PRESENTATION BY Ph.D. MARSHA FIRESTONE, USA

 Why Women Owned Businesses?

In 1965, when I graduated from college, life for women in the United States was extremely different than it is today. At that time when those women graduated from the university, they often immediately took a secretarial course so that they could become secretaries to male bosses while they spent most of their time strategically planning how to meet a man to marry. Most of my friends, in their senior years at college were either planning their weddings—as we say, a diamond ring by spring—or evaluating the best secretarial course they could take in their hometown. Few had ambitions to become executives, political leaders, business owners, doctors, or lawyers. Most expected that their financial support would come from marrying someone who had the potential for great financial success.Few of them ever seriously considered that they might want to run an organization or that they might have the need to be responsible for their own finances in the future.

In the last 30 years, women have experienced an evolution in their expectations and goals. I deliberately say EVOLUTION, and not REVOLUTION, because it has been a slow process of change. Today, women represent almost 50% of the workforce in the United States. And, in the last few years, they have gained importance both as a market and as a source of leadership. Women currently control 83% of all purchases in the US and have entered the workforce in droves. Some have moved into leadership positions. Although approximately 50% of the workforce is made up of women, we still have our problems. We o­nly earn 76 cents for every dollar a man earns. o­nly 8% of the top executives in corporations are women, a small amount indeed compared to the numbers of us in the workforce! Today o­nly ten women in the US head a Fortune 500 company. There are o­nly 20 female heads of Fortune 1000 companies. And “glass ceilings” are slow to come down. I say “glass ceilings” in reference to the fact that few women are actually promoted into managerial positions, even though they are competent and hardworking. Research documents that women are highly able but not many become corporate executives. In fact, research indicates that women outperform men in eight out of ten criteria evaluated.

Women’s advances in the workplace have begun to stall. Since 1993, in fact, women have been losing ground to men. In 1979, women earned 62 cents for every dollar that men earned. By 1993, women were earning 77 cents, and currently, women earn o­nly 76 cents, reflecting a downtrend. Yet I am pleased to report that women have seized an opportunity that we never had before.

Because we have been in the workforce for some 30 years now, we have learned new technical skills, and recognize that we are really able to do most of the same tasks men do. At last women themselves are beginning to believe that they have what it takes and are willing to go after it. Ironically, our unsatisfactory experiences in the corporate world are the very o­nes that have led us to start our own businesses. We have learned that we want more—more decision making authority, more influence, more control of our time, and more financial security. And we’re getting what we want! Today, women owned businesses generate 2.5 trillion dollars in revenues. The Center for Women’s Business Research has found the growth in women owned businesses results from the following:

·40% of women entrepreneurs indicated that they started their own business because they recognized opportunities to implement for themselves what their bosses were doing.

·44% of women business owners left their former positions to start businesses because they felt they were not being promoted—the “glass ceiling”.

·One-third of the women felt they were not being taken seriously in their positions and they too left to start their own businesses.

Our movement into business ownership has made us a significant and important sector of the US economy and we are now finally beginning to be recognized as such. In 1989, the United States faced a downturn in our economy. The Wall Street Journal in May of 1994 wrote, “Female entrepreneurs are the heroes of the economic recovery in the US.”Indeed, women led the economic recovery by starting two out of every three new businesses. Each of these new ventures provided employment opportunities, revenue for the fastest growing segment of the US economy (the small business) and economic development. In 2006, women now own 10.6 million businesses. To think that in 1997 o­nly 4.5% of the businesses in the US were owned by women, it is amazing what we have accomplished, although step by evolutionary step.

These changes have also motivated young women (when polled immediately after graduating from college) to say that they would o­ne day like to become an entrepreneur. A high percentage of the young women report that their preference both in life style and in career expectations is to be the CEO of their own company. They have rejected the long hours, stress, and lack of autonomy associated with corporate life, and they have embraced the idea that as a business owner they will have more influence, more economic freedom, more control of their own time and especially, greater power. I believe that a confluence of a number of different factors helped to strengthen and support this growing phenomenon.

Government policies are o­nly o­ne of the factors relevant to the success of women as business owners.Federal and state government policies, special legislative decisions such as the Community Reinvestment Act and the US Small Business Administration Act have mandated that women must be a major part of the workforce and that government purchasing contracts should also be made available to women business owners. In 1994, the US Congress recommended in the Streamline Act that at least a 5% goal be implemented for government purchasing contracts signed with women entrepreneurs.

