Women-owned businesses play a critical role in the growth of the U.S. economy. The number of women-owned firms with revenues over $1 million increased 46%, compared to 12% for all U.S. businesses in the last decade.
While this is a tremendous feat, other data suggests that women-owned businesses are still underfunded and thus limited in their ability to scale. For example, female founders who apply for bank loans receive about 45% less money than their male counterparts, according to a 2017 Biz2Credit study.
Access to capital. The lack of financial resources is the primary barrier to women launching businesses. Historically, government programs, such as the Small Business Administration, focused much of their efforts on helping small-business owners secure funding through their SBA loan program.
While the SBA does not make loans directly to small businesses, the agency provides guarantees and guidelines to banks, credit unions, and community development organizations who lend to small-business owners. SBA loans each year amount to more than $20 billion borrowed by small businesses which may not have otherwise secured low-cost funding.
Knowledge gap. So women business owners and the SBA sound like a perfect fit. Well, it is, except women are less likely to be aware of the programs the SBA, and other similar small-business support organizations, offer, according to our recent report on women entrepreneurship.
Forty-one percent of women haven’t heard of any small-business support organizations vs. 31% of men. Looking at SBA-related resources, 28% of women have heard of the SBA.gov website vs. 31% of men, and only 6% of women are aware of SBA District Offices vs. 16% of men.
This is a statistically significant difference. The trend spans across other valuable small business resources such as the Small Business Development Center (SBDC), SCORE Mentors, and Women’s Business Centers.
Bridging the gap. Government organizations have an opportunity to bridge the knowledge gap by raising awareness of available support services among women. While women-owned businesses are outpacing the general marketing in growth, the disheartening reality is that 88% of women-owned firms generate less than $100,000 in revenue.
A concerted effort among small-business organizations to reach woman business owners can significantly turn the tide and help women-owned firms scale up, giving them a better shot at profitability and longevity.
So, what can these agencies do to reach woman business owners?
1. Respect their unique challenges. Lack of financial resources is perceived as a bigger obstacle among women than men. Other barriers where women over-index compared to the total market are uncertainty and raising a family. These unique challenges can be addressed in programming. Be mindful about the time of events, availability of childcare, and e-learning opportunities. Increase the number of female mentors.
2. Help them achieve their goals. The ability to work from home and have better work-life balance are strong motivators for women to start a business. Individual mentoring and group learning modules are essential to helping women vet their ideas and create an action plan for success.
3. Be available. Half of all women currently have their own business or are interested in starting one. Women are eager to learn and understand how to make a business successful. But they can’t get this deeper understanding in a ten-minute conversation at a booth at a business expo. Show up where business owners are: coffee shops, libraries, co-working spaces.
Give them the knowledge and the tools, and women will run with the baton. That’s a guarantee.