Women entrepreneurs face significant challenges in growing their companies, but there are ways to improve the business environment to make it better. That’s the central theme of a study released by Bank of America and Babson College that identified what entrepreneurs can learn from industry-leading women business owners. Laurel Ofstein, an associate professor of management in the Haworth College of Business at Western Michigan University, contributed to the study and helped interview 30 women entrepreneurs who have achieved an average of $43 million in revenue. Ofstein spoke with MiBiz about how women entrepreneurs overcome obstacles related to market misperceptions, network exclusion and underfunding.
What made you want to research women entrepreneurs?
There’s a lot of research on women starting businesses and that it can be very challenging, but we wanted to look at women who have reached $5 million in revenue per year in their businesses, which means they are very successful and larger than most businesses. We were looking to see what challenges they were going through in growing even bigger, and what allowed them to get that large. We were initially looking at barriers to growth, things like running into obstacles, raising money, difficulties in accessing networks. Through the examples women provided, we were also able to identify some action strategies for how to help other women achieve.
The research highlighted misperceptions for women-led businesses. What were some of those?
The first was market misperceptions. An example is with Farmgirl Flowers: The founder focused on flower delivery, and sometimes that market was perceived as, ‘isn’t that sweet, a woman is focusing on flower delivery.’ But she was into it because she knew it was a big market that was ripe for innovation. There are misperceptions about the size and the financial opportunities in some of the markets these women-led businesses chose.
What did the research tell you about inclusion in the workplace?
We find that women who try to network within their industries, trade shows or other events were often perceived as not the right fit for the organizations they tried to join. A lot of the time, the events happen in the evening or at the bar, on the golf course. While women are perfectly capable of attending those things and being part of the group, they just didn’t see the point, so they were often excluded from those times when decisions were made outside of regular business hours or just in places where they weren’t as welcomed.
How were the women able to grow their own businesses?
Because the venture capital that’s available to women entrepreneurs is much more limited than to men historically, women have had to build their businesses organically, kind of over time, reinvesting in their own businesses as opposed to getting cash infusions from outside investors. Sometimes their businesses weren’t able to grow as fast because of having to rely on that organic growth. Instead of just looking for that elusive venture capital, (they were) finding angel investors or other kinds of grants that are specifically focused for women-owned businesses.
Is that slower organic growth process necessarily bad in the long term?
Women really perceive building their business as a marathon and not a sprint, so growing organically allowed them to really focus on their culture and build a strong business that wouldn’t just be sold off in a few years, but could grow and retain talent.
What were some other strategies the study came up with?
Buy from women-owned businesses. Making an intentional choice, either as a woman business owner to buy from women business owners, use them as suppliers, collaborate with them, consider helping fund other women-owned businesses to help to amplify the attention on these women-owned businesses. We’ve heard a lot about mentoring. Sometimes because of limited networking opportunities, there aren’t always as many women leaders who are able to be mentors to some of the up-and-coming women. We are encouraging women to be a mentor to other women who are helping to build their businesses.
What do you hope people will take away from the research?
I’m hoping it shines a spotlight on the fact that there are large, very successful women-owned, women-led businesses, and that women leaders are just as capable at achieving growth across industries as male business owners. I hope it raises awareness of the need to include women in working events to make sure the invitations are made to all people working in the industry and that the events are accessible and family-friendly for all genders. I hope that by publicizing this research here locally we don’t just see it as a job for communities where these large businesses live, but that we use these actionable strategies to make some changes here locally in West Michigan.