“We need to accept that we won’t always make the right decisions, that we’ll screw up royally sometimes—understanding that failure is not the opposite of success, it’s part of success.” - Ariana Huffington
“I learned to always take on things I’d never done before. Growth and comfort do not coexist." - Ginni Rometty, CEO of IBM
Having the courage to try, knowing that success is not guaranteed and failures along the way are inevitable, is what sets entrepreneurs apart from the rest of the world. But courage often manifests itself differently for women than for men.
Today, we look at women entrepreneurs and the specific challenges they face.
Closing the credit gap
One of the difficulties women entrepreneurs face is access to credit and capital. In fact, this is often cited as one of the reasons for the disproportionally high failure rate among women-owned businesses. Taking on debt or becoming an equity partner requires courage, and successful women entrepreneurs recognize this.
Women entrepreneurs tend to pay off debt at a faster rate than their male counterparts. The Hiscox American Courage Index, a study of the state of courage in America, found that 38.7% of women entrepreneurs are focused on paying off debt, compared to 25.5% of men. This may be a good thing, but it may also be limiting. Sometimes, we need to summon our courage in order to take advantage of an opportunity for growth.
Despite the challenges facing women entrepreneurs, they are, as a group, more confident in the economy and the stock market than the general population. 21.1% of female business owners felt very confident in a strong economy over the next six months, compared to 6.3% of those women who do not own businesses. And 24.6% of women business owners felt very confident in the stock market.
The confidence women have in economic conditions, combined with their propensity to pay off debt, indicates that it may be more difficult for women entrepreneurs to get a loan or secure venture capital than it is for men. Fortunately, an increasing number of women-owned funding sources may be responsible for narrowing this gap in the near future. Regardless of where you get your funding, you need to be able to show that you’ve thought your business through and planned for its growth. You’ll need a comprehensive business plan with realistic sales projections, solid financial statements and a plan to protect your company and your creditors with the right liability insurance.
The Creative Endeavors Crunch
More women tend to start businesses that are focused on creative endeavors than men. An estimated 21.6% of women business owners identified their businesses as being creative, compared with 6.6% of men. The emotional connection people have to their creative enterprises makes it difficult to summon the courage required to make business decisions from a purely objective point of view.
Women whose businesses revolve around their creative talents also face challenges when it comes to scale. Manufacturing companies can always make more product if the demand is there. But the production of handmade items, artwork and even writing is limited by the ability of the creative force.
Asking For Help
Another challenge for women is accepting help. It’s common for woman to think they can do it all themselves, so delegating is difficult.
The unfortunate part of that is that women love to help one another. The Hot Mammas Project is a digital library of case studies of successful women. The project has evolved from a single business school case study in 1998 to an organization dedicated to increasing the courage and confidence of women in business, including seminars, classes and coaching.
In fact, many businesses started by women revolve around coaching and mentoring others. Up and coming entrepreneurs can call on the women who have come before them to provide guidance and advice, and to share what worked for them and, more importantly, what didn’t.
Identifying Resources for Women Entrepreneurs
Women can take advantage of all of the resources available for entrepreneurs from the SBA and other sources, but there are some resources that are specific to women who are starting their own businesses.
Ladies Who Launch is a website teeming with free advice and resources for women. It includes valuable tips and advice tailored to women and inspiring stories of female entrepreneurs who’ve started successful businesses. There are templates for creating a business plan or marketing plan, articles of incorporation or partnership agreement, financial statements and much more.
Goldman Sachs 10,000 Women and the World Bank’s International Finance Corporation have launched a $600 million global finance facility for women-owned small and medium-sized enterprises. The Women Entrepreneurs Opportunity Facility plans to enable approximately 100,000 women to access capital for their businesses.
Courage is important for everyone
The areas where courage is required may differ between men and women, but the importance of courage is the same across gender lines. Displaying courage means taking a logical look at the potential risks in a given situation and then deciding if the rewards are worth those risks. There are three ways you can deal with risk: avoid it, ignore it, or mitigate it. If you avoid it, you will not follow through on the action that involves taking that risk (i.e., you won’t start the business). If you ignore it, you move forward with your plan and don’t think about the risk (i.e., you open that third donut shop within a two-block radius and hope for the best). If you mitigate it, you recognize the risk and take steps to minimize its impact in the event the worst occurs (i.e., you start your photography business and purchase the appropriate liability and business owner insurance coverage.)
The courage shown by women entrepreneurs can make all the difference in the success of their businesses. Improve your chances by stepping out of your comfort zone and effectively managing risk.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.