By Annie Rorem, Senior Research Manager at the National Women’s Business Council
In the United States, just over one in three privately held businesses is woman-owned (36 percent, to be precise). This already apparent disparity in ownership is magnified when looking at firms we might consider “high growth.” Only 14 percent of all privately held firms with receipts of $1 million or more are owned by women. Put another way, with another denominator: Fewer than one in 50 woman-owned firms generates revenue of $1 million or more.
There are plenty of root causes for this paucity of high-growth, women-owned firms—not the least of which is that, no matter one’s gender, scaling a business is a challenge. Business ownership, in all phases of business growth, requires foresight, audacity and determination. But the specific skills required to start a business are not identical to the skills needed to bring it to scale.
The National Women’s Business Council (NWBC), the government’s only independent voice for women entrepreneurs and business owners, is committed to helping women business owners achieve success no matter the size of their business. This includes encouraging early-stage entrepreneurs, as well as those seeking to grow their ventures. To do so, NWBC not only conducts research on women’s business ownership, but also serves as a convener for women business owners across the country—amplifying their voices and magnifying their individual experiences.
So, what characteristics, tools, experiences or points of view allow certain business owners to successfully manage growth? The following insights on successful scaling and growth management reflect the conversations NWBC has been fortunate to have with successful women business owners across the country, and makes particular reference to insights shared by panelists Kim Wales, Kari Warberg Block, Laura Yamanaka and Laura Zander during NWBC’s June 2016 Public Meeting, “Beyond the Start-Up: Strategies to Scale-Up”.
Define growth properly
Growth is measurable, and easy to track from week to week or month to month. However, according to Laura Yamanaka, teamCFO co-founder and president, NAWBO National past chair and Los Angeles chapter member and former NWBC Council member, successful growth does not mean constantly reaching for more. Says Laura, “Now don’t get me wrong, you’ve got to make money, you’ve got to have revenue. You’ve got to have a business model that works. You’ve got to have cash in the bank, but that’s not always the first criteria after you reach a certain level.” Rather, she explains, striving for balance beyond the budget was key to her company’s success and growth: “We started to select the businesses we wanted to work with, which meant that we turned some people down and immediately people wanted to work with us more because we were being selective. We had less of a difficult time in hiring people. We got better quality people who were going to be willing to stay with us longer and shared our vision.”
In other words, as Laura puts it, “You always have to be growing, but you have to define growth properly.”
Unlearn the instinct to do everything yourself
Starting a business may require a founder or leader to be chief executive officer as well as director of marketing, transportation supervisor, lead copywriter (not to mention copyeditor) and head custodian. However, with growth comes the ability—and, in fact, the need—to share responsibility with a team.
Speaking about her own company’s growth, Laura Zander, founder of Jimmy Beans Wool, deadpanned, “One of our biggest growth spurts happened when I had my son, and it was because they made me stay in a hospital for two days. So I had to stay there. Apparently, he wanted to be with me, you know, right in the beginning. So I had to let go of things and…I was forced to not be in the day to day for a number of days.” But Laura was not joking when she praised her team for their talent: “Apparently, the people who work for me are much better at a lot of the things than I am. It was literally a hospital stay that forced the issue. Once I started to kind of let go, and let other people do things…that’s when we had our greatest growth.”
Sharing the responsibility not only allows others to contribute to the success of a company, but also allows founders and leaders to work on, not just in, the business.
Get creative on capital (but don’t forget traditional options)
Of course, one of the key concerns with achieving scale is the circular logic it requires: Growth requires resources—finance and talent—but resources come with…growth. The solutions to this conundrum are, of course, as varied as the companies that find them. Kim Wales, founder of both Wales Capital and CrowdBureau, spoke with the Council about the value of strategic investment partnerships and joint ventures. According to Kim, such alliances can not only result in capital infusion, but also mentorship for sustaining or even pivoting a business model. However, she says, there is merit to a blend of new technologies, such as crowdfunding, and old methods, as well. (For more on growth resources and crowdfunding, check out the following NWBC products: Grow Her Business, an online resource repository, and Crowdfunding as a Capital Source for Women Entrepreneurs, NWBC’s May 2017 research release.)
Taking on outside capital can be particularly concerning for businesses that have achieved success with a strong purpose or mission. Says Kari Warberg Block, founder and farmer-in-charge of EarthKind, and current NWBC Council member, “I started the business and I never ever even thought about taking any outside capital…I didn’t want capital diluting our purpose, if you will.” But, she explains, her thinking evolved even as her company’s purpose remained front and center: “Looking at the true goal of the company, which is to get dangerous pesticides out of homes…there’s a lot of equity players in our own category now. It’s really changed the dynamic for the category and made me think a lot differently about bringing on outside investment to grow faster and keep our purpose strong.”
In brief, evolve as you grow
As Kari puts it, it is essential to adapt and be willing to adjust your thinking as your company moves through different growth phases. This doesn’t mean abandoning principles, but it can mean changing practices. Business owners who successfully manage growth will be able to recognize and adapt to the changing needs of their organization.
The benefit of a community like NAWBO, of course, is that there is no reason to go through growing pains alone. So, here’s to smart women, scaling companies in good company, and a million million-dollar businesses to come.
NAWBO is one of the six national women’s business organizations currently represented on the National Women’s Business Council.