Top 10 lessons of successful female entrepreneurs
Thursday, 14 February 2008
Last Updated: Monday, 19 May 2008
By Amanda Gome
What's keeping women entrepreneurs in the minority? Is it something they are doing wrong? It doesn't have to be this way. AMANDA GOME offers 10 steps to success.
What is it with women?
Recently I interviewed a young female entrepreneur, Lisa Messenger. Although she had almost 10 years experience working in large corporations, her first venture was a disaster. The reason? She spent all of her time doing favours for other people, and told everyone that she didn’t care about money but just wanted to follow her passion.
Soon after she launched her sponsorship company, she paid $30,000 for a staff member and an office, but took no salary for herself. Of course she went broke before coming to her senses and launching a successful business, Messenger Publishing.
Unfortunately this is a story I have heard many times: the ambitious businesswoman who tells anyone that will listen that money does not matter, shuns any talk of profit and works long hours in low growth or no growth businesses.
Often they start their business because they see a niche and want flexibility and independence. They end up, if they are lucky, barely replacing their salary and wondering what the hell they have done; this was never the plan.
But then there is the breed of extremely successful female entrepreneurs. By successful I mean bringing in revenue of $1 million and $100 million. They operate in a very different way. From day one, they start with adequate funding. They are not afraid to think big, take a risk and borrow.
Unfortunately they are a very small proportion of the entrepreneur population. And finding successful female entrepreneurs to interview is a feat in itself.
How many are there? There is a lack of longitudinal data that chronicles the rise (or fall) of female entrepreneurs in Australia – but there are clues. The latest figures from the 2006 census show there were 1.48 million owner-managers. Of those, only a third (469,058) are female.
Only 17% of Australian businesses are run by an individual female or predominantly by females. And only 30% of predominantly female-run businesses employ staff compared to 41% of predominantly male-run businesses.
Award lists like the BRW Rich List or Young Rich lists never feature more than 10% of self-made female entrepreneurs. In awards such as SmartCompany’s Smart 50 2007, about 20% are females.
This leads me to predict on the back of an envelope that about 150,000 businesses are being run by ambitious female entrepreneurs.
The good news is that these numbers could swell. As the number of female graduates have caught up with the number of male graduates in the last 10 years, Australia is reaching a tipping point where a wave of well-educated women are in their 30s, backed with networks and experience, and an expectation of success to start their own ventures.
So what makes a woman a successful entrepreneur? What differentiates her from a struggling business owner? And what traps does she need to overcome – traps that are often specifically related to her gender?
Lesson One: Money is good – talk about it, borrow it, control it, embrace it
Nice girls don’t talk about money. Nor do nice businesswomen. In fact women in Australia have been so indoctrinated that many (like Messenger) try to use an anti-money statement to position themselves in the market.
Entrepreneurs that I interview often proclaim that they are in business not to make money but to “make a difference”.
Even highly successful business women like Amanda Briskin who founded Mimco, refuse to discuss revenue.
In 2006 I researched 100 successful female entrepreneurs and found that 28% say they hate to talk about money, and most agree that most men are far more at ease talking about money than women.
This has profound implications for the business. It can mean the focus is not on the bottom line nor on revenue. It is not on getting money in the door to ease cashflow, and it is certainly not about badgering clients for money. (Nice girls don’t confront.)
About 54% of the female entrepreneurs also admit that generally women in business are more risk averse than men and that they are conditioned to take less risk.
The difference in ambitions and the way this is communicated means women are often misunderstood by financial institutions. They cautiously start smaller enterprises with a longer start up period, often in traditional industries (which may be low growth).
Financial institutions consider them unworthy of investment.
This lack of external financial support means many businesses never get launched or at a later stage, fail to expand. It’s a vicious circle because with so few businesswomen talking money, the culture does not change.
My research also shows that half of them needed between $5000 to $100,000 to start their businesses. When asked what had held them back, 51% nominated lack of money. A third say they struggled because they could not get enough funds at the start. They regret not starting with more and say it held them back.
About 30% say they faced enormous problems getting money to grow while 17% say they tried but failed to get a bank loan.
None got money from a venture capitalist and only one entrepreneur got money from a business angel.
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