At the same time that these government decisions were implemented, the emergence of women’s organizations began to explode. Today there are over two thousand women’s professional and business organizations in the United States. Not o­nly do they help to train women, they help to participate in advocacy, peer and group support, preferential discounts o­n products and services that decrease the cost of doing business, and education o­n the constituencies in their communities. In short, they have begun to raise the awareness of not o­nly women, but also of their husbands, brothers, fathers, grandfathers, and sons.

These groups often meet monthly and invite speakers to help their members know more about professional life and frequently include a networking event following the meeting, not unlike the o­ne here today. What fun they had at first exchanging their business cards and taking them back to their offices, putting them in a pile, and not knowing quite what to do with them. But, as part of this explosion in networking, women soon learned how valuable these pieces of paper are. Today women collect business cards, bring them back to their offices, and meticulously enter them into their database. They become a source for doing business with o­ne another. In short, they have created their own “old girls network”, such as the Women Presidents’ Organization which has 61 chapters in North America and will have 70 by the end of 2006. Where men often prefer to do business with men, women also often prefer to do business with women. They are now seeking female doctors, lawyers, investment advisors, and dentists, seeming to be very comfortable with their own gender.

As women garner more business, their financial success has attracted the interest of corporations in obtaining their share of business from them. They are aware that if they, the corporations, don’t begin to market to and support these women, they will lose a significant opportunity to increase revenues and market share.Many large companies have departments whose sole responsibility is to develop women’s initiatives.IBM, Wachovia, Wal-mart, and ING are o­nly a few of the larger companies to do just that. They have begun marketing campaigns targeted specifically to women’s businesses, developed brochures including women in photos (never heard of before), trained their corporate management and staff about working with women, and hired more female employees. Of even greater significance is that those corporations really serious about this effort have contributed financial support to non profit organizations and endeavors used to train, develop, and reach women led businesses. Banks especially want to do business with these companies and have tried to approach the financing of women’s businesses with second reviews of rejected loans, cash-flow financing of service businesses, and smaller-sized loans which are of particular importance to women who own smaller sized businesses at this time.

Still with all of these supportive programs, women entrepreneurs are facing many challenges:

·38% of women business owners still report their greatest challenge is being taken seriously.

·Only three percent of government contracts and four percent of corporate contracts go to women’s businesses.

·Only five percent of all venture capital dollars go to the 48% of businesses owned by women.

And most importantly of all, our entrepreneurial economic success has not increased the number of female elected officials. Of the fifty states, o­nly 8 have female governors and o­nly 14 of the mayors of the United States’ 100 largest cities are women. Without these leaders in power, women have decreased influence, and will continue to experience less success in obtaining all goals, especially if they are economic.

We still have far to go before we can decrease our efforts. In October 1998, I was invited to Washington, D.C. to meet with other leaders of the women’s business community in order to work collectively o­n these issues. The National Women’s Business Council, which is appointed by Congress and reports to the President o­n issues of importance to women in business, convened a Summit to develop a master plan that focused o­n strengthening women’s businesses and was to be presented to the President and Congress in March of 1999. The four primary initiatives o­n which they concentrated were access to markets, training, financing, and developing leadership in both public and private sectors. Most importantly, what we did was to bring everyone interested in making change together to work collectively, whether from corporations, government, academia, non-profit organizations, or women led businesses. Together we have forged a new and more influential path and have been able to share in a bigger piece of the pie. Many of these recommendations have since been implemented resulting in an accelerated growth in women led and women owned businesses, and even greater impact of these companies o­n the economy.

Roadmap to a Million Dollar Business

Sixteen years ago when I first became involved with the women’s business community, I met two women who owned small businesses. o­ne of these companies grew into a fifty million dollar organization and the other never grew and continues to be extremely small to this day. In my presentation, I will address some of the differences that account for the two distinct outcomes. I will differentiate between the characteristics of high growth businesses and those that are not.

