Debbie Benedit, a restaurant owner in Atlanta, put it bluntly in a 2011 interview with Forbes: “It is very much a man’s world.”
“I have 36 years of a successful business under my belt and it is all but impossible to get the capital or investors I need,” she said. “Controlling my cost without jeopardizing the quality and affordability of my food is probably my biggest challenge right now.”
This is a common refrain when it comes to women business owners. But there are some encouraging signs.
A June report by the National Women’s Business Council said women-owned businesses performed as well as men from 2007 to 2010. And the numbers have grown. Women owned just 10 percent of U.S. businesses in 1980, according to Reuters. Now? Women own 40 percent of privately owned businesses, according to the National Association of Women Business Owners.
But obstacles remain. Here’s a look at some of those challenges.
- Youth can hurt: According to the NWBC report, women-owned businesses tend to be newer than those by their male counterparts. The younger the business, the higher the chance it doesn’t survive. On the other hand, younger businesses do have higher expansion rates.
- The funding dilemma: The U.S. Small Business Administration’s Office of Advocacy released a report in April that explores the financing of small businesses by venture capitalists. Women-led businesses lag behind in such funding. This can be attributed to a lack of women who actually do the investing, along with fewer women in high-growth fields in growing markets. The venture capitalists are risk-averse, the SBA says, and so they go with the familiar when it comes to investing. This can prevent women business owners from growing as business leaders.
- More risk concerns: Rohit Arora, co-founder and CEO of Biz2Credit, writes a column for Fox Business. He examined 14,000 loan applications over six months, and found that loan approval rates for women are 15 to 20 percent lower than men. He also notes that women businesses owners had lower credit scores, earned 15 percent less revenue and had 21 percent higher operating expenses. Arora attributes this to women gravitating toward retail businesses, which are of an “up-and-down” nature, enough to raise risk concerns.
- High receipt vs. low receipt: Women are not as present in high-receipt industries — defined as a median receipt of $500,000 — according to the National Women’s Business Council report. Those fields — manufacturing, mining, management, wholesale and retail trade — are dominated by men. On the other end of the scale, women are overrepresented in low-receipt industries (with a median receipt under $225,000) such as education, real estate, entertainment and administration.
What to Do About It?
So, how about some solutions? Arora suggests microlenders for business loans less than $50,000, and assistance by the Community Development Financial Institution for minority women.
The Small Business Association suggests support of mentoring and leadership programs for women, and encouraging investors to take more of an interest in women-led businesses.
And Diane Leneghan Tomb, president of the National Association of Women’s Business Owners, offered this advice in an interview with The Huffington Post: “To not forget that, like anything, it doesn’t always happen the way you envisioned it. The perseverance, doing your homework, being sure you have access to resources, but also the staying with it and not giving up. When I see the members who have been successful in their current business, it’s the ability to hang in there when things get tough. Being able to use their resourcefulness and being risk takers but also being measured in how they do it.”