SCORE Minnesota

Wanted: Minnesota Female Entrepreneurs!

May 27, 2010

Since the U.S. Small Business Administration (SBA) has declared May 23-29 as the 47^th annual National Small Business Week, I thought it would be a perfect time to encourage aspiring entrepreneurs and honor those small business owners who have been doing their part to ensure that Minnesota’s future is a bright one. And, although we owe a huge debt to every entrepreneur in America, a recent blog article titled “Business Is Women’s Work” posted on the America’s Best Business Practices blog inspired me to focus on Minnesota’s female entrepreneurs. Why? Because I can personally identify with the unique challenges women have to overcome to succeed in business.

If you have been listening to what people have been saying about women in business, you have probably heard things like, “women are opting out”, “women are unable or unwilling to play with the big boys”, and “women just don’t have what it takes to start and grow a substantial business”.

There is a kernel of truth in these remarks. Women have been exiting the rank and file of corporate America in droves. According to the Center for Women’s Research, from 1997 to 2004, the number of women-owned businesses grew twice as fast as all businesses in the U.S. One in 18 adult women in the U.S. is a business owner. These businesses generate $2.5 trillion in revenue and employ 20 million people. So, the verdict is in: women definitely have the vision, talent, and movie to start and grow successful businesses.

Perhaps more women are starting businesses to break the glass ceiling and ensure that they receive pay that is comparable to men. According to Hilda Solis, U.S. Secretary of Labor in an article titled, “Not Just A Women’s Issue”, published in the May 27, 2010 issue of the Huffington Post, “women earn only about 80 cents for every dollar that a man earns, and the gap is even greater for African American women and Latinas, who earn only 70 cents and 63 cents, respectively, for every dollar a man earns”.

The fact is that women-owned small businesses tend to be smaller than male-owned businesses. As of 2008, average revenues for women-owned businesses were still only 27% of the average revenues of men-owned businesses. This issue was addressed in an article published in the Wall Street Journal on May 17, 2010, titled, “Why Are Women Owned Firms Smaller Than Men-Owned Ones?” by Dr. Sharon Hadary, former Executive Director and Founder of the Center for Women’s Business Research.

After studying the data and interfacing with entrepreneurs, researchers, educators, and bankers, Dr. Hadary is convinced that female entrepreneurs face two unique obstacles. One stems from women’s self-limiting views themselves and the opportunities available to them. The other stems from generalizations, beliefs and expectations of the entrepreneurial community including bankers and policy makers in business and government.

Hadary believes the problem starts with a difference between why men and women start businesses. Men want to be the “boss” and grow as big a business as possible. Women want to be personally challenged and to integrate work and family. They also want to control the size of the business so it is more manageable.

Other challenges women-owned businesses must overcome include:

1. Access to capital-with fewer resources, women tend to start businesses where the cost of entry is low such as retail and personal services as opposed to technology. Studies also confirm that women tend to avoid debt. Women of color don’t believe they would get credit even if they tried and when they do, they ask for as little as possible, fueling the perception that they are not serious about growth.

While women tend to excel at relationship building, they don’t often build strong relationships with bankers. Coupled with limited knowledge about financial products and services, women don’t know what options they have. To make matters worse, despite marketing effort aimed at women business owners, many bankers in local communities still don’t have much confidence that a woman-owned business has the capacity to grow and be a good credit risk.

2. Access to markets-business-to-business and business-to-government markets offer the greatest potential for growth. However, data confirms that women don’t win a representative share of those contracts.

In addition, many women-owned businesses who agree to subcontract for larger, men-owned businesses so they can win contracts requiring participation by women and minority-owned businesses, report that they don’t get any work after the contract has been awarded.

3. Access to networks-women often lack the connections necessary to tap into industry associations, chambers of commerce, venture-capital groups and other key networks.

