3 Ways for Women to Overcome Their Biggest Entrepreneurship Hurdles

Starting a New Business

Taking the leap to start a new business is often a difficult choice, and most who pursue this goal fully understand that it comes with significant personal risk and entrepreneurship hurdles.

Choosing to become a business owner typically means working longer hours, learning new skill sets, and managing more tasks than ever before.

Starting, owning, and running a business is hard work throughout all the different phases of entrepreneurship—if your company is one of the ones lucky enough to survive the initial startup and last long enough to grow and thrive.

No matter who decides to embark on this endeavor, there will be hardships. For Black women business owners, however, there are some very specific entrepreneurship hurdles that present themselves as much fiercer adversity.

We Shall Overcome?

Overcoming these entrepreneurship hurdles requires following a different path than that of many other business owners.

Recent headlines may lead us to believe the road to success now has fewer obstacles for women entrepreneurs. After all, in 2017, more than 11 million US businesses were owned by women, and these companies generated approximately $1.7 trillion in sales.

But while these numbers are impressive, they leave out a number of key details—important details that demonstrate why most women entrepreneurs would agree that finding success was made more difficult because of their gender.

The hurdles these women have faced (and continue to face) are reflected in further data on the topic.

For example, in 2017, founding teams consisting of only women accounted for a mere 2.2% of total venture capital funding. (Kauffman Foundation)

In addition, despite their enormous contributions to the US economy, women-owned firms received only 4.75% of federal contracts in 2018. (National Women’s Business Council).

It’s Who You Know

For Black women entrepreneurs, however, even these staggering general statistics about women in entrepreneurship do not truly shed light on just how hard it is to succeed as a minority business owner.

One of the first entrepreneurship hurdles we typically face when starting a business is not knowing any others who have successfully owned and operated a company.

While some might downplay the significance of this, the bottom line is that knowing people, learning their stories, and gleaning insights from their mistakes and successes is a privilege that Black women often do not experience when entering entrepreneurship.

That lack of information, knowledge, and history puts us at a disadvantage from the beginning.

Access to Funding and Capital

Women also face a much harder time accessing and securing funding and capital. Fewer than 3% of companies with venture capital funding have female CEOs. This inequity represents a tremendous challenge for women, since the number one reason new businesses fail is a lack of growth capital.

Furthermore, fewer than 6% of women-owned firms generate revenue exceeding $250,000, and only 10% hire outside employees. The remainder are sole proprietorships.

So, while there are, in fact, increases in the total number of women-owned businesses, these are often very small companies, primarily due to the owners’ inability to access growth capital.

The lack of access to growth capital presents an even greater challenge for Black women entrepreneurs. Financial institutions and private investors are trying to make smart money decisions so they don’t lose their and/or their clients’ money; for this reason, they typically operate solely within a universe of relationships.

Building Relationships

As Black women, not having relationships with bankers, private equity, or wealthy people, in general, tends to put us at a disadvantage when trying to scale our businesses.

No company grows solely from the money it makes from the work it does. It requires an infusion of cash from somewhere.

Yet before the conversation about the success of the business and its prospects for future growth can even be held, the business owners must have the appropriate and necessary relationships to even get to the table for the discussions to begin—and forging these relationships is a tremendous challenge for many Black women entrepreneurs.

Crumb Syndrome

Lastly, one of the major entrepreneurship hurdles Black women face when running our businesses is something I refer to as “Crumb Syndrome.”

For a Black woman-owned business, the Crumb Syndrome is the overarching assumption (your own or everyone else’s) that your product or service has to cater or market to only other Black people or Black women.

Some companies certainly fit this bill; overall, however, a consumer’s choice of supplier is generally based on their needs—and most of what we do, make, and provide can and should be purchased and consumed by the masses.

Don’t let them (or you yourself) talk you into a tiny piece of the smallest slice of the pie. The pie is limitless, and it’s big enough for everyone to eat from forever.

As a Black woman entrepreneur, it’s important for you to fight for the size of pie that you want and deserve.

