Maria opened her fitness studio in 2012, and soon discovered that being a woman in business came with a unique set of challenges. She recalled the first time her skills and vision were underestimated, and she was the victim of gender bias.
Maria shared, “The banker seemed more interested in my new husband’s income and assets, than my business plan and projections. I built and ran my own business long before I married my husband, yet the bank seemed to believe my financial success was somehow related to my male partner. I decided to walk away and get funding elsewhere.”
Unfortunately, Maria’s story is not uncommon. Many female entrepreneurs feel they are treated differently based on their gender. It is a big mistake for those working with these women as their economic power is substantial and on the rise. In the United States, 11.6 million firms are owned by women and these enterprises collectively generate 11.7 trillion in sales. In Canada, 50% of all start-ups are founded by women and generate 160 billion in economic activity. Despite these impressive statistics, women entrepreneurs receive significantly less venture capital funding and 33% lower loan approvals than male-owned businesses.
Common myths about women in business contribute to this persistent problem. These fallacies include the notion that women are risk averse, aren’t profit motivated, and don’t want to grow their businesses. These gender stereotypes make it harder for women to attain funding from traditional and non-traditional sources.
If you are a woman entrepreneur, don’t get discouraged. Instead take action. Here are the top three myths about women business owners and how you can overcome them.
Myth #1: Women are risk adverse.
Research shows that women view risk holistically and consider more than just the financial return on investment. Many contemplate the impact of taking on business risk to their lifestyles and their families. Ironically, business owners that look at a variety of factors when making funding and growth decisions tend to be more prudent investors. So, the truth is women take calculated risks and are more risk aware. These are actually good traits that fuel business success and revenue growth. In the 2018 Carlton University study, “A Force to Reckon With: Women, Entrepreneurship and Risk” researchers found that majority female owned businesses had the highest instance of average yearly revenue growth of more than 20 percent compared to male-owned businesses.
Your Action Step:
Develop a good working relationship with your banker and communicate clearly your goals for business growth. Explain your risk philosophy and all the factors that you consider when taking on additional debt, a new employee, or expanding your products or services. Notice any stereotypical thinking and gently communicate your desire to be viewed as an individual business owner with unique financing and banking needs. With the right gender-savvy banker and financial team, you can take your business to great heights.
Myth #2: Women aren’t profit motivated.
The truth is 44% of American women and 31% of Canadian women are the primary breadwinners of their home, and over half of all small businesses are either owned 100% or partially by women. Women, similar to men, want to be financially successful and increase their revenues. This helps them provide for their families and have a positive impact on the community and world around them.
Your Action Step:
Invest time in understanding your relationship to money and learning the skills for communicating effectively about finances. If you were raised to believe that talking about money is rude or unnecessary, challenge this mindset. Work with a coach to uncover mindsets that might hinder your ability to ask for money, or regularly review your financial statements. The most successful businesspeople know their value, can clearly communicate their worth, and are fiercely dedicated to turning a profit.
Myth #3: Women don’t want to grow their businesses.
Most women similar to their male counterparts are looking for capital and want to grow their businesses. However, 94% of decision makers at venture capital funds are men and only 10% of the global venture capital dollars between went to fund startups with a female founder. The problem isn’t that women don’t want to grow their businesses; it is that funding sources are gender bias.
Your Action Step:
Be clear about your vision for your firm and share your growth objectives with those around you. Don’t be shy about your desire to scale and increase your odds of getting financing by seeking out bankers who understand the unique needs and challenges of women entrepreneurs and are committed to working with them. If you are going after venture capital (VC), pitch to VC firms with at least one woman on the executive team as they are twice as likely to invest in female-owned companies than all male executive teams. And once you are financially able, invest in other women-owned business.
Eventually, Maria found a banker that understood her value as a CEO and helped her secure commercial financing. While she looks to her husband for emotional support, Maria has kept her business activities separate from the couple’s finances. One fitness studio eventually grew into a regional franchise, and now Maria is looking for her next business endeavor.
Stereotypes hurt all business owners but are especially potent for women. You can overcome these gender bias by taking individual action steps as you grow your enterprise. Set an example for the next generation of men and women and show them that women entrepreneurs are a force to be reckoned with.
By Kathleen Burns Kingsbury
Kathleen Burns Kingsbury is a wealth psychology expert, founder of KBK Wealth Connection, host of the Breaking Money Silence® podcast, and the author of several books including How to Give Financial Advice to Women, How to Give Financial Advice to Couples, and Breaking Money Silence®. For more information, www.breakingmoneysilence.com.