To ensure that women-owned businesses have the best chance of success and growth, Hadary recommends that women:

• Think big and plan for growth from the get-go
• Acquire more in-depth knowledge in finance and credit
• Form relationships with bankers, Venture capitalists, and Angel investors
• Learn “how to” best practices from women with high growth businesses
• Build networks with a broad range of communities

Why is it so critical for Minnesota women-owned businesses to succeed? At the Minnesota District SCORE meeting yesterday, State Economist and professor at the University of Minnesota, Thomas Stinson painted a pretty gloomy picture of the “New Normal”. Of course, Minnesota is just a microcosm of what is happening at the national and global level. Here some of the highlights (or low-lights, as it were) of Stinson’s presentation:

• The nation has lost 8.4 million jobs (many are not coming back)
• Many displaced workers have the wrong skills going forward
• For the first time since World War Two wages have declined
• Household wealth down by $17 trillion reducing spending by 850 billion
• Rapidly aging population and increases in health care costs
• Labor force is shrinking

Stinson used the five stages of grief developed by Elisabeth Kübler-Ross in her 1969 book, On Death and Dying to describe the various reactions people are having about the economy. People in the Denial stage are thinking, “This can’t be happening”. People in the Anger stage are mad that others allowed this to happen. People in the Bargaining stage are thinking “If only we (or they) had done something”. People in the Depression stage are thinking, “We are doomed, so what’s the use of trying”.  People in the Acceptance stage are thinking, “I can’t change it so I might as well make the best for it”.  Stinson suggested that the best way Minnesota can prepare for a brighter future is to return to our strengths; education and entrepreneurial innovation.

While there is not enough space in this article to mention more than a few, I want to salute three phenomenal women business owners who have done their part to advance entrepreneurial innovation in Minnesota. For all aspiring female entrepreneurs in Minnesota, these three women serve as shining role models:

Jill Blashack, Founder and CEO
Tastefully Simple, Alexandria, Minnesota

Jill’s inspiration for her company came as a result of selling food at a craft shows. She woke up in the middle of the night and realized that she could create a company that involved talking and eating.  After investing $36,000 of her own money, some from a friend, and an SBA loan, she started a business where she sold gourmet food at home parties with a make-shift distribution center in her backyard. Today, it is a $119 million company with 20,000 “party consultants, and is growing at about 10% each year.

Rose Totino, Founder
Totino’s Pizza, Fridley, Minnesota

Rose Totino secured a $1,500 loan, using her car as collateral, to launch a take-out pizza shop in Minnesota. Totino had to bring samples of her product to the loan committee to secure the initial financing because pizza was relatively new to the U.S. food industry. The business was so successful that Rose decided to launch a frozen pizza business in 1962 to take advantage of the emerging market for frozen foods. She sold the business to Pillsbury in 1975 for $22 million, became the first female vice president at Pillsbury, and was the first woman inducted into the Frozen Food Hall of Fame.

Jill Johnson, President and Founder
Johnson Consulting Services, Minneapolis, MN

Jill Johnson is an award winning management consultant specializing in market-based strategy development. This week, she was named One of 25 Top Industry Leaders by Minneapolis/St Paul Business Journal.

At the age of 49, Jill is among the youngest women to be named an Industry Leader. Other honorees are senior executives from much larger Twin Cities’ corporations including Best Buy, Xcel Energy, M&I Bank, Thrivent, KPMG and J.P. Morgan.

This is the second business award that Jill has won in the last month. In April, she received the Established Woman Award from the National Association of Women Business Owners – Minnesota Chapter. She has earned numerous awards; been interviewed for stories in the New York Times, Wall Street Journal and Money magazine; and served two terms on the SBA’s National Advisory Council

While Jill deserves all of the public recognition and honors she has received for her own business success, she has also made significant contributions to the success of many other new Minnesota businesses. Uncharacteristically altruistic for most 24 year olds, Jill became one of the youngest SCORE counselors to small business.

Minnesota female entrepreneurs, we need you! Minnesota’s future rests, in large part, on new and emerging small business growth, and especially women-owned businesses, to create new jobs, recapture household wealth, and rebuild our economy.

SCORE offers free business counseling and mentoring to aspiring entrepreneurs and small business owners. SCORE has partnered with IKEA to host a free seminar on Marketing Tips-For Women in Business on Wednesday, June 9^th, 2010 at IKEA, 8000 IKEA Way, Bloomington, MN 55425 from 11:30am-1:00pm. Child daycare is available on site. Daycare registration is required. Please email reservations to dnhn@memo.ikea.com

To learn more about how to start, operate and grow a successful business contact SCORE by clicking the link on the right to the office nearest you or click here to request free face to face counseling.

Have you ever considered volunteering for SCORE? Our members help millions of new or existing small businesses succeed each year by sharing their knowledge and experience. Click here or the link on the right to the office nearest you to learn more.

Susan Fronk, St. Paul SCORE
View more posts by Susan Fronk

Filed under: Business Planning,Entrepreneurship,Small Business News,Start-Up

Tags: female entrepreneurs, Minnesota small business, small business administration, women-owned business