The State of Women in Small Business
Women entrepreneurs are vital to the U.S. economy: Women own 39 percent of small businesses in the U.S. and are more likely than men to start their own company. What’s more, women business owners are just as successful as their male counterparts, from business growth to business longevity.
Women start their own businesses for a variety of reasons. Some seek the autonomy and flexibility they couldn’t obtain in corporate America. Some become passionate about a product or service they long to share with the world. Some are drawn to more socially conscious, environmentally sustainable ways of working and find entrepreneurship to be the best way to get there. Some do it out of necessity after a layoff or long stint of unemployment.
Regardless of their motivation for starting their own venture, many women entrepreneurs grapple with issues their male counterparts don’t necessarily face. As a result, many women entrepreneurs are determined to rewrite the rules of conducting business.
Rethinking old business models
After 20 years in the corporate marketing trenches, Kirsten Ludwig wanted to approach business differently. So, in 2015 she founded IN GOOD CO, a marketing agency that only works with socially conscious, purpose-driven brands. As proof, the company quickly attained B Corporation status – certification of its commitment to improving society and the environment.
“We started with the opposite of a business plan,” Ludwig said. “We’re very idealistic in nature.”
That idealism involves building a better business culture that prioritizes kindness and empowers employees to do their best creative work. Most employees own a percentage of the company. And rather than operate a home office, the eight-employee company has a virtual team hailing from Los Angeles, New York and Mexico City.
“We’ve always led with our ethos,” Ludwig said. “We want our people to thrive and not just survive.” This company’s people-and-planet-first philosophy has paid off. “Every year we have fundamentally doubled our revenue,” Ludwig said.
Breaking the funding ceiling
Securing affordable capital is a challenge for many entrepreneurs — but it’s often harder for women. Consider that male entrepreneurs have a 15 to 20 percent higher loan approval rate than women loan applicants. Likewise, women entrepreneurs receive just 3 percent of all venture capital.
As inventors of new technology for creating sustainable, recycled textiles, the Seattle-based company Evrnu was an unknown to investors. “No one had ever done what we do and no one had a clear exit strategy, so fundraising was very difficult,” Evrnu CEO Stacy Flynn said. “Trend-wise, investors simply don’t invest in women in this space.”
As a result, Evrnu’s earliest investors were not traditional lenders or investment funds. Instead, the company, which is also a Certified B Corporation, received its seed funding from a handful of high net worth individuals.
Flynn, who started the company in 2014, has come to see the challenges of fundraising as an advantage. “All our efforts are focused on creating a highly profitable, high-value company,” she said. “I believe we are going to have a much more profitable company because we are not going to be reliant on investors.”
Stepping into a leadership role
After being someone else’s employee for years, leading your own company can be an adjustment. All the critical decisions fall on your shoulders, and the entire staff looks to you for guidance.
Flynn experienced this adjustment period when she began fundraising for her startup – a process that involves selling investors on a concept that isn’t fully realized yet.
“One of the first things I had to get over was feeling like I was an impostor or fraudulent in some way,” Flynn said. “I’ve spent a lot of time focusing on how I talk about my vision to inspire people rather than looking at it as something that has to be completed before raising capital.”
For Terry Cosola August, founder of Fancifull Gift Baskets, the second-guessing stemmed from managing employees.
“I’ve gone through many stages of pondering whether I am too tough or not tough enough,” said Cosola August, who founded the Los Angeles-based gift basket company three decades ago. “I often try to make everyone happy, which isn’t always going to happen. Even after 32 years I still struggle with this. But I have learned that sometimes you just have to put what is best for the business first.”
Many women entrepreneurs refuse to sacrifice their personal life in the name of running a successful business. Consider Susan Dorsch, founder of Office Nomads, Seattle’s oldest coworking space. Dorsch has been steadily growing the business since 2007. But she when she became a mother several years ago, that growth became unsustainable. Not only was she spread too thin, but she was also exhausted.
In 2018, when her business partner decided to move three hours outside Seattle, Dorsch “right-sized” the business, reducing its physical footprint from two floors to one and reducing her own schedule to part-time.
“It feels so much better,” Dorsch said of her reduced hours and the smaller space she now operates. “It’s allowing us to focus on giving the members of our coworking space a much better experience.”
At IN GOOD CO, Ludwig prioritizes work-life balance for her entire team. The company offers unlimited vacation time and a generous parental leave policy and takes time off seriously. “When someone’s on vacation, we all jump in for them,” Ludwig said. “We want our people to unplug for real when they’re out of the office.”
That’s not to say all women entrepreneurs have a light schedule or perfectly balanced lives. Dorsch will be the first to admit that her business to-do list is “always nine times as long” as what she’s able to accomplish in a day. This was the case when she worked full time at the business, too.
Cosola August’s business is seasonal, which means her schedule fluctuates greatly throughout the year. “During the holidays, we do 50 percent of our yearly sales and ramp up from seven employees to more than 30,” she said. “Come holiday season, I just give it my all, working six days a week. I am often dreaming of Sunday where I don’t have to be anywhere and can stay in my pajamas.”
Empowering other women
Women entrepreneurs are often pioneers in their field. Recognizing this, many look to support other women along the way and set an example for employees, future female business leaders and their own children.
Dorsch, who has two young children of her own, will attest to that. “Entrepreneurs are people who’ve figured out how to pay themselves,” she said.
Ludwig, who boasts an all-woman staff at IN GOOD CO, goes out of her way to champion the mothers she employs. When an employee sends around an out-of-office email because they’re home with a sick child, they’re encouraged to say so rather than just type “OOO today” without giving a reason.
“Not only do I want to be a better model, but having my own children, I want to be supportive of other parents,” Ludwig said. “We’re setting a future example and we’re very aware of that.”
“In the agency model, typically everything approved in last 100 years was approved by a middle-aged white guy,” Ludwig continued. “But how about woman and millennials leading the charge? For us, it’s about inclusion across the board and breaking that hierarchy. We’re very big on being the change.”
Women small business owners are groundbreakers in multiple arenas. From creating jobs to reinventing how companies operate, many women entrepreneurs are taking the lead on building an economy and workforce that’s friendlier to employees, business partners, and society at large.
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