Setting ambitious goals goes a long way in a company’s development.
There is a big disparity when it comes to the gender wage gap. But there is even a bigger disparity when it comes to how much male- and female-run businesses make. There are more women-run businesses now than there ever was, but they still aren’t making as much money as their male-run competition. Here’s how to change that.
Male-run businesses are 3.5 times more likely to surpass $1 million in sales than their female-run counterparts and only 2% of women-owned companies ever break the million-dollar mark, according to a 2014 report by Ernst & Young. “Women start businesses at nearly twice the rate of men, but far fewer of them actually scale,” says Kerrie MacPherson, a partner principal at Ernst & Young who oversees the EY Entrepreneurial Winning Women Program, which selects and mentors 12 promising women business leader a year.
There are a number of reasons for this gender disparity. For one, women-owned businesses are typically smaller and concentrate in service industries that tend to make less in revenue. While 30% of privately owned companies are run by women, they only account for 11% of sales and 13% of employment in the privately owned space,according to a report by the U.S. Department of Commerce.
But that same report indicates that women tend to start businesses with less money and are less likely than men to take on debt to grow their companies. “They are more likely than men to indicate that they do not need any financing to start their business,” according to the report. While many may not need the extra cash if they’re operating a low-cost small business, the fact that only 2.7% of venture capital-funded companies have a woman CEO, suggests there’s more at work here.
The Winning Women Program is trying to fight that disparity but helping fast-growing businesses address some of those key missing links in too many women-run companies.
For Sarah Kauss, founder of S’well, which makes reusable insulated steal water bottles, building a team has made a massive difference in scaling her company from a one-woman operation out of her New York apartment. Kauss, who was just selected as one of twelve companies in the Winning Women Program this year, started S’well four years ago. In the last year and a half, she’s scaled the business from six to 25 employees. “This year is really about starting to think of ourselves as a medium to growing company, not just this quirky little startup anymore,” she says.
How to make that leap? “You have to be comfortable with not doing everything,” she says. This of course is a challenge to all startup founders—male and female—but for women-run businesses that start small, growth is often stymied because there’s no one else to shoulder the responsibility. “You need to work on the business rather than in the business,” says MacPherson. “It’s about building a team around them who can ensure the business runs while they are out growing it.”
Setting ambitious goals goes a long way in a company’s development. Companies that grow, “think bigger and set higher goals,” says MacPherson. While a woman might typically come in with the goal of growing her company 30%, shifting that goal to 100% or 200% growth can be feasible if she gets the funding and support needed. The Entrepreneurial Winning Women Program helps link women to potential funders and develop their own boards of directors—two key resources too many women-run business go without.
For Phyllis Newhouse, founder of Xtreme Solutions, an IT services company that focuses on ethical hacking, figuring out a way to meet her company’s goals was a big challenge. Last year, around the time Newhouse was chosen for the Winning Women Program, her business was poised to scale from 400 to 1,200 employees and needed to figure out a way to grow so quickly. “It looked very terrifying,” says Newhouse, who despite a 22-year career in the military, had never scaled such a global operation in so short a period of time. Newhouse used the connections and guidance she got at the Ernst & Young program to inform her business decisions.
Networks like the one created by the Entrepreneurial Winning Women Program give women running multi-million-dollar businesses a way to share their resources. “That whole thing that it’s lonely at the top is exacerbated for women leaders,” says MacPherson. But it isn’t simply a supportive community that will help female-run companies grow. It’s resources. “They do business with one another,” says MacPherson. “They have become peer coaches to one another.”
Photo credit: Girl Talk HQ
Via Fast Company