Starting and growing a business is challenging, no matter your race, gender or age. But female entrepreneurs have long faced more challenges than their male counterparts.
As I noted here, the GEM 2021/2022 (Global Entrepreneurship Monitor) Women’s Entrepreneurship Report: From Crisis to Opportunity highlighted three challenges women business owners frequently have to contend with: financing, regulations, and sufficient family support services.
Let’s take a deeper look at access to capital for women entrepreneurs and explore other challenges they face.
Access to Capital
Sadly, 29% of women business owners don’t think they’ll ever have equal access to capital., according to the 2022 Women & Minority Business Owner Spotlight report from Bank of America.
Possibly one of the reasons for this is that not enough women business owners apply for funding. The Bank of America report shows that 79% of entrepreneurial women planned to obtain funding compared to 87% of men business owners. These findings are underscored by a report from Fundera that says women business owners were less likely to apply for business loans than men—25% of women business owners seek business financing, while 33% of men do.
The financing challenge extends to high-growth firms as well. TechCrunch reports that in 2022, “startups with all-women teams received 1.9% (around $4.5 billion) out of around the $238.3 billion in venture capital allocated, according to the latest PitchBook data.” And that is “a notable drop from the 2.4% all-women teams raised in 2021.” The last time all-women-led startups “raised such a low percentage of funds” was in 2016 and 2012, according to TechCrunch.
Having “a man in the room” makes a significant difference when raising VC funds. Again, according to TechCrunch, while the all-women-led teams only raised 1.9% of all VC funds in 2022, mixed-gender teams raised 17.2%.
To find lenders, search online, check out the SBA’s Lender Match and the Access to Capital Directory from Bank of America and Seneca Women. There explore these grant opportunities for women business owners.
The World Economic Forum reported that although women launched 49% of all startups in 2021 (significantly up from 28% in 2019), “typically, businesses owned by men average twice the revenues of women-owned companies.”
One way to boost sales is to get certified as a woman-owned business. This increases your reach, allowing you to sell to corporations and government agencies specifically looking to do business with women business owners. To get certified as a Woman-Owned Small Business (WOSB) or Women’s Business Enterprise (WBE), you need to go through one of these Small Business Administration (SBA)-approved third-party certifying organizations:
- National Women Business Owners Corporation
- U.S. Women’s Chamber of Commerce
- Women’s Business Enterprise National Council
- El Paso Hispanic Chamber of Commerce
WOSBs can also apply to get certified at the SBA’s certification site.
For years it’s been thought that women were more risk-averse than men. But an academic report on “Gender differences in risk attitudes” by Antonio Filippin, a professor at the University of Milan, Italy, says, “Belief in the existence of gender differences in risk attitudes is stronger than the evidence supporting them…That woman are more risk averse than men has become at a certain point a ‘stylized fact’—an empirical finding that is so consistent that it is accepted as truth.”
The professor continues, “Some studies have found that higher risk aversion among women explains [why fewer of them] undertake entrepreneurial activities. But…recent evidence has challenged the robustness of the evidence about gender difference in risk attitudes [which] further weakens the asserted link between risk aversion and labor market outcomes.”
So if women aren’t more risk-averse, why are most women-owned businesses smaller than those owned by men?
Fear of Failure
One possible explanation for that is tied to the concept of “just doing it!” Studies have shown that women think they must meet every criterion before they bid on a project, while men might fill three of 10 criteria and just go for it. The reality is that you get 0% of the projects you don’t go for. But many women are afraid to scale because they’re afraid they’ll fail.
So many women try hard not to make mistakes because they were raised to strive for perfection. Forbes puts it this way: “Welcome to the world of too-afraid-to-lose, one of the most prevalent leadership de-railers. Those suffering from the too-afraid-to-lose syndrome:
- Worry excessively about failing to get the right result
- Question and second-guess every step along the way
- Avoid decisions and commitments that might cause mistakes
- Get involved in every detail.
Sound familiar? The article points out that one of the ways to escape this world is to “take risks and try new ways of doing things.
I’m not saying you should be fearless. Fear, I believe, is a powerful motivator and teacher. In another article in Forbes, Evy Poumpouras, a former Secret Service special agent, says, “You can never conquer fear. Ever. You will always feel it. And it serves a purpose. Fear can help you assess the pros and cons or the risks and rewards of a situation, but it cannot be the deciding factor of what you do…If you want to master fear, you must surrender to your vulnerabilities, to the fact that you cannot control everything.”
Entrepreneurs in general, and entrepreneurial women in particular, have a problem delegating because they’ve personalized the business so much that they believe no one can do anything as well or better than they can. But once you accept the fact that you cannot control everything, delegating becomes easier.
And it’s critical to not waste your time on tasks that others can handle so that you can concentrate on strategy, development, and revenue-generating activities.
So many of the challenges noted here all stem from a lack of confidence. In Forbes, Evy Poumpouras warned that it’s dangerous to lose trust in yourself. Nearly a decade ago, two renowned journalists wrote an eye-opening article and later a book, The Confidence Code, exploring why women are less confident than men. They found that so many accomplished women were often unsure they deserved their success. Even Sheryl Sandberg, the then COO of Facebook, told them, “There are still days I wake up feeling like a fraud, not sure I should be where I am.”
One of their conclusions addresses part of the challenge of succeeding—that “confidence matters as much as competence.” And a lack of confidence will be a barrier to your success. Sharon Miller, President, Small Business, Head of Specialty Banking and Lending, believes that having “role models who have achieved and accomplished at the highest levels” helps instill confidence in women business owners. It’s critical that women “keep breaking glass ceilings so we can show what can be done.”
“No One is Alone”
To grow your small business, it’s crucial to be collaborative, join groups and associations, and build a network you can turn to when you need advice, help, or just someone to vent to. When I started covering small businesses decades ago, entrepreneurs were often described as lone wolves.
But that’s not right. You can’t make it on your own. The legendary Stephen Sondheim wrote a song for his Broadway hit, Into the Woods, perfectly describing the entrepreneurial journey. In part:
“People make mistakes…
Thinking they’re alone…
Someone is on your side…
No one is alone
Hard to see the light now
Just don't let it go
Things will come out right now
We can make it so
Someone is on your side
No one is alone.”
I’ve always thought those lyrics describe SCORE’s mission. Many women have said they lack the mentors and advisors they need to succeed. But you don’t. You can get the help you need from a SCORE mentor. Because, truly, no one is alone.
The Glenn W. Bailey Foundation serves Florida, New York, Connecticut and DC area organizations working to help us realize our vision and continue our mission of fostering pathways to success in STEM careers and entrepreneurial opportunities. Our Foundation’s focus also includes solving complex environmental and high-mortality disease research funding issues.
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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.