October is National Women’s Small Business Month. And what a better way to celebrate than with some success stories and resources to help you launch and grow your small business.
And, there’s a lot to celebrate.
In 1972, 4.6% of all businesses in the US were owned by women. As of 2018, the number of women-owned companies with employees grew to almost 20% of all US companies. In other words, there were 1.1 million women-led firms, employing more than 10.1 million workers and generating approximately $1.8 trillion in revenue in 2018. (US Census data)
Additionally, data reveals that there were 10.6 million female solopreneurs in 2017, reporting revenue of $286.1 billion.
Women own 31% of small businesses or franchises in the US. (Guidant Financial).
A Small Business Trends survey reveals that women-owned small businesses increased by 27% in 2021 over the previous year.
And this is not the end of the story. According to the US Small Business Administration (SBA), women launch more than 1,000 startups every day.
A Look Back on Women Small Business Owners
Women have always been business owners, even if they didn’t define themselves that way. Typically their business was not in their name. Women’s small businesses tended to be limited to taverns, hat and dress shops, and inns. They focused more on women and the needs of their local community.
In 1873 Lydia Pinkham launched the Lydia E. Pinkham Medicine Company, a home-based remedy startup based on her experience with herbs. Pinkham was the first entrepreneur to promote her business under her name.
Sarah Breedlove became the first Black female self-made millionaire in the US, launching Madame C.J. Walker, a successful hair care products company. In addition, she provided training and employment to more than 40,000 Black women and became a well-known philanthropist and social activist.
World War II Changed the Landscape
World War II shifted the national consciousness of women in the workplace, creating a boom in the number of women founders. According to press reports, the number of female entrepreneurs grew from 600,000 in 1945 to almost 1 million by 1950. Home-based businesses were the standard business model. Nevertheless, Mary Kay Ash and Mary Wells took their home-based businesses on the road, becoming perhaps the best-known female entrepreneurs.
The Fourth Industrial Revolution
Global digitalization combined with a significant jump in technological innovation enabled women entrepreneurs to expand into new industries. Today, women small business owners still own restaurants and retail establishments. However, by tapping into the power of cutting-edge digital technologies, women are empowered to start up new businesses from any location and in every sector. Tech-savvy female entrepreneurs use digital platforms to find capital, market and manage their business and become leaders in their industry.
Challenges for Female Entrepreneurs Continue
“Women’s entrepreneurship is crucial to the growth of our economy and access to capital is one of the key challenges women continue to face.” Serena Williams, founder of Serena Ventures.
A Visa study reveals that while 79% of women entrepreneurs feel more empowered, 66% report challenges obtaining funding to launch or expand their businesses. In addition, according to Crunchbase data, only 2.3% of venture capital funding goes to female founders.
Funding Resources for Women Small Business Owners
“In our extensive work with women entrepreneurs, we have learned that one of the biggest challenges is identifying sources of funding, particularly amid the pandemic.” Anne Finucane, VP at Bank of America
Bank Loans
In general, banks shy away from startups, and if you’re a female entrepreneur, your chances of being approved are low. On the other hand, if you have a strong relationship with your local bank and an excellent personal credit score, it may be worth the effort. You’ll need
- a great business plan
- measurable goals, and
- air-tight financials.
Small Business Administration
The US Small Business Administration offers special programs to help small business owners succeed.
Office of Women’s Business Ownership
Housed in the US Small Business Administration, the mission of the Office of Women’s Business Ownership (OWBO) is to enable and empower women entrepreneurs. OWBO fulfills its mission by providing outreach, advocacy, education, and technical support to women-owned small businesses. There is a particular focus on women who are economically or socially disadvantaged. The SBA established a Women’s Business Center in almost every state to achieve its goals and objectives. The Centers cater to the needs of small business owners in that state, providing mentoring, marketing, finance, and digital training and access to SBA’s financial and procurement assistance programs.
SBA 8(a) Business Development Program
SBA’s 8(a) program targets disadvantaged businesses, aiming to steer at least 5% of all federal contracting dollars to socially and economically disadvantaged business owners. It’s an excellent source of potential funding for women small business owners, in addition to the SBA’s loan program.
Women-Owned Small Business Federal Contract Program (WOSB)
The WOSB program assists women-owned small businesses to compete for federal contracts. Additionally, it advocates with federal agencies to increase its awards to female-led companies. You need to meet program eligibility requirements.
SBA 7(a) Loan Program
The primary lending platform run by the SBA is the 7(a) loan program. While not specifically geared to women small business owners, it’s an excellent resource for affordable loans with flexible and low-interest terms. The minimum loan amount is $50,000, and the maximum is $5 million.
