National policy helped a generation of women start, fund, operate and thrive in business. Now, it is up to those women to support, train, guide and invest in the next generation of businesses owned by women.
According to the Small Business Administration (SBA) in 1972, there were a little over 400,000 women-owned businesses in the United States. In 1988, the Women’s Business Ownership Act increased the SBA’s access to capital that gave assistance to organizations that supported women-owned businesses. This policy added so much fuel to the fire that, within two decades, 42% of businesses in the U.S. were owned by women.
By 2019, national revenue created by 13 million women business owners rose to $1.9 trillion. Yes, this growth took 50-years, but produced 114% growth in women business ownership over the last 20-years. Government and non-profit leadership made sure that women had a seat at the table of entrepreneurship.
There are still many programs that help women get started in business ownership. However, those programs may not cause the rapid growth of entrepreneurship that we experienced between 1972 and 2019.
The current class of successful entrepreneurs must lead Gen-Y and Millennial leaders as they begin their journey into business ownership.
Here are some simple ways to help young women to thrive in entrepreneurship:
Mentorship — The Small Firms Enterprise Development Initiative reports that 70% businesses with mentors survive 5-years or longer. Compared to US Chamber of Commerce statistics, 50% of businesses fail within their first 5-years. The simple act of identifying a young entrepreneur to mentor, meet with regularly, give assignments, introduce them to your community and open opportunities for training can help minority business upstarts buck the trend of failure and go on to long-term success.
Accountability partners — Finding a peer who is at a similar stage of entrepreneurship is important for new business owners. Entrepreneurs tend to live in a vacuum where it is tough to get insightful support from spouses, employees and family members. Sharing war stories with other women business owners can be cathartic. In addition, sharing goals, holding one another accountable, challenging each other to grow personally and professionally and even just taking a break for lunch, can be great ways to leverage accountability partners.
Personal board of advisors — In addition to mentors and accountability partners, successful entrepreneurs recruit a personal board of advisors. This board should include women who are at the stage of life the entrepreneur wishes to achieve, other successful business owners, industry leaders, professional advisors (CPA, attorney, wealth manager, etc.), and those who have admirable personal lives and character. The board of directors can meet at the same time or separately to review the entrepreneurs’ goals, performance, address challenges, advise on growth strategies and celebrate victories.
Leveraging women business enterprise (WBE) projects — Women who are in industries that lend themselves well to government contracting should certainly file to become a local, state and federal, Women Business Enterprise. Most projects awarded to prime contractors require the use of minorities as subcontractors. This means that in order for the prime to continue to win government contracts, a percentage of the work must go to women business owners. Registration as a WBE can mean immediate business for the company. Take care with this strategy, however. Relying solely on government contracts causes a customer concentration issue which can mean big problems to revenue if a dependable prime contractor goes out of business, or if the women-owned business desires to sell the company.
Targeted lending programs — Many banks have special lending programs for women that will reduce interest rates, require smaller down-payments and have less stringent underwriting requirements. Women must advocate for themselves during the lending process and proactively ask and shop for these programs when selecting a lender. Many times, these programs are not actively promoted or advertised. Keep calling lenders until one is found with a lending program for women.
Plan for and support entrepreneurship equity initiatives — The Central Indiana Women’s Business Center, NAWBO, NOWIB, IFBPW, Indiana Minority Supplier Development Council, Indiana Office of Women’s Business Ownership and Springboard Enterprises all have programs that support women in business. To ensure equity for women in business, established entrepreneurs should support these organizations with their time and money.
Our country, state and city have made incredible advances for women in business, but there is more work to do. This work is now in the hands of successful women entrepreneurs who will mentor, lead and support the next generation.
Jamar Cobb-Dennard is an attorney and business broker. To learn more about how to buy and sell businesses, contact Jamar at jamar@jamarcobbdennard.com.
