Women-owned businesses have been on the rise for years, increasing 21 percent from 2014 to 2019 while all businesses only increased by 9 percent. As of 2019, women owned 49 percent of all businesses, according to American Express’s 2019 State of Women-Owned Businesses Report. These numbers are significant when you consider that only 4.6 percent of businesses were owned by women in 1972.
Despite this promising growth, women-owned businesses only accounted for 14 percent of the workforce and 8 percent of revenue in 2019. These numbers are even lower for women of color, who claim only 23 percent of total revenue created by women-owned businesses in 2019. This disparity is particularly startling given that women of color owned half of women-owned businesses as of 2019.
Since the start of the COVID 19 pandemic, all businesses have been hit hard. The number of active business owners fell by 3.3 million from February to April of 2020 and women-owned businesses experienced a 25 percent drop. Additionally, Bank of America’s 2021 Women Business Owner Spotlight found that 48 percent of women entrepreneurs cut their own pay to keep employees on staff during the pandemic and 90 percent say that the pandemic has created added stress associated with running their businesses.
It is more important than ever that women entrepreneurs are able to take advantage of resources and programs designed to help them succeed. Are you a woman looking to start a business or expand your current business? Below are some resources and advice to help you make your business thrive.
Impacts of COVID 19
In spite of the effects of COVID 19, women-owned businesses have continued to flourish in many ways. Bank of America’s 2021 Women Business Owner Spotlight found that, of the women business owners they surveyed, 61 percent expect their revenue to increase in the upcoming year and 92 percent consider their current financial situation to be strong or fair. This report also found that women-owned businesses have been very adaptable amid the effects of the pandemic. 50 percent of women entrepreneurs have changed their approach to employee wellness, allowing flexible work schedules, work from home extensions, more paid time off and sick days.
Women entrepreneurs also proved to be very community and collaboration-focused during the pandemic, both relying more heavily on community support than male counterparts and giving back to the community. 46 percent of women entrepreneurs have volunteered in their community since the start of the pandemic. Additionally, 29 percent of women business owners are looking to partner with more women- and minority-owned vendors in the future.
Securing funding is often a struggle for women entrepreneurs and business owners who want to grow their businesses. Biz2Credit research has found that the average-sized loan for women-owned businesses was 33 percent less than for male-owned businesses in 2020. They also found that only 27 percent of business loan applications were submitted by women-owned businesses. Finding the best funding option for your business can help you gain the resources needed to finance your business goals. Grants are funds that don’t have to be repaid, and they’re often issued by a government entity, corporation, nonprofit organization, foundation or trust. The federal government does not offer grants for starting or growing a business. However, if you’ve started a noncommercial organization (such as a nonprofit) in medicine, technology development or related fields, you could get some funding through specific channels. Some business grants are available through state or local programs. But these grants usually require you to match the funds or combine the grant with other forms of financing, such as a loan. There are also state and local-level grants you could leverage. To see what’s available, check out your state’s small business office. Economic Development Resources and Small Business Development Centers can also provide a wealth of information. Angel investor websites are another approach you can take to secure a private investment. An industry association of angel groups has also emerged, called the Angel Capital Association (ACA). The ACA keeps tabs on angel groups and estimates that there are more than 14,000 angel investors nationwide. According to the National Women’s Business Council, women have been 4.6 percent more successful at raising capital through crowdfunding than men. They also tend to contribute to crowdfunding campaigns at high rates, with women contributors representing 47 percent of all crowdfunding investments. A few platforms for crowdfunding include: Unlike a grant, a business loan is debt that your company must pay back according to the specific loan’s terms and conditions. They can come from banks, microlenders and online lenders. Lenders require cash flow to support a loan, and it can be difficult to get a loan when you’re first starting your company. Consider looking into small business loans, term loans and business lines of credit. Compare everything, including interest rates and loan terms. Of the loans you qualify for, choose the one with the lowest APR, because you’ll pay less over the term of the loan. Here are a few types of entities that offer business loans: Most loans require a high credit score, and if you have a low credit score, a bad-credit personal loan is another option for funding business needs. Biz2Credit found that the average credit scores for women-owned businesses rose from 590 in 2019 to 597 in 2020, but still trailed the scores of their male counterparts (620) by 23 points. Fortunately, credit scores aren’t set in stone, and there are many ways to improve yours if it’s not in good standing. Maria Otero launched the Women’s Venture Fund in 1996 with the idea that women could succeed as entrepreneurs when they can access credit and resources. “All the research tells you that women have challenges with credit, and for every five women who apply, only one will get funded. Access to credit and equity is a challenge,” she says. You can increase your credit score through several methods: There are three major types of business loans that can be an option: bank loans backed by the Small Business Administration, microloans from nonprofit lenders and loans from online lenders. It’s also possible to get a business loan with bad credit. Here’s how you can prepare to apply for a business loan: Mentorship and business development programs are other resources that can help women-owned businesses thrive and grow. These often help female entrepreneurs with networking, skills development and more. “My business completely transformed when I was willing to invest in the right support, which was three years into my business,” says Stacy Raske, an author, speaker and success coach catering to women leaders. “I encourage those starting out to plan and budget for investing in a coach or mentor right away to ensure your success.” There are several programs and organizations that offer entrepreneurial mentorship programs to help build networking skills, business development and women-owned certifications. A few notable mentorship programs for women entrepreneurs can have a certification with the Women’s Business Enterprise National Council (WBENC), a private third party that certifies women-owned businesses on behalf of U.S. corporations. Also, look for WBENC certification through city, county or state programs. A few options include: Women business owners in specific industries face unique financial and startup challenges. Nearly half of women business owners operate in low growth industries, according to the 2020 Annual Report from the National Women’s Business Council. These industries include: Women in other industries such as construction and STEM often face increased scrutiny and difficulty in accessing funding due to a lack of acceptance in these industries. Women-owned businesses that have the highest total revenue are in wholesale trade, retail trade, and professional, scientific and technical services. Women historically haven’t broken into these industries and must seek additional experience, credentials and education to increase credibility and industry acceptance. Further education and certifications in these industries can increase trust and credibility in the eyes of investors. Resources include online classes, STEM mentorship in high school and college and networking in these industries. Taylor Bruno, SoLo Funds co-founder and design advisor, says, “As a female co-founder in the predominantly male-led tech industry, I’ve worked for the last 10 years in close proximity to the challenges facing female entrepreneurs.” She says her approach has everything to do with relationships. “I form relationships with the people I work closely with on a professional level while opportunistically finding time to get to know them on a personal level over coffee.” Experts agree that the more people who can attend networking events, conferences, and conventions in these industries, the more likely the gender gap will eventually close. Get involved in discussions and presentations and seek peer mentors in hard-to-break industries. “We need to start putting money where it’ll make a deep-rooted, long-lasting significant change,” Feldman says. “The money has to go to not just causes, but activities that will generate even more resources, and that means putting the money in resources and women who are doing real things, starting businesses, taking on leadership roles. That’s where we need to see more resources.” Female entrepreneurs face various challenges in growing their businesses, but these hurdles aren’t insurmountable by any means. With the right skills, mentors and resources, women can see their business ventures grow and thrive.
For women entrepreneurs facing funding difficulties, the below grants and financing options may be able to help.Federal business grants for women
Private/state and local grants for women
Crowdfunding
Business loans
Keep a high credit score
How to build good credit from the ground up
How to apply for a business loan
Apply for mentorship and business development programs
How to find development programs
Hone your industry-specific skills
How to seek further education, experience and involvement
Know how to network
The bottom line
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