Room for Growth

The data presented above demonstrates the tremendous entrepreneurship hurdles we face, but it also demonstrates the importance of persistence in the stories of successful female entrepreneurs—especially Black women entrepreneurs.

Furthermore, it’s important for women to understand there is still a lot of room for growth.

Even though women comprise only one third of all entrepreneurs, this figure has grown by nearly 60% since 2007. Unfortunately, the growth is still disproportionate.

While Black women entrepreneurs accounted for 42% of the recent women-owned business growth in certain states, the average annual revenue of these companies is $66,000.

We Deserve a Bigger Piece of the Pie

For businesses led by non-minority women, the average revenue in the same area is nearly $219,000—a fact that illustrates yet again why it is so important to fight for a larger piece of that pie.

While this data is troubling, in the face of a deepening understanding of the challenges Black female entrepreneurs have to overcome, we must also recognize that many new opportunities—including those related to funding—have now become available.

Ultimately, if Black women entrepreneurs can overcome the following three big entrepreneurship hurdles, we significantly increase our chances for sustainable long-term business success.

Here are three tips from Farissa Know, CEO and Founder of RLM Media , a progressive marketing firm based in Chicago.

3 Hurdles to Overcome for Business Success

1. Gaining Access to Capital
   Women-owned and women-led companies are woefully underrepresented in the venture capital world, and this fact is even more true for minority women. As recent reports have found that women are in the extreme minority of startup companies, there has been a movement to increase the number of capital opportunities for female entrepreneurs.
   
   Financing a startup and securing funding is difficult under the best of circumstances, so initiatives that focus on women-led companies are crucial in helping these companies succeed. By focusing on and pursuing funding opportunities specifically for women, you will have a better chance of actually securing capital for your business. The competition will be closed to the majority of other companies, which will automatically increase your odds of securing much-needed capital.
   
2. Scaling Beyond Personal Control
   Scaling a business is no easy task. For many women, the scaling of their company is limited to what is achievable within their personal control. This is why so many women-owned companies are sole proprietorships.
   
   While funding is a primary barrier to achieving a greater business scale, it is not the only one. Increasing business scale requires putting in significant legwork related to planning as well as data and industry analysis. It also involves fostering customer, supplier, and partner relationships and forging new business relationships, which is a tremendous hurdle for Black women.
   
   Fortunately, once this process gets started, it can often have a snowball effect. When a business gains growth momentum, it becomes easier to continue to scale it. But this effect is still difficult to achieve in the predominantly masculine world of business. Barriers related to scaling in women-owned businesses can be overcome by putting in the effort to evaluate your business and industry, understand the market, and develop optimal strategies. The more you know about market conditions, the better your position will be for growth. With careful preparation, you can make smart data-driven business decisions that will lead to continued growth.
   
3. Preparing for and Planning an Exit or Financial Event
   Being an entrepreneur means you will have to make a lot of tough decisions that will impact your growth and income potential and possibly even your retirement prospects. Many business owners view their company as their retirement plan. If you are considering making an exit soon, or if you have another major financial event looming on the horizon, it’s a good idea to begin planning for it.
   
   Even though 41% of small business owners report that they plan to leave their businesses within the next five years, the majority of these individuals have never even had their businesses appraised—and nearly half lack a formal exit strategy. Navigating these plans is especially hard for Black women entrepreneurs who may not have the same insight from peers as many other business owners do.
   
   Without a formal appraisal or business valuation, you have no idea what your company’s actual value is and it’s tough to negotiate a favorable deal without data to back up your position. One small misstep in this process can cost you tremendously. It’s worth planning and going through all of the steps of a formal business valuation before an exit. You will want to have all of the necessary information in front of you before deciding on the best way to proceed.

Tough Path to Success

There’s no denying that women—and especially Black women—have a tough path to success as entrepreneurs.

Fortunately, the strategies mentioned here can enlighten female business owners and help them gain the tools they need to succeed.

As a result, with the appropriate insights and tools, more and more women entrepreneurs will be launching all types of new business ventures in the months and years to come.