
One of the reasons for the better performance of women-led businesses is that – given the higher barriers they face and higher standards they are held to – only a few exceptional leaders break through. Inherent biases make it harder for women to get funding than men, and many women start later in life and juggle family commitments. There are some typical challenges female entrepreneurs must face on the road to success, this article will highlight them and provide some guidance on handling them.
3 Major Mistakes Women Make When Starting a Business:
- Not building a network. One of the major keys to growing a business is having the right network of people to allow for expansion. This might mean a strong employee base, but it also includes outside support, such as business groups or professional advisors. 90% of women-owned businesses have no employees, generally because most female-led businesses are service-based (event planning, marketing, writing, etc.) and do not lend themselves to having multiple employees. One of the biggest decisions a business owner will make is when, and if, to hire employees. You cannot do everything yourself if you want to grow. Delegation of tasks is just as important as your own time investment. The decision to hire often comes down to available cash flow and whether an owner desires to actively grow her business.
For this reason, it’s important to determine whether a business will be a lifestyle business or an asset to grow for future sale. Many women begin their business as a passion-focused endeavor to earn income, so they can live and work on their own terms. Assembling a team that may include an accountant, business coach and financial adviser will aid in decision-making about growing and investing in your business.
- Not having a plan for business credit and funding. Knowing the best ways to finance a business and fund growth can be a confusing, whether it’s through traditional lines of credit, outside investment or cash. Businesses led by women are 63% less likely to obtain venture capital than those led by men, according to Columbia Business School. Women are also less likely to receive loan approvals from financial institutions simply because of biases against females in business.
You need a business plan. Working with an outside consultant like a financial adviser can help you decide what options are best for you and your goals. They can also help you identify alternative funding options, lines of credit or SBA loan programs that you might not have thought of, and alert you if you are taking on too much debt. It takes time to start making a profit, you need access to capital.
- Lacking a balance between career and family. There’s been considerable progress in combating gender roles, but women still typically shoulder most of the household tasks in families, including being the primary caregiver for children. Female entrepreneurs are more likely to start their businesses once their children are of school age, putting them at risk for additional biases, such as being a mother and taking time out of the workforce to raise children.
The best way to combat this issue is to deepen your bench. No one person — woman or man — can run both a successful business and a successful household alone. You need advisers, employees, and family members to fill in the gaps you simply cannot. Set aside time for work vs. home life and use available resources without guilt. Remember mental health plays a major role in creating a sustainable business and home life.
Contact Us: There is no question that being an entrepreneur, especially a female entrepreneur, is challenging. Having passion, tenacity, creativity, plus a good business advisor and accountant are the key to finding success and achieving your financial goals. At TFG, we are here to assist aspiring entrepreneurs to launch their businesses and position themselves for success. Improving women’s experiences in starting a business starts with honest conversations and some smart questions from the right financial professionals who know how to listen! Reach out to CPA@Fuoco.com or call toll free 855-542-7537.