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October: National Women’s Small Business Month

Over the summer, we conducted a survey of one thousand small business owners to gain a big picture view of their struggles and sentiment. Inadvertently, we found out that of those one thousand business owners we surveyed, over half (52%) were women. This has been a rising reality for a few years now and in-depth statistics from the U.S. Census Survey of Business Owners and Self-Employed Persons (SBO) prove this trend shows no sign of slowing down.

As of 2012, women-owned businesses comprised 36% (or nearly 10 million) of the country’s privately-held businesses. These firms generate over $1.4 trillion in sales and employ over eight million people. Between 2002 and 2012, the number of women-owned firms increased at a rate 2-1/2 times the national average (52% vs. 20%), employment in women-owned firms grew at a rate 4-1/2 times that of all firms (18% vs. just 4%), and the growth in revenues generated by women-owned firms paralleled that of all firms (up 51% compared to 48%).

While those numbers are impressive and the trend is still moving upwards, we asked The National Women’s Business Council (NWBC) about which challenges women still face in terms of small business ownership and operations. The main challenge highlighted, was the lack of access to capital.

“It is clear that disparities and challenges remain for women entrepreneurs in many segments of the entrepreneurial ecosystem that would allow for women-owned and women-led firms to reach their fullest potential. Women continue to lack access to some of the most crucial assets, capital and markets, necessary to launch and grow their businesses,” said Associate Director of Public Affairs at National Women’s Business Council, Cristina Flores.

Access to Capital Still a Challenge for Women

Access to capital is one of the most significant hurdles for women starting and growing their businesses. NWBC research has shown that men tend to start their businesses with nearly twice as much financial capital than women ($135,000 vs. $75,000). This disparity is slightly larger among firms with high-growth potential ($320,000 vs. $150,000).  Among the most successful firms, men started their businesses with six times as much capital as women did – $1.3 million vs. $210,000. Yet, women-owned firms greatly exceed their own expectations regarding growth. If women business owners underestimate their own growth, they may not pursue growth capital, and therefore never maximize their growth potential as a result.

Although there are roadblocks in maximizing this growth potential for women owned businesses, they are still challenging and changing the business landscape, championing for change.

Women business owners, and those that support them, are pushing harder than ever before for the creation and implementation of necessary policy solutions and new initiatives that will continue to break down the barriers of access to capital and access to markets that stand in their way,

Cristina FloresNational Women’s Business Council

If you are a woman who needs funding to launch a new business or help grow and existing one, these three basic strategies can help:

Create a Solid Business Plan

Having one is an important part of securing financing through traditional lending institutions. It also serves as a valuable blueprint, helping you to better understand target market, customer and the direction of your business. The most important aspect is to focus on the bottom line to show how you plan to make the business expand and be profitable. This is the time to be very realistic as this plan is not only meant to keep things on track, but many traditional banks will want to review it as part of the loan consideration process. However, don’t underestimate your potential for growth – create deadlines and milestones. If you aren’t sure if you’re on the right track, the U.S. Small Business Administration has a tool to help you build one.

Research Your Options

Traditional bank loans are notoriously difficult and time consuming to obtain, so educating yourself on the other funding options available is beneficial. Lines of credit, credit cards and SBA microloans may be a better financial fit for your business needs. Take some time to consider every option available to you. Many find an alternative financing option offers customized solutions and convenient and quick cash flow. Conducting proper research is key.

Build Your Business Credit

Your business credit score is just as important as your personal one. To guard against a low score rating, keep up with payments, avoid collections and steadily pay down any debt. Strong business scores will help you obtain the best rates when applying for business funding, loans, and even credit cards. It’s the main indicator institutions consider to determine financial reputation and trustworthiness.

Although barriers do exist for women owned businesses, they are steadily changing the business landscape. To make the most out of every opportunity, make sure you’re empowering your ventures by building a solid business plan, nurturing your business credit score and doing due diligence on proper financial services research. It’s all about finding the right financial fit for your business. Also, if you ever have any questions about what alternative financing solutions can do for you, our funding specialists are always here to help.

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