According to the U.S. Census, women business ownership is on the rise. In 2018, women-owned firms made up only 19.9% of U.S. companies, but their numbers are growing.
As someone who works with small businesses at various stages in their development, an important topic arises that’s not often discussed: Do female and male small business owners have the same needs and support?
Exploring this topic with local organizations who support our small business community, including Business Impact Northwest, Washington Women’s Business Center, and Verity Credit Union, the organization I work for, the answer turned out to be that women business owners do in fact have unique needs that require differentiated products and offering.
Verity, for example, provides below-market rates on working capital to nonprofit organizations that support BIPOC [Black, Indigenous, and people of color] and women-owned businesses.
We identified four main areas of need for women-business owners:
1. Training. Statistically, most female founders have fewer years of work experience and are less likely to have previous business ownership and managerial experience compared to their male counterparts. This requires an increased level of training to learn essential new skills for starting a business, including leadership skills.
Beyond the owner, employee training is critical. The understanding and belief in the value of training allows employees to magnify their contributions. Having a well-trained workforce also enables owners to transition from a more hands-on approach to running their business to a leadership role.
Verity provides branch space at no cost to the Washington Women’s Business Center, a division within Business Impact Northwest. This nonprofit provides capital, coaching, and classes to female, veteran, BIPOC, immigrant and LGBTQI+ entrepreneurs for in-person training and education.
2. Coaching. Coaching is imperative at all levels of business experience to strengthen systems, collaborate on marketing plans to increase profits, and look at expansion opportunities.
Critical to organizational success is the entrepreneur’s willingness to be coached into the role of leader, establishing a path for employees to follow. Coaching is also an important part of identifying strengths and opportunities for growth, showcasing what’s needed to drive strategic hires, and pursuing goals beyond what one might set for themselves.
John Benner, Verity’s director of small business, and I are dedicated mentors for women-owned businesses supported by Business Impact Northwest and Local Initiatives Support Corp., an organization dedicated to connecting communities with resources.
3. Financial resources and capital. We need banks and venture capital firms to invest more in women-owned businesses with solutions and products that reflect their unique needs and stages of growth. As of 2022, women receive an average loan size of $39,000, while men receive an average loan size of $44,000.
Additionally, in 2021 less than 3% of venture capital went to women-owned businesses, even though BCG research found that women-founded businesses earned more than twice as much per dollar invested, with nearly 10% higher cumulative revenues over a five-year period, than those led by men.
As mentioned previously, Verity has developed differentiated loans and financial offerings for BIPOC and women-owned businesses. Benner also provides a full-scale training program on small business lending to women-owned businesses that covers multiple topics like human resources, taxes, business plan development, financing, and growth and expansion.
4. Networking connections. In general, women are less involved in civic organizations, such as boards, local chambers of commerce, and so on. That means they have fewer opportunities to attain necessary leadership, managerial, and networking skills which can drive their business to fruition.
Making connections is crucial to thriving within the business community, yet most major organizations still feel like a “boys club.”
Successful entrepreneurship is at risk if women can’t acquire these essential skills and experiences. Women leaders need to become educated on leadership behaviors, organizational culture, and team development.
They need to seek leadership positions in business, civic, and social organizations to further develop these skills. And more opportunities need to be available for this to be achieved: more board seats, strategic positions, capital, training, and inclusivity in areas where networking commonly occurs.
Verity supports networking for women-owned businesses as the title sponsor for the Washington Women’s Business Center annual “Celebrating Dreams” fundraising and networking event.
This support isn’t just needed for start-ups; it’s needed for businesses of all sizes and in all stages. One example of a female-led company who benefited from focused support is Lily Tran, a local small business owner who tapped into resources to help her view her business more strategically from a leadership vantage point and as a result was able to monetize a part of her business she otherwise offered for free.
There are so many more, like Lily, who can benefit from a more specific approach to support that sees their unique needs and will be much better positioned for success and growth. This will pave the path for more women to bring their own business ideas to fruition, knowing they will be set up for a win.
TINA NARRON is chief lending officer at Verity Credit Union in Seattle and board advisory member at the Washington Women’s Business Center.