Starting and growing a business comes with a set of challenges for everyone. But there’s a unique set of hurdles that women in business face, more than their male counterparts, like the difficulty to obtain business loans from traditional owners of capital. Read more about women entrepreneur below in detail.
While fintech lenders like Camino Financial are closing the lending gap, starting a growing business can still be hard for women venturing into a male-dominated landscape. The good thing is, there are larger-than-life women entrepreneurs who have made it against all odds. You can make it, too!
However, existing and aspiring women entrepreneurs should understand the odds stacked against them and how the gender issue will help or hurt your business’s success. Thus, you can devise your course of action upfront to overcome the challenges.
5 Things women entrepreneur should know
You aren’t alone
Let’s start on a positive note. According to the National Association of Women Business Owners, about 12 million businesses in the U.S are women-owned. As of 2017, these businesses generate $1.7 trillion annually and employ nearly 9 million people. Thus, women cannot be wished away from the small business ecosystem, which is encouraging to aspire women entrepreneurs, just like yourself!
Build a support network
According to INC, 48% of women entrepreneurs say lack of advisors and mentors is a hurdle towards professional and business growth. Again, a 2014 U.S Senate report found that women may not get the business training and counseling they need to pivot their startups.
Despite the challenge, don’t be a lone wolf in the business land. Proactively strive to build a robust support network to help you blaze the entrepreneurship path. It’s where you learn about industry trends, meet business partners, and keep your competition in check.
It’s easier said than done, but you can start by taking advantage of women networking events like the WIN Conference or BizWomen. Don’t forget online forums and groups like Ellevate network that focus specifically on women.
Getting funding is harder
Small businesses everywhere face challenges obtaining small business loans from traditional lenders and venture capitalists. But obtaining capital is harder for women entrepreneurs. For instance, Fortune reports that male-founded companies received $58.2 billion of VC funds in 2016, while female-founded businesses received only $1.46 billion. Again, A Boston college report found that only 2.7% of VC-funded companies had women CEOs.
That shouldn’t scare you, but prepare you to face the odds. Some business experts maintain that VCs tend to invest in businesses owned by people of their “tribe.” Thus, female VCs are more likely to invest in female-found startups. You’re more likely to succeed if you look for female investors to invest in your business. Confidence is your real arsenal when pitching to investors. Bring yourself out as a proven leader.
Gender bias is real in the lending circles
Gender bias in traditional financial institutions is a pain in the neck women have to deal with when seeking capital to start or expand their businesses. Per Bloomberg, men are 15%-20% more likely to get approved for a bank loan than female counterparts. In total, women end up receiving less than 16% of all conventional business loans.
Again, the 2014 Majority Report of the U.S Senate Committee shows that banks are more likely to turn down a woman loan application, and when it’s accepted, women may receive up to $5,000 less than men.
Somehow, the odds are stacked against you. So how can you win? Start by stashing aside some personal savings to keep the ball rolling for a while. When you go for a loan, ask for more than you need. If your application or pitch goes through, you’ll settle close to the amount you want. In case banks and VCs reject you, look into fintech lenders. It leads us to the last point below.
Obtaining startup or working capital from VCs and traditional financial institutions is tougher for women entrepreneurs. There’s good news. Alternative sources of funds have sprouted to help bridge the lending gap.
Top among them are fintech lenders, like Camino Financial. They use technology to process business loans without issues of gender bias and have a simple application process and faster approval periods.
So make sure you’ve got a solid business plan, a great product, a robust support network, and work with the right lenders. That’s how you tilt the odds of succeeding in entrepreneurship in your favor.
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