SBA Microloans for Businesswomen
The Microloan program is specifically for the benefit of women and minority-owned businesses. Average loans are $13,000, but you can apply for up to $50,000.
Visit the SBA website for additional resources such as the National Women’s Business Council, Dream Builder, and an extensive list of national associations providing resources to women-owned small businesses.
You need to meet SBA small business requirements for all SBA loan programs.
Tory Burch Foundation Capital Program
Launched in 2009 by Tory Burch, a fashion designer, the Tory Burch Foundation helps businesswomen overcome some of their challenges when launching and growing their businesses. The Foundation provides mentoring, networking, and access to capital. The Capital Program is backed by Bank of America and assists women small business owners access loans through Community Development Financial Institutions. Loans range from a minimum of $500 to a maximum of $100,000.
The Tory Burch Foundation also offers a $5,000 grant to winners of its Fellow Program. This unique, year-long program provides networking opportunities, mentoring, management support, financial and other education, and access to workshops.
Grameen America Microloans for Women Small Business Owners
Inspired by the philosophy of Nobel Peace Prize Laureate Muhammad Yunus, the Grameen America Foundation was founded to help women improve their financial health through entrepreneurship. Grameen America offers microloans (maximum loan is $2,000), mentoring and financial training. The microloan program targets impoverished women who have no opportunity to access capital through the traditional financial system.
Grants
A small business grant is one way to fund your small business without taking on debt. Grants are available from the federal government, state governments, and private foundations and corporations. Depending on the funder, a small business grant may be open-ended, meaning you can use it for any purpose or limited to certain expenses, such as equipment.
You’ll want to do your homework before applying for a grant. It’s a time-consuming process, and time is money. Be sure the grant program is a good fit for your business and needs and that you meet all the requirements. You’ll need a business plan too. The granter may not require a business plan as formal as your bank. Still, you’ll need to write at least a brief document detailing your purpose, accomplishments, goals, how you intend to make money, plans for growth, and solid financials.
Your local Chamber of Commerce is the best resource for identifying small business grants. Here are a few to get you started.
FedEx Small Business Grant
The FedEx grant program is not specific to women small business owners, but it’s devoted to ensuring equal access to its funds. The company says that it seeks to “recognize incredible small businesses from across the country.” Ten small businesses are selected, with $50,000 going to the first-place winner.
Amber Grants for Women
Visit Amber Grants for Women’s website to learn more and to apply for their monthly grant programs. The program provides monthly grants of $10,000, and one recipient will be awarded an additional grant of $25,000 at the end of the year.
An online search will help you find other sources of grants for women small business owners.
Resource Directories for Women Small Business Owners
Bank of America announced a partnership with Seneca Women on October 5, 2021, to launch the Bank of America Access to Capital Directory. The Directory is a unique resource to provide women small business owners with real-time information about capital, potential sources of funding, including grant capital, debt, and equity. According to Bank of America, 42% of women entrepreneurs have never applied for a business loan or line of credit. The Directory includes more than 350 sources of capital, and Bank of America anticipates that the list will continue to grow.
Grants.gov
If you’re looking for federal grants, Grants.gov is an outstanding resource. You’ll find current grant opportunities from all the federal agencies, and it costs nothing to access the platform.
GrantsforWomen.org
The Grants for Women database helps you locate unpublished grant opportunities for women small business owners. You’ll discover grants to launch and scale your business.
Venture Capital and Angel Funding
We covered the basics of VC and angel funding in a previous article. Many of the resources there fund women small business owners. Like grants, venture capital and angel funding are not debt, which is critical when your cash flow is tight. Unlike grants, however, you give up equity in your business.
37 Angels
The mission of 37 Angels is to close the gender gap in startup investing. As a result, they invest in early-stage startups from women and men founders but have created a transparent and equal playing field.
Female Founders Fund
Founded in 2014, the Female Founders Fund provides VC funding to women-run and women-owned startups.
SoGal Ventures
This venture capital investment firm, led by women, provides early-stage capital to founders in the US, Africa, Asia, and Europe. In addition, in collaboration with SoGal, the VC firm provides mentorship, coaching, startup resources, management support, and other resources to help women small business owners succeed.
Bottom Line
Despite the tremendous progress women small business owners have made, the gender gap between female and male entrepreneurs persists. However, with the increased focus on these disparities, there’s hope for a better future. AI-powered lending platforms are closing the gap somewhat, as they have no inherent biases built into the system. More women launching or joining venture capital and angel funding firms are starting to make a difference too.
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