Women entrepreneurs launch businesses at a rate faster than the average rate of growth of new small businesses in the U.S.
Despite the increase in number of women-owned businesses, the chances of women entrepreneurs landing venture capitalist money or small business loan dollars are very slim. According to the Center for Venture Research, a whopping 36 percent of entrepreneurs seeking funding are women, but only 15 percent succeeded in raising capital as opposed to 22 percent of male entrepreneurs.
In 2014, women launched 1,200 new businesses per day, and today there are more than nine million women-owned businesses in our country—together contributing a whopping $1.4 trillion to the economy. They provide employment to seven million people and make a positive difference to the social fabric they are a part of.
The reasons behind women not getting enough funding range from the poor marketing skills of women CEOs to reluctance in speaking about their achievements, to the difficulties that gender barriers present while negotiating the world of high-profile investors.
Though intentional bias is rarely the case, there are archaic perceptions ruling the intuitive pattern recognition of venture capitalists. They see few women entrepreneurs reaching out or pitching to them. The fewer the successful women entrepreneurs before them the lesser are the chances of the investors recognizing one when they see her.
The simple plan should be that more and more women entrepreneurs need to come forward to participate in fundraising. There are many options for women entrepreneurs seeking financial help to grow their businesses.
Here are a few that you can check out.
1. Check Out What SBA Offers
The U.S. Small Business Administration (SBA) actively strives to support businesses launched by minorities and women, and they have several schemes and grants for the same.
There is a network of more than 100 Women’s Business Centers that provide counseling, free training, and technical assistance to women to apply and be eligible for loans and grants.
More than 11,000 volunteers work in 320 chapters of SCORE across the country. You will get free advice, tips and help from business experts to chart practical action plans and grow your business. SCORE is an initiative of SBA to help small businesses in America flourish. You will also be connected with mentors in your industry who will handhold you through the tough initial years.
Another option is online tool LINC that will connect you with SBA lenders across the country. SBA assures that once applicants fill out the application forms they will be contacted by lenders within 48 hours. You can also access resources that help you know about SBA partners in your locality who offer low-cost consulting, training programs and even legal help.
SBA has tie-ups with big names in business, so do your research and choose an option best suited for you.
SBA grant and loan processes may be time-consuming, elaborate and require paperwork, but most of the time you get loans at negligible rates of interest or grants and aid that do not require payback. So what you essentially get is free money or low-cost funds.
2. Consider Corporate Aid
Many multinational companies and business conglomerates come forward to lend a helping hand to budding entrepreneurs. The corporate loans and grants are low-cost and do not require as elaborate paperwork or waiting period as government loans. Big companies carry out these initiatives as part of their corporate responsibility and as a part of a public relations exercise, so make sure that you know when and how to apply because the competition is strong.
Some of the notable corporates doling out aid include Kelloggs, Microsoft, Cisco, Etsy, FedEx, Google, Huggies, Boeing and several other Fortune 500 companies.
10,000 Women is a global initiative by Goldman Sachs to provide practical and relevant business education, advertising and networking opportunities to women entrepreneurs across the world. The program has touched lives of businesswomen in more than 43 countries. You also get assistance in accessing capital, and more than 73 percent of graduates have received loans to fund their entrepreneurial dreams.
3. Bootstrapping Is Not a Bad Idea
Bootstrapping is the way to go if you are setting up a young business with no established customer base. This helps you have complete control and hold 100 percent equity in your business. Also, once investor money comes in, a large portion of your time will get eaten up managing the board.
If a startup is your dream, then you should start saving for it. A large portion of your income needs to go into the savings kitty. If you are married, try to live by one partner’s salary and save the rest. You will require this to fund your company’s initial years. This includes marketing expenses, rent payments, utilities, operating costs, advertising spends, salaries (if any) and personal needs. If you have a family you will have to find ways to keep things smooth-sailing on that front as well.
You need to keep a strong check on expenses and account for every pie. Opportunities will not be easy to come by so you must not let any pass. In other words, when your money and financial future are on the line, it becomes a very high stakes game.
The benefits of bootstrapping include the freedom to realize your vision and goals, and molding your company to take on challenges ‘you’ decide are worthwhile.
4. Borrow Money to Avoid Giving Up Equity
Women are passionate about their ventures and want to steer them on their own. You can consider cheap loans that are good debt as a great option.
You can also consider alternative financing options like asset-based lending and factoring. If you have an established customer base and a solid revenue projection then leveraging accounts payable or accessing a line of credit based on assets would be fairly easy.
Crowdfunding is the new buzzword in the startup financing scene with Kickstarter, GoFundMe and RocketHub gaining popularity. Plum Alley is a crowdfunding site that caters to women entrepreneurs.
Also, assets like gold or silver jewelry can be liquidated to get access to quick cash, but ensure you go with reputed gold dealers only.
Women entrepreneurs in the past few years have built multi-million dollar businesses virtually from scratch. There are several names out there who you can look up to and feel inspired. So, choose your area of interest, launch your business, and script your success story in 2016.
Korie Cantor is a content writer for My Gold Limited—New Zealand’s leading precious metals merchant. She loves to write about business and lifestyle topics. When in leisure time, she loves to read books and spend time with friends and family.