The nuts-and-bolts work of running a business preoccupies many women entrepreneurs. Are they thinking strategically enough soon enough to build the strongest, best companies they can?
Sales and marketing, personnel and management issues, the almighty dollar — these are the top challenges for the women entrepreneurs who shared their stories with us as part of the 1,000 Stories campaign.
A close look at the business stories these women submitted to The Story Exchange during our 3-year project shows that most are primarily busy with the nuts-and-bolts of running their companies. If descriptions of their top challenge are any guide, bigger-picture strategic issues get much less of their attention.
The focus on tactical issues may well reflect a heavy representation of newer entrepreneurs and smaller companies in our data set — 69 percent of the companies owned by our 1,000 respondents have been in operation for 5 years or less, and 76 percent have 5 employees or fewer. In the early stages of a business, entrepreneurs are often “running every bit of the show, working in the business, rather than on the business — that old cliché,” says Susan G. Duffy, executive director of the Center for Women’s Entrepreneurial Leadership (CWEL) at Babson College, which partnered with The Story Exchange on the 1,000 Stories project.
“Right from the get go, you have to think about a bigger company,” Duffy says, or you will quickly find “you don’t have time to lift your head up and think bigger and strategically.”
So are women business owners neglecting to lay strategic groundwork early enough in the lives of their ventures? Our data suggest many are struggling to see the forest for the trees. This situation, along with a tendency to set lower growth targets than men, could add up to a common reality where women do not build businesses of the size, strength and longevity they truly desire.
Overall, the top challenges of women business owners in our project, in order, are sales and marketing (26 percent), personnel and management (17 percent) and finances and cost management (16 percent).
Across the board, sales and marketing is the No. 1 challenge, as it is for most business owners.
Promotion on a budget is Tze Chun’s top challenge at New York-based Uprise Art, which has an unusual art-sales concept. Her art gallery is an online one that connects art lovers with emerging artists. Free “personal art advisors” can help buyers find just the right piece, and those buyers can bring new treasures home right away, but pay for them over time.
“We don’t have a marketing or advertising budget, so getting the word out about our gallery is always a challenge,” Doe Deere, owner of Lime Crime told us. Her solutions have been to build both “an online and offline community of artists and collectors that encourages people to spread the word about our events and follow us through social media.” Uprise Art has done especially well on the art-minded Instagram social platform, amassing nearly 9,300 followers.
On the other side of the country in Los Angeles, Doe Deere faced a public-relations nightmare in 2014 when hackers broke into the website of her makeup company, Lime Crime, and stole customer data. “Restoring customer trust in the brand was the hardest thing myself and my team have ever done. We rallied and worked tirelessly” — and brought in experts to ensure the site would be “the makeup equivalent of Fort Knox,” she said. “What happened to us and our customers was awful, but I feel that we’ve learned a lot.”
Management and personnel is the No. 2 challenge area for 1,000 Stories participants overall, but a greater one for younger women (U.S. women ages 21-40 and non-U.S. women ages 31-40), who would tend to newer to staffing decisions, hiring and people management, tricky but vitally important parts of building an enterprise.
Denese Palmer, owner of Southside Distributors Ltd., a 9-year-old food company in St. Elizabeth, Jamaica, with 42 full- and part-time employees, says her biggest challenge is “getting the right staff on board who are trainable and adaptable to the food-processing environment.” Southside makes and exports jerk sauce and jerk seasoning, among other products, and brings in annual revenue of more than $500,000.
To address her people issues, Palmer has added staff training sessions, including in areas beyond food processing like ethics. She has also restructured her job interview process to add practical tests designed to identify whether job applicants are ready to learn.
“There is some improvement, but we have a far way to go,” she says.
Finances and cost management are always big themes for business owners, and especially women, who face both systemic and personal barriers to accessing capital.
But money, at No. 3, ranks lower than might be expected in our study (though it ranks No. 2 for women aged 41-60). For instance,an Ernst and Young survey shows founders face three main challenges: funding, people and know-how, and funding is No. 1 (know-how ranked low for our group, too, cited as a top challenge by only 6%). Add in structural inequities women face and, often, their own reluctance to ask for money, or for enough money, and women would be expected to cite this challenge even more frequently.
In many places in the world, women have trouble getting loans because they lack the collateral to back them. Overall, disparities in debt and equity access between men and women are well documented, but Amanda Elam, CWEL’s research director, says the problem appears to have more to do with capital-access problems within the industries where women predominate than outright gender bias. For instance, beauty businesses have more trouble raising money than landscaping firms.
Whatever the roots of the problem, there is much work to be done to improve women’s access to capital — and that work is being taken up by specialized funds and programs for women entrepreneurs emerging around the world.
“We have to unlock capital markets for women, because they can have great companies. And if they don’t have access to funding at the right levels, they’re going to get starved out of growth,” says Duffy of CWEL.
