What Makes Women Business Owners Successful?
By Melissa Fossell, Director, Commercial Banking
When it comes to female-led enterprises, women are reaching new heights in business ownership. More than 11.6 million firms are owned by women today, and these powerful entities generate more than $1.7 trillion in sales, according to the National Association of Women Business Owners.
If you’re a woman thinking about starting your own business, there may never be a better time. Here’s why.
There is no doubt that women-owned businesses are an active force in shaping the American economy. One in five firms that generate more than $1 million in annual revenue is woman owned.[i] An analysis conducted by Boston Consulting Group also indicates that businesses owned by women realize better returns, with revenues almost doubling those generated by their male-owned counterparts.
As would be expected, there are many reasons behind the success of women in business. For one thing, female owners are considered a lower credit risk than many men, affording them optimal opportunities for financing. When used properly, a business loan can help entrepreneurs start off on the right foot and even propel growth throughout the company’s years of operation.
Other evidence suggests that women may have an edge in interpersonal communication skills, making them more desirable as a boss. One study found that 50% of respondents would rather work for a female business owner. Additional studies indicate that women-owned companies have more engaged employees, leading to a more dedicated workforce aligned to company goals and objectives.
Interpersonal communications skills also can help women get ahead. Research suggests that women who form tightly knit relationships with other females are more likely to achieve leadership positions, and the same holds true for advancing your business goals. Reach out to other women entrepreneurs who can serve as sounding boards and advocates. These powerful connections can provide vital resources for gaining guidance or finding the right talent to fulfill your business objectives.
However, while women have more opportunities today and an easier path toward starting their own venture, setting out on an entrepreneurial journey can be challenging. Taking the leap into business ownership requires thought and preparation.
Even if you’ve dreamed of owning your own business for years, timing is everything when it comes to putting those plans in action. According to U.S. Census Bureau data, nearly 750,000 women left the workforce following the COVID-19 pandemic to better handle the rigors of childcare and family commitments.
For business owners, the stress of family life can be multiplied by the longer work hours and obligations associated with business ownership. The message here is simple. If you’re raising children, taking care of aging parents or dealing with a complicated family medical situation, make sure you have dedicated support to help you manage home life as you start your business.
Another thing to consider is whether you’ll need to maintain your current employment while setting off on your own venture. Many entrepreneurs continue to work a steady job while ramping up their business, but this can lead to a lot of hours and early burn out.
Before jumping in, think about whether you’re ready for the extra time commitment and if you can keep up the pace. It may make more sense to seek part time employment in the initial stages of your business development, but you’ll need to consider how soon your new company will be making money and the associated financial implications.
While considering your personal financial obligations, it’s important to think about startup costs as well. Starting a business can cost an average of $2,000 to $5,000 for microbusiness opportunities. Beginning a larger, more comprehensive operation will naturally require more upfront capital, particularly if you need to invest in inventory or equipment.
A financial support team that includes a banker, accountant, attorney and women-focused organizations can guide you and answer the hard questions. Creating these partnerships early will give you a network to lean on as you build your business plan and confidence.
The good news is that women are finding ways to mitigate the challenges and realize the dream of business ownership by establishing the right connections and playing to their strengths as female entrepreneurs.
Learn how FNBO’s business partnerships can support your dreams!
Melissa supports businesses in the Sioux Falls area of South Dakota. She works directly with business owners and key executives to identify areas of opportunity and provide banking support through a full range of financial solutions. She loves to watch her community grow as she helps businesses rebuild and vitalize the local economy.
[i] “Women Business Owner Statistics.” National Association of Women Business Owners. Retrieved from https://www.nawbo.org/resources/women-business-owner-statistics.