So often, it seems, Carol Malysz hears the same message. She will be speaking to a woman business owner and she will tell her that she wished her organization had been around when she was getting started.
She wonders how much money and how much time her company might have saved.
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Malysz is executive director of the Rhode Island Center for Women & Enterprise,
which has offices in the city’s Jewelry District. The organization’s mission is
to make sure women business owners are aware of the resources that are available
to them — particularly when it comes to raising capital.
So it came as no surprise to Malysz when she reviewed the findings of a recent survey conducted by the National Foundation for Women Business Owners.
According to the NFWBO study, women who own fast-growth businesses are more likely than those who run traditional businesses to access a wide range of credit sources and to borrow money to finance their businesses. The study is called “Entrepreneurial Vision in Action: Exploring Growth Among Women- and Men-Owned Firms.”
These fast-growth women entrepreneurs also access capital much differently than their male counterparts — and are more likely than fast-growth male entrepreneurs to depend on their business earnings and personal debt for business financing.
“It’s not surprising,” said Malysz. “Women are still having trouble accessing capital. That’s why centers like ours have been created by the Small Business Administration.”
The survey among 1,194 business owners — 602 women and 592 men — was conducted
by the NFWBO. The survey shows that male and female owners of fast-growing businesses
— firms that achieved revenue or employee growth of 30 percent or more over the
past three years – are similar in that they have a larger appetite for capital
than those who own slower growing firms.
“However, only 39 percent of women who own fast-growth firms have a commercial bank loan compared to 52 percent of male owners of fast-growth firms,” said Nina McLemore, chairperson of the NFWBO. “One-third of women owners of fast-growth firms use personal credit cards to finance their firms compared to only 21 percent of men who own fast-growth firms.”
Teri Cavanagh, director of the Women Entrepreneurs’ Connection at FleetBoston Financial, the primary underwriter of the NFWBO study, points out the importance of leveraging capital.
“This reliance on personal debt is holding women business owners back,” she said.
“The study clearly indicates that women who understand how to leverage debt and
equity have a far greater chance of becoming owners of fast-growing — or ‘gazelle’
— businesses.”
Fast doesn’t always mean high tech
Cavanagh said the survey results confirm Fleet’s experience that access to capital is a critical issue for women entrepreneurs. Most fast-growing firms are not in high-tech fields, nor are high-tech firms necessarily fast-growing, according to the study.
Most of the high-tech related businesses surveyed did not meet the study’s criteria for fast growth. However, women are more likely to own those high-tech firms that are also fast-growing – 48 percent of high-tech firms owned by women are fast growth, compared to 28 percent of high-tech firms owned by men. And, the high-tech women-owned firms are more likely to be in the fields of biotechnology or life sciences, while information technology dominates male-owned technology firms.
“Women owners of fast-growing firms differ from other women owners in their desire for independence and more money as motivations for becoming owners,” said Mark Lange, executive director of the Edward Lowe Foundation, another of the study’s underwriters. “These women owners of fast-growth businesses are also better educated and younger than other entrepreneurs who were surveyed.”
The study also showed that most women entrepreneurs who have achieved fast growth for their firms have a greater diversity of business-related characteristics and life experiences than male business owners do.
“Women owners of fast-growth firms are less likely than their male counterparts to have had an entrepreneurial role model, a managerial or executive professional background, or past experience in owning a business,” said Trish Costello, director of the Women’s and Venture Capital Initiatives at the Kauffman Center. “It is critically important that women have access to mentors as well as to knowledge and information about entrepreneurship to be successful in growing their businesses.”
Although keeping up with technology is a key business concern, only about 20 percent of all business owners surveyed consider the Internet and e-commerce to be critical elements of their business growth strategy. Even among owners who have identified growth as a primary business goal over the next five years, only 44 percent each of women and men owners have a Web site — while just under one-third of firms that are less growth-orientated have a Web site.
“Women owners of fast-growth firms are less likely to share ownership of their firms with outside investors than their male counterparts — only 28 percent of women compared to 49 percent of men, according to McLemore, of the NFWBO.
“Women entrepreneurs should recognize that bringing in expansion capital is an important factor in achieving high growth, even if they must relinquish some equity,” said McLemore.
Seizing opportunities
What is clear regarding the study’s findings is that women need to connect to the resources available to them.
“This study validates what we have been hearing from women business owners for three years,” said Cavanagh. “They need a central place to go both to learn how to access capital and to get connected to the money.”
Malysz is convinced that once connected to opportunities, women business owners will seize them. She has seen it happen.
“It is amazing how excited they are when they discover that someone will act as a focal point for them,” she said.
Other findings of the NFWBO study include:
- Among the fast-growth firms surveyed, 21 percent each of women and male-owned firms have annual gross sales of $1 million or more.
- Women owners of fast-growing businesses are more likely than other owners to consult outside sources on business management and growth issues. For example, 60 percent of women owners of fast-growing firms consult with accountants compared to 44 percent of their male counterparts.
- Businesses that have achieved recent fast growth tend to be younger, have higher revenues, and employ more workers than firms that are not growth-orientated. Likewise, firms that expect to grow in the future are younger and have higher revenues than firms that are not growth-orientated.
The NFWBO study is expected to spur a flurry of initiatives on the part of those organizations that committed as its underwriters. FleetBoston Financial, for example, has embarked on a partnership with Independent Means, Inc. in helping “Gen Y Entrepreneurs-in-Training (13-19 year old women)” learn how to create and build businesses through workshops, camps, games, and books. FleetBoston has also established a program called Business Credit Express, offering small business credit lines of up to $100,000 attainable within 36 hours.
The Edward Lowe Foundation will explore new articles on the key issues facing women business owners for the “Edward Lowe Report,” a monthly newsletter.
The Kauffman Center for Entrepreneurial Leadership will work to identify ways in which women entrepreneurs can access mentors who can help them grow their businesses – and will enhance the information and resources on its Web site, Entreworld.
(The report, “Entrepreneurial Vision in Action: Exploring Growth Among Women- and Men-Owned Firms,” is available for $90. Contact the NFWBO, 1411 K Street, NW, Suite 1350, Washington, D.C. 20005-3407, or call 202-638-3060. The organization can be found online at www.nfwbo.org.)