Worse, they can go under. Even in the most developed countries in Europe and the U.S., where financial systems are large and sophisticated, financing issues accounted for half and one-third, respectively, of business closures for women, much higher proportions than for men, according to Babson’s 2012 Global Entrepreneurship Monitor Women’s Report.
Most of the women who participated in our project, like all business owners, used their own money (64 percent) or received help from friends and family (10 percent) to startup, a combined number roughly in line with Babson’s research findings. Few have used bank loans (4 percent) or other types of debt (6 percent) or received equity investments (6 percent), most of which come later in a venture’s life.
Rebecca S. Hage Thomley, a former clinical psychologist, has been CEO of Orion Associates since 2000. For years, she successfully self-funded Orion, which operates a family of seven companies that provide management services to for-profit and nonprofit social-services providers (the first of which was founded by her mother). But in 2013, when she shared her story with us, the Golden Valley, Minn.-based firm was launching a national expansion and needed more cash.
Thomley has not been keen to give up control to equity investors. And after gathering opinions from her advisory board and a consultant met at an EY Entrepreneurial Winning Women event, she decided to focus on negotiating a line of credit. Her small local bank had to partner with a mid-sized bank, which had to be educated about her complex business, but she ultimately got a $9 million credit line. Orion today brings in more than $110 million in revenue and has nearly 5,200 full- and part-time employees, including 210 in administrative teams in five states.
“One of the things we do very well is build relationships with our banks. They’re not just someone we get money from, they are a partner,” Thomley says. “They know me, and, in addition, we have created a pretty solid reputation. And I’m really tough, and they know that.”
Crises and Confidence
Personal challenges ranked fourth among a dozen major themes we identified, though they were only mentioned by 12 percent of respondents. These challenges were primarily related to personal fears and confidence issues, but also to difficult events like personal or family health crises. Another 2 percent of respondents cited discrimination, including sexism.
Indeed, the self-selected women who participated in the 1,000 Stories project tend to be quite self-assured. The vast majority were “very confident” in their abilities (92 percent), skills (90 percent) and knowledge (88 percent) . Perhaps they would not have volunteered to share their stories publicly, if they were not.
Nevertheless, this finding is interesting considering the fact that research shows that, around the world, women tend to register lower in their perceptions of their capabilities than men, and greater in fears of failure, despite often higher education levels. And confidence is an oft-discussed challenge at forums for women entrepreneurs.
“I think women that start their own businesses don’t identify as having confidence issues,” Duffy says. The confidence conversation is colored by “overconfidence in the male model,” she argues. When women don’t display overconfidence, “they’re considered underconfident.”
The fact is women approach risk differently from men, she says, tending to take in a lot of information and weigh both the short- and long-term implications of decisions, rather than shooting from the hip. Meanwhile, the culture tells women “you have to be this Wild West, crazy, risk-taking entrepreneur. And that’s not how entrepreneurs do it at all.”
Fuzzier Big Picture
Where women may have the greatest struggles — perhaps without knowing it — is with the big picture.
Only 5 percent of the women talked about work flexibility and work-life fit as a top challenge. Manufacturing and operational issues were cited by 6 percent. Strategic issues added up to only 11 percent — starting up (5%), scaling up (2%) business strategy (2%) and working with partners or third-parties (2%).
Kari Warberg Block, founder and CEO of Earth-Kind, a maker of natural pest-prevention products, says her business took off when she changed how she used her work time. Back in 2012, revenue was about $2.7 million and she spent about 20 percent of her time working on her business and 80 percent in it. Block, like Thomley, was tapped by EY Entrepreneurial Winning Women, which helped her become more strategic. Today, she works on the business three-quarters of her time — she mainly thinks 5-to-7 years out — and Earth-Kind annual revenue now approaches $10 million.
“It’s so hard to do,” she says. “When you’re growing, fires come up all the time.”
One key has been sharing responsibility. Block no longer makes all the decisions. Instead, employees use her framework for making decisions, asking themselves if it’s “lean” (enables customer-focused improvement), “mean” (disciplined and focused), and “green” (right for the environment, Earth-Kind’s families and customers).
She also hires a lot of consultants to get specialized expertise, whether in sales, marketing, research and development or finance. In fact, her CFO is both “fractional” and strategy-focused. He works with Earth-Kind 20 to 30 hours a month (he has two other clients) and focuses on long-term issues and coaching her controller, “who wants to grow into a CFO.” As a result, Earth-Kind has only 22 employees but a workforce that stretches to 110 to 120, including consultants and temporary workers (20 percent are developmentally disabled).
“When you take yourself out of the day-to-day, you can look at it differently,” Block says. “I like it because it’s challenging for me. And it’s fun, too, because it allows me to be very visionary.”
This journey has transformed Block the businesswoman. Back when Earth-Kind entered the pest-control market in 2007, she was afraid to take a step unless every detail was worked out. “The confidence wasn’t there, where now I’m a lot bolder,” Block says. “Confidence grows the more decisions you make.’”
Banner graphic by Michelle Ciotta.