Scrappy Success: How Female Founders Make Ado with (Almost) Nothing

Scrappy Success: How Female Founders Make Ado with (Almost) Nothing

The Small Business Administration (SBA) states that 30% of businesses fail during the first two years of being in operation; 50% fail during the first five years. Some of the main reasons why businesses fail are the lack of a realistic business plan, insufficient capital, and inadequate internet visibility.

The challenges of running a business are magnified for women-owned businesses.

As of 2018, there are 12.3 million women-owned businesses in the U.S. Women business owners and start-up founders get the short end of the stick as compared to their male counterparts when raising money. Although U.S. female founders raised nearly $1 billion more in 2018 than in 2017, they received only 2.2% of the $130 billion total venture capital money invested in 2018. Moreover, the average deal size for a women-led startup was $5.9 million; for men, it was $17.3 million.

Chart: Ojasvinee Singh • Data Source: Fortune

For a demographic that owns 4 out of every 10 businesses in the U.S. and launched almost 1,821 businesses every day in 2018, the odds of successfully maintaining a small business are considerably lower. Women in business can face numerous explicit and implicit biases, especially when it comes to industries that are traditionally female-dominated, like beauty and fashion, due to lack of representation in the investing world. For the 62% of women entrepreneurs who depend on their small business for their primary income, balancing business operations, raising capital, and expanding their client base simultaneously can be overwhelming without a clear roadmap.

Women are more likely than men to start their own businesses. Courtesy of their comparatively more entrepreneurial spirit, the silver lining to them receiving less funding than men on average is that they retain more equity of their startups and reach profitability quicker, as they aren’t forced to scale their operations up aggressively in order to appease investors. Moreover, because women are generally more risk averse and are held to higher standards than men, women CFOs were often more profitable and produced better stock prices than many males in the same roles.

Chart: Daniel J. Sandberg • Source: S&P Global

Women-owned businesses are vital for economic and societal progress. In Asia, for example, a McKinsey study estimates that Asia’s economy could gain as much as $4.5 trillion by 2025 if women weren’t sidelined due to the preexisting prejudices in the workforce. So how do we break down the obstacles that female entrepreneurs face in business operations?

For the issue of not having a realistic business plan, the SBA provides tools and advice on its website to plan, launch, manage, and grow your business. As for the common financial issue of burning through capital before surviving long enough to prove to the market that the business can efficiently disrupt an industry, having a specialist who can ensure costs are low while operations are optimal is essential.

When it comes to customer acquisition, however, exploring new territory and targeting new customers can be unclear and difficult. With scarce resources in hand, small businesses often burn out by exhausting their limited audience. So, when dealing with higher barriers to entry in the small business world, the opportunity to offset the responsibility of internet visibility and client outreach onto another party can free up much needed human capital for women, who can then use their legroom to pursue more objectively defined business goals and elements.

Photo: Brooke Lark • Source: Unsplash

In comes Konversai. Primarily a social knowledge-sharing platform that connects people for one-on-one video conversations, Konversai is expanding its horizons after identifying that its database could solve the client outreach problem that many small businesses face. Through its new Global Small Business Partnership Program, the platform aims to empower small businesses by providing a way for potential clients from all over the world to find them.

As businesses continue to explore newer niches, the need for wide online presence will only continue to grow, as a business’s ability to stand out amongst thousands of similar businesses is vital to its life expectancy. Despite heightened hurdles, however, women continue to thrive, and are on an upwards momentum to creating positive change for generations to come.

By Ojaswinee Singh

Edited by Pavita Singh