Over the past 20 years, the number of women-owned businesses has grown 114 percent, according to a 2017 report by American Express. That’s more than 2.5 times the national growth rate for all businesses. On top of that, women now own one in five firms bringing in $1 million or more in revenue.
Yet, there are still many obstacles relatively unique to women entrepreneurs. If you’re looking to take the plunge, here are five challenges you may find yourself facing—and advice for how to overcome them.
Challenge 1: Getting comfortable with risk
When a woman starts a business, it’s often the “first time in her life that she is completely banking on herself,” says business coach Ali Brown, host of the Glambition podcast. Brown has noticed that women usually fall into one of two camps: Some dip their feet in the water and get in slowly, while others dive in headfirst after having an idea.
If you’re in the first cohort and are having trouble getting yourself going, take some time to figure out why. It may not be about the money on the line, but other factors: For instance, fear of what your family will think, or nerves when it comes to promoting your idea in front of people. Journaling the process can often be revealing, Brown says–and the answer to what’s holding you back might surprise you.
Other women find jumping all the way in is necessary to get started. That may mean telling others what you’re doing so they can hold you accountable or amass a start-up slush fund for your business. If you can meet with women who have taken this path before you, they might be able to give direction and counsel on which risks make sense. They can say, “It might look like you’re jumping off a cliff, but here are the parachutes you have in place that you might not even realize,” says Lisa Schiffman, global lead of EY Entrepreneurial Winning Women, a national competition and executive education program for women entrepreneurs
Challenge 2: Setting the bar too low
“In our experience, many women underestimate what they can accomplish,” says Schiffman. She says that sometimes, women create interesting businesses without realizing how successful their companies have the potential to be. Many women, says Brown, start businesses in the “hobby mindset,” meaning they’re looking to avoid risk and just make extra money. That’s a completely valid goal, but it’s also okay to have grander visions
If you’ve got bigger dreams, it’s a good idea to create personalized long-term goals for yourself, then “reverse-engineer” them to figure out what you can do to get there, says Alison Koplar Wyatt, president of Girlboss. Steadily check off benchmarks on the way to your goals while doing your best to build on your strengths—and surround yourself with supportive women who want to see you succeed.
Challenge 3: Surrounding yourself with the right people
You may also want to round up a sponsor or two. There is a difference between mentors and sponsors. Mentors are people you can go to for advice, while sponsors are people with enough trust in your potential that they’ll advocate for you when you’re not in a room. Most importantly, they’ll also help you get to the next step in your goals. “Women have a tendency to collect mentors,” says Wyatt. “Men go after sponsors.” If you feel like you’re racking up mentors, ask the ones you’re closest to if they’ll serve as your “ambassador”—keeping an ear to the ground for opportunities that would help you get closer to your goals (or the financial support to help your budding business).
Having a supportive community can also be a key tool for building your business, especially when it comes to talking openly about money. The struggle: “Most of us don’t have circles where we can do that,” says Brown. That’s why seeking out a place that allows you to freely share what’s going on in your business—and exchange pieces of advice—is so important. “The biggest mistake I see is women networking at too low of a level,” says Brown. Aim higher by asking about conferences you should attend or groups you should apply to be part of. Then take a deep breath and invite the woman you’ve been admiring from afar for coffee or lunch. “See what success looks like close-up,” says Schiffman.
Challenge 4: Securing the money
The last challenge on this list may be the hardest to surmount. It’s often more difficult for women to secure funding for their big ideas. One reason is that venture capitalists tend to invest in men for their potential, but judge women by their current performance, says Wyatt.
Changing that perception requires two things. First, you need a clear vision. Whether you’re applying for a bank loan or trying to round up angel investors, you need to be ready with the answer to a few questions:
- What you want your company to look like in five years?
- How will this change the landscape of its industry?
- How big–in revenue terms–does it have the potential to become?
While Wyatt was fundraising for Girlboss, a venture capitalist pulled her aside to tell her: “You have to appear that you absolutely know this is going to be huge… Don’t show any sort of disbelief in what the outcome’s going to be.” She says men tend to be more affirmative in their beliefs about themselves and potential results, while women tend to be more honest in their assessment of risk. When it comes to fundraising, confidence can make all the difference.
Secondly, you need a rock-solid grasp of your numbers. You’re not just aiming to memorize your projections, but also to fully understand the concepts. Data suggests women tend to receive more questions about their companies’ finances than men do, says Wyatt, so be prepared to answer any questions that might come your way.
Finally, when you do go out to find funding, make sure you ask for enough. Research shows fewer women than men solicit venture capital funding, and when they do, they focus on what they might need, rather than what they could get, says Wyatt. Then, when there’s a large opportunity–be it expanding into a new area or buying a competitor–they don’t have the resources to proceed. Don’t let that do you in: Get that money when you have the chance.
With Hayden Field