Money and Connections Still Hurdles for Women Entrepreneurs
The business world has come a long way from the days when men dominated the scene. According to American Express OPEN’s 2016 State of Women-Owned Businesses Report, 11.3 million U.S. businesses are currently owned by women, and an average of 1,072 new female-owned companies are being started every day. This number is growing five times faster than the national average for all businesses, meaning more women than ever are taking the leap into entrepreneurship.
But it’s not always an easy road — Keri Gohman, head of small business banking at Capital One, said that there are still numerous obstacles female entrepreneurs may have to overcome.
“Women are starting and growing businesses at a rapid rate, thanks to advances in technology and reduced barriers to entry,” said Gohman, whose company recently released a report on female entrepreneurs through its Future Edge initiative, in collaboration with Center for an Urban Future. “Although women have made significant strides, continued hurdles are preventing them from scaling their business or starting one in the first place, like securing financing, acquiring financial skills, and finding and establishing professional networks.”
Business News Daily spoke with successful female entrepreneurs about the challenges and advantages of being a woman in business today, and the advice they have for other aspiring startup founders. [See Related Story: 17 Reasons Women Make Great Leaders]
Challenges for women in business
The movement toward gender equality in the workplace and society as a whole is a step in the right direction. However, women still face some difficulties in starting a business that their male counterparts don’t always experience. Some of the biggest obstacles to women’s entrepreneurial success include:
Unconscious bias. Men are still over-represented in the highest levels of industry, whether it be finance, venture capital, C-level positions and even Congress, said Alex Ontra, co-founder of Shufflrr. Corporate diversity programs are a step in the right direction, but unconscious bias is still a part of human nature.
“We are attracted to those who look and act like us,” Ontra told Business News Daily. “So, a dude in a hoodie will naturally gravitate toward another dude in a hoodie. And, no surprise, I am very much at home in the company of other women entrepreneurs. But both men and women need to change the way we think and act, on a deeper level. We all must make a conscious effort to go against our natural tendency, and expand our professional and personal circles.”
Sexism and discrimination. Women who work in male-dominated industries often face gender discrimination, whether it’s indirect — a man getting promoted over a woman, for instance — or direct, in the form of sexist comments or outright harassment. Elizabeth Kraus, co-founder and chief investment officer of MergeLane, said that one of the most difficult decisions for women is whether to address it head-on, or ignore it and work around it. She feels that ignoring issues like this may be easier, and even advantageous, in the short term, but in the long term, it only perpetuates the notion that discriminatory behavior is acceptable.
“It is often more advantageous for me personally to ignore [gender inequalities],” Kraus said. “For example, I’m often one of the few females in the room, so people remember me and come talk to me.”
Then, there are trickier situations. Kraus recounted a comment made by a male investor, who said he is “happy to attend events with 35-year-old good-looking women rather than 60-year-old men.”
“He was joking around, but it felt terrible,” she said. “We’ve worked tirelessly to recruit amazing entrepreneurs who have built and sold successful businesses, and worked at Fortune 500 companies. That is what we want to be known for. I wanted to call him out, but I was afraid of forgoing the opportunity … to be associated with that powerful investor. I am letting my entire gender down each time I ignore [situations like this].”
Family status versus professional accomplishments. Although the tides are shifting toward more equitable parenting roles, society still has a complicated relationship with working mothers. Sabrina Parsons, CEO of Palo Alto Software, is a mother of three, and said she has often encountered judgments from others who question her ability to be a good CEO and a good mom simultaneously.
“They usually conclude that if I am a good CEO I must be an awful mom, and vice versa,” she said. “We still have a climate in business where women face discrimination in the business world the minute they get pregnant. Being your own boss affords you the ability to make decisions about your flexibility and schedule that will help keep you successful, and even if and when you should decide to have kids.”
Funding. Getting your business funded is hard for any entrepreneur, but the process can sometimes feel unfairly stacked against women, since investors are predominately men, said Susan Tynan, CEO and founder of custom framing company Framebridge.
“I think most women are pretty grounded and realistic; they are pitching a plan they believe they can achieve,” she said. “This can be an issue for them if they are pitching against men who may present more ‘confidently,’ which is code for ‘bluffing.’ Also, if you are selling a product catered to women, it can be especially hard to convey the significance of the opportunity to a male investor audience.”
Why women succeed at entrepreneurship
Despite these challenges, women do still have a lot on their side when it comes to business success. The American Express report shows a lot of positive data about the current state of women’s entrepreneurship: Women-owned businesses employ nearly 9 million people and generate more than $1.6 trillion in annual revenues. Diversity is increasing as well, with women of color leading 44 percent of all women-owned businesses.
The growing women’s entrepreneurship movement has made it easier for other women to follow suit and start their own business. Ontra said that because of this increase in female-owned startups, there are more organizations and resources available to help them.
“We are growing in numbers, creating jobs and generating wealth, and it is in both the public and private sectors’ best interests to support these businesses,” Ontra said.
Kraus agreed, adding that there is now an increased awareness of how and why businesses can recruit and retain talented women.
“Several businesses have expressed interest in sponsoring MergeLane because of their desire to recruit women and align their brand with a female-focused initiative,” Kraus told Business News Daily. “While there are still fewer female entrepreneurs [than male], the ratio is, from my experience, quickly leveling.”
Women have also proven that they are good for business and the business climate, said Parsons.
“Statistics prove that public companies with women on their boards do financially better, and companies with women in the top echelons grow revenue faster,” she said. “Women led startups are able to do more with less investment money, and are better at growing a healthy company than their male counterparts.”
“From a business perspective, women rock!” added Tynan. “They are often creative, intuitive and customer-focused. Women are also proven multitaskers – a required skill for a startup entrepreneur.”
Advice for female entrepreneurs
Whether you aspire to start a company or are already running one, here’s our sources’ best advice for women in business:
Demand what you need. “As women, we have a tendency to ask politely. And when we do demand something, we get called, ‘bossy.’ Right! You are bossy because you are the boss, with a business to grow and people relying on you for their paycheck. Don’t ever apologize for that.” – Alex Ontra
Take risks. “Women frequently are less willing to go live, seek funding or take risks until everything is ‘ready.’ These are major generalizations, but we’ve seen this over and over. Be conscious of these tendencies and … consistently push your personal boundaries.” – Elizabeth Kraus
Get the right people on board. “Be who you are, work hard at your career, and surround yourself with right-minded people that believe in your path to success and don’t hold you down.” – Sabrina Parsons
Be confident. “Bring all of your confidence with you. The process is trying to weed you out, so you have to really stand strong. Women hear people telling them to take a safe route more often. And starting your own business is not a safe route. So, you have to dig deep and believe in yourself and your business.” – Susan Tynan