There are four categories which illuminate the Roadmap to a Million Dollar Business. The first delineates the statistics o­n the status of women owned businesses today as well the research that differentiates those businesses that have the “leading edge”. The second addresses specific success strategies of fast growth businesses that members of the Women Presidents’ Organization attribute to the success of their companies. The Women Presidents’ Organization is a peer advisory group which I founded nine years ago for women owned and women led companies that exceed o­ne million dollars in revenues. I will talk more about that later. The third category is what I have observed to be the personal characteristics of the CEO’s of these successful companies. And finally, I will recommend ten steps to incorporate into your fast growth business plan.

Where are women business owners in the United States today? Let’s take a quick look at the statistics.Knowing the statistics about women led and women owned businesses has been essential to accelerating their growth in the U.S. Luckily, the Center for Women’s Business Research has done an extraordinary job in providing the research and statistics for the U.S. They are the best source of data o­n the numbers and sizes of women owned and women led companies. They have found the following in their research:

1. Women own at least 50% of 48% of the privately owned companies in the U.S. today.
2. That accounts for 10.6 million women owned firms of which there are actually 15 million women who are entrepreneurs. Therefore, o­ne out of every 11 adult women owns their own business.
3. Women owned businesses employee 19.1 million people, which in the last seven years has grown by two times that of all privately held firms.This means that 19.1 million people have employment, food to eat, homes to live in, and families they can provide for.
   
   
4. These firms generate 2.5 trillion dollars in revenue and contribute significantly to the economic well-being of the country.
   
   
5. Amazingly in 1972 when the census first counted the number of women owned businesses, o­nly 4.5% of the privately held firms were women owned. At that time, those businesses consisted mostly of enterprises in fashion, fitness, and beauty. Today women owned companies are represented in every industry from manufacturing to marketing, from travel to transportation, from retail to real estate, and from communications to construction. In fact, the fastest growing sector of women owned businesses are in the non-traditional industries.

6. Corporations are finally recognizing that women owned businesses and women in general are the key decision makers in all purchasing.83% of all consumer purchasing decisions are made by women, in everything from travel to banking, from healthcare to furniture.Annual expenditures by women owned firms in salaries and benefits are 546 billion dollars. In information technology, telecommunications, human resources, and shipping, the annual expenditures are 103 billion dollars.
   
   
7. The media used to call us “mom and pop” operations but that, in fact, is no longer true. 75% of the women owned companies have ten or more employees and 3% generate a million dollars plus.6% of our male counterparts generate over a million dollars.

With these statistics indicating the extraordinary growth of these companies, we have to ask the question, which start-up businesses are going to grow fast and which will remain small? A study by the Center for Women’s Business Research completed in 2003 identified the characteristics of the fastest growing companies. The leading points resulting from this study indicate the following:

1. These companies almost always use professional advisors. They are willing to pay for accountants, attorneys, and consultants, even in the early stages of the company. Very frequently they use the advice of an advisory board to help them make key decisions.

2. These faster growing companies more frequently use sophisticated management practices, especially as they relate to financial information. They study financial reports, understand them, and use them to help manage the company. Regularly, they apply these practices.

3. They are more likely to utilize today’s innovative technology through creation of websites, engaging in e-commerce, utilizing electronic marketing, and surveying their customers through electronic questionnaires.
   
   
4. Very importantly, these companies find ways to fund the start up of the company and the o­ngoing operations.They use innovative strategies to reduce costs, by paying invoices early to secure discounts, leasing equipment instead of buying it, and providing incentives to their customers for early payment.They use multiple funding sources to grow the company including borrowing from credit cards, bank loans, and securing vendor credit.

5. Most of these companies offer business to business products and services.Their customers are often from corporations and/or government contracts.Because corporations and government are concerned about securing delivery, they seek out larger companies which tend to be non-traditional types of businesses.

6. These fast growth companies were found to be very involved in business and professional organizations such as industry and trade organizations and women’s associations.They utilize the networking for business development opportunities and to learn about operating their companies successfully.For example, our Women Presidents’ Organization, which is a peer to peer advisory group, meets monthly and provides an opportunity to reach farther through new ideas and solutions to business problems.

The research indicates that these women don’t walk; they run through these steps often accelerating their growth to million dollar companies in less than five years.They were found to use all of the strategies identified above, resulting in their “leading edge”.

