Minority Women Entrepreneurs Are Leading The Way For Small Business Growth

The surging growth of minority women-owned businesses in the last 15 years tells a mixed story about the American workforce.

Minority women-owned firms grew 156 percent from 1997 to 2013 and now account for one in three women-owned firms in the U.S., according to a 2013 report by American Express on the State of Women-Owned Businesses. In contrast, non-minority women-owned firms grew 32 percent during the same period.

A Two-Sided Coin
The growth in business ownership among minority women is a continuing trend, even if it comes from a smaller base, according to the report. Yet there’s a duality in the increase of minority women who are choosing entrepreneurship, says Dr. Sharon Freeman, president of the All American Small Business Exporters Association (AASBEA).

“There are two sides of the coin,” Freeman said. “On the positive side there are fewer barriers to being able to start a business,” she said. “On the other side, there are fewer employment opportunities, which necessitates going into business.”

Education and Networking Drive Growth
There’s a strong match between the educational tracks of minority women and the business sectors they choose, such as health care and social services, Freeman points out. In addition, most minority women-owned firms have just one to two employees, according to the report. “What you’re really looking at here is essentially self-employment,” Freeman says.

For minority women-owned firms that aren’t owned by first-generation Americans, networking may also drive business growth, says Freeman. Business owners with strong connections to their home countries can more easily export and import goods and services, she says.

Networking also improves access to capital among immigrant business owners, who create informal lending networks that can accelerate and propel the growth of their firms, Freeman adds.

Collateral Knowledge
While access to capital is increasing, there’s still a natural barrier for many minority women business owners imposed by a lack of collateral, Freeman says. “Even when a loan is backed and guaranteed by the Small Business Administration (SBA), you still have to have enough collateral so the bank is willing to take the risk on you,” she says.

One option for increasing access to capital may be to create solutions that collateralize business experience and knowledge as a soft asset that could add weight to hard assets like cash or one’s home, she says. For instance, if a person has a number of successful years in business, maybe there is a way to add weight for that actual experience to a loan application, she says.

Specialization Is Key
To grow their businesses to the next level, minority women business owners require the specialized knowledge that comes from the success stories of other entrepreneurs, Freeman says.

Entrepreneurs need knowledge that’s directly related to both their business types and their geographic regions, says Freeman. “How you make a beauty salon succeed on Chestnut Street in Philadelphia is different from how you make it succeed downtown in Washington, D.C.,” she said. “It’s another level of knowledge that’s not as easy to access.”

To help business owners find that specialized knowledge, Freeman writes a series of books to share gems of wisdom from different industries that are offered by the AASBEA. She also recommends the websites of the Minority Business Development Agency (MBDA), the SBA, and SCORE. But the best knowledge comes from the lessons learned by other entrepreneurs, Freeman says. “The secrets to success are not general, they’re specific,” she said.

Lisa Wirthman writes about business, sustainability, public policy, and women’s issues. Her work has been published in The Atlantic.com, USA Today, U.S. News & World Report, Fast Company, Investor’s Business Daily, the Denver Post and the Denver Business Journal.

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The Paula Principle: why women aren't getting ahead at work

Professor Tom Schuller explains his theory of why women aren't fulfilling their potential in the workplace. 

 

Women Leading U P (Under Pressure)

With the financial scandals, terrorism, natural catastrophes and numerous notable organizational disasters, including the BP oil spill and the Toyota recall, that have rocked the country during the past decade, you may be starting to wonder whether crises, generally defined as rare and extreme occurrences, are the new normal.
It is undeniable that the state of business has become increasingly complex. With that complexity comes a greater likelihood that things will go wrong, and sometimes in catastrophic ways. More often, however, organizations are simply experiencing a heightened level of pressure to compete globally, manage diverse stakeholder needs, and produce more with fewer resources.
There are several hallmarks that characterize an organization under pressure.
•    Expectation of immediate decision-making and action. Do your clients demand immediate response to questions? Do you feel a need to shortcut analytic rigor in order to produce a response or deliverable? Do you feel your deadlines are unduly short?
•    Time pressure. Do you find that there is inadequate time in the day, week or month to achieve your work objectives? Are you multitasking in ways that are likely to generate costly errors?
•    Public and stakeholder scrutiny. Is your work subject to public scrutiny? Do you have multiple internal or external stakeholders who depend on you and your work, or who have considerable influence over your work and career?
•    Inadequate information. Are you constantly making decisions with inadequate information, or do you find yourself inundated with so much information that you struggle to make sense of it all?
•    Limited resources. Do you have insufficient resources (people and financial) to deliver quality output?
The more you answer “yes” to any of these questions, the more you are operating under intense pressure, and the more likely it is that problems, or a crisis, will occur. In fact, according to the research conducted by the Institute for Crisis Management, in 2009 more than half of all crises were due to mismanagement, not an external event.
The challenge is to develop a leadership orientation that will allow you to go from merely surviving under pressure to thriving in it. People who skillfully lead under pressure have certain character traits that allow them to think differently, and more positively, about organizational problems and threatening situations.
Reflect, learn and adapt. People who are able to adjust to the rapidly increasing pace of change, and to learn from the failures and successes, are positioned to lead effectively under pressure.
Scan the environment and see possibilities. People with this leadership trait can identify new patterns, see ways to do things differently, and spot a potential trend long before others can.
Recognize the potential for opportunity. Pressure-laden and threatening situations can present amazing opportunities. People who can see the light during dark times can lead their teams to success.
Expect mutual trust and respect. No one functions alone in times of peril, and cooperation only comes when you have proven yourself to be a trustworthy leader. Such trust is earned by extending trust to others.
The timing is right for women to step into the challenges of leading under pressure. Interestingly, research shows that firms with a higher proportion of women in executive positions perform better in recessionary times than firms with fewer women at such levels. Although it would be inappropriate to conclude from this research that women are naturally skilled in leading under pressure, there is no doubt that the perspective and experiences of operating under pressure that women bring to organizations can add tremendous value.
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IFC's Women in Business Program

IFC's Women in Business Program

Women in the private sector represent a powerful source of economic growth and opportunity. By strengthening women's roles as leaders, entrepreneurs, employees, consumers, and economic stakeholders, we can reinforce and transform the economy itself.

This is exactly what IFC is setting out to do. IFC's Women in Business (WIN) program promotes business opportunities by assisting our organization and clients to take a gender view across all areas of business. A suite of IFC investment products and advisory services has also been developed to focus on: Increasing access to finance and access to markets for women entrepreneurs. Reducing gender-based barriers in the business environment.

Creating business opportunities for IFC clients built around improved working conditions for female employees, woman-focused market segmentation, and the inclusion of both men and women in community relationships. WIN is housed within the Advisory Services in Sustainable Business department of IFC. To learn more, contact the WIN team of specialists.

Women make some of the best entrepreneurs

According to a recent survey carried out by one of our partners, women business owners have overtaken their male counterparts for ‘growth ambition’, with 88% of women predicting business growth over next five years (read full report ) With female entrepreneurs predicting a £12 billion growth in turnover over the next five years, there are plenty of reasons to join in the optimism.