Women-owned business startups are rising nationwide. In fact, 40% of all new entrepreneurs in the U.S. are women, and the growth rate for our companies is double the rate of male-owned enterprises.
Yet it seems we’re somehow doing it all on a shoestring. One study shows that only one in four female entrepreneurs apply for business loans. And when they do, women ask for thousands less than their male counterparts.
Why do we struggle without adequate capital – or fall back on high-interest credit cards or our own retirement savings? Here are a few possible answers:
We don’t like asking for money. Many of us aren’t confident sharing our financial facts and boldly seeking the capital we need to grow. Fear of being turned down is a real obstacle that may explain why women apply for business loans 20% less often than men.
When we do ask, we request less. A 2017 study shows that women apply for about half as much capital as men do. Researchers found that the average small business loan size for women was around $57,000 as compared with $104,000 for men.
We tend to be less profitable in the early stages. While the growth potential of women-owned businesses is strong, we may experience slow going in the beginning and therefore find it harder to make our case with potential funders.
We don’t know the all options available to us. When it comes to fueling growth, the local bank isn’t our first and last stop anymore. NAWBO actively works with the U.S. Small Business Administration to keep the lending pipeline open for all of us. Beyond traditional loans, there’s microfunding, crowdsourcing, venture capital and even grants from forward-thinking organizations that want to see women succeed.
So how can we get past the overwhelm and get on with the business of winning the capital we need? Here are three practical suggestions:
1. Envision success. If you’ve been silently worrying about this issue but unable to move forward, try imagining what an infusion of capital could do for your company. Would you hire more staff, or open more locations? Maybe expand your inventory, buy new equipment, or launch a new website to reach more customers? Enthusiasm, paired with concrete goals, will give you new momentum.
2. See this as a learning experience. A “no” from one funder – or even several – doesn’t mean you don’t have a viable business. You’ll get objective feedback that can teach you a lot about how lenders and grant makers think. Use everything you learn to improve your pitch, knowing that with each step you’re getting closer to the funding source that’s right for you.
3. Seek out financial friends. Do you know people who are fluent in finance? Ask them how they would find new capital if they were in your shoes. Talking it over with peers will help you build mastery in presenting your financials. Together, you can look at different funding options and focus on those that line up with your needs.
And if you haven’t met that amazing financial mentor yet, just raise the question at your next NAWBO meeting. The expertise you need may be right there in the room.