Now let’s talk about best practices or best strategies to get to the “leading edge” from the perspective of members of the Women Presidents' Organization (WPO). WPO has 61 chapters in North America with over 1,000 members whose average revenues are 11 million, whose average number of employees is 94, and have an average of 20 years of business experience.WPO provides chapter meetings as well as a Platinum group for women who gross over 10 million, a Zenith group for women who gross over 50 million, and a Member at Large option for cities and countries where there is not a chapter.Before writing my comments I checked with some successful business owners from our Platinum group and asked them to describe the o­ne strategy that they believe accounts for their success.Each suggested a different reason to explain why their company is a leading edge company.Let’s describe what some of these strategies are:

1.Innovation – Coming up with a creative solution to a business problem or need in the market seems to guarantee accelerated growth.Of course often innovations are copied and it’s important for a successful company to constantly update their creative approach, and not to become complacent.

2.Strategic Alliances – When two or three smaller companies ban together to provide increased services or products they become a larger entity. Most corporations in the US o­nly want to do business with companies that they know will be able to deliver. Small companies are often at a disadvantage.By creating a strategic alliance with other women owned companies and offering additional products and services, suddenly three small companies can become o­ne large entity.

3.International Expansion – Every American today is very aware of the growth in business opportunities especially in Asia and India. I came to APEC with an assignment from a small business that manufactures children’s bedding to look for a Vietnamese manufacturer to produce their products.The fastest growing companies are very much aware that opportunity must include international relationships and growth.

4.Offering the same customer multiple products – It is much easier to sell a good customer multiple products than to bring in new customers.Successful companies develop new products and services that they can offer to their current customer base.They save their resources and expand their revenue base with this approach.

5.Niche Marketing – The fastest growing companies have created very specific niche markets for their company.They are very much aware of what is unique about what they sell.They are able to differentiate themselves from everyone else in the same market and accelerate the company’s growth by doing so.

There are a few other suggestions which I will not explain but which I would like to point out to you.Knowing the competition, hiring the right employees, using performance evaluations, motivating staff, and utilizing cost saving processes are additional useful strategies identified by WPO members.These examples, from members, and their own evaluation of how they grew, provide a strong basis from which to proceed.From my experience attending WPO meetings, the main focus of the participants is learning new business strategies that will result in faster growth.Reaching Farther Together, the tagline of the WPO, is a very clear statement about the impact of peer learning o­n women business owners.

As I mentioned earlier, I have been in women’s economic development, for some sixteen years and I have become quite familiar with those business owners who have what it takes to succeed.Here are some of the personal characteristics that I have observed.They are smart, focused, hard-driving, and confident.They usually have a hundred ideas a minutes, not all of which will be successful, yet certainly some will be.Perhaps the two most important characteristics are that they are willing to dream the big dream and they do not have small goals.When I was managing a training program for women entrepreneurs, I would go around the room and ask what each person’s goal was.Out of a group of 25 women there would o­nly be o­ne or two who said they wanted to dream the big dream.Those women I believe are the o­nes who have become the most successful.The stronger the personal motivation, the more likely they are to succeed.

Often I am asked for my advice o­n the top ways to grow a company.Quickly here is summary of my counsel.Of course this is my personal opinion but o­ne that I think can be helpful.

1.Know where you want to go and what your objectives are.Clearly state your vision and mission for the company.

2.Clarify what is unique about your product and be able to communicate it to your customers.Frequently survey your customers for their feedback o­n the company performance.

3.Use professional advisors to guide you as you grow your company.

4.Focus, focus, focus.Don’t over-expand too quickly.

5.Know your competition and differentiate your products and services from them.

6.Hire carefully, train thoroughly, and retain competent employees.

7.Understand financials and use them to manage the company.

8.Be a leader both inside and outside of the company.

9.Know when to let go of your control.

10.Keep the fire in your heart burning!

Just to summarize, I have covered four topics—current statistics about women owned businesses in the U.S., strategies that have led to business success, personal characteristics of successful entrepreneurs, and advice in accelerating the growth of a company.So now I will go back to the story where I began with the two women I met sixteen years ago.Here’s why the small firm stayed where it was, while the fifty million dollar company galloped ahead.The larger company had many of the characteristics that I have used to describe in the roadmap above.The smaller company did not have these; neither the personal attributes or the successful strategies.If you are considering growing a company yourself, or helping someone else to do so, you should consider using these strategies as a guide. This roadmap to a million dollar business will be of help to you as you deal with the economic development of woman owned companies when you return home.The more involved women are in the economy of their country, the greater economic strength results for all citizens.