On Friday, August 12th Empowered PhXX held our first roundtable discussion on CAPITAL. Access to capital is consistently cited as one of the biggest challenges that any entrepreneur faces, for women the challenges is even greater. The most diverse group of participates we have ever had at an Empowered PhXX meeting came together to discuss capital including women business owners from diverse industries and experiences and five different types of funding resources were represented as well! From micro-loans to crowdfunding, credit unions to traditional banks, our goal was to ensure that we had diverse sources of capital represented and I am proud to say we achieved that goal.
The wonderful Laurie Battaglia facilitated the discussion, starting with everyone sharing “lessons” that they had been taught about money. The women business owners in the room shared how those lessons influence the way they think about capital in their business today.
We shared statistics and trends about capital, as well as best practices for funding partners to effectively work with women business owners and leveraged our growing population. This information is published in our blog and powerpoint presentation that we released for review prior to the meeting. One of the most notable trends was the growth of specialized types of capital designed specifically for women business owners to meet their unique needs including a variety of seed funding, micro lending and investor groups specifically committed to women-led firms. The majority of those resources have developed due to the growing body of research showing that women business owners pay off loans at much higher rates and yield much higher returns for investors.
We asked each of the funders in the room to place their organization on the women business owner lifecycle that we had created during a previous Empowered PhXX meeting. The funders got a few moments to talk about their strengthens. Since several of the women in the room represented leadership from various networking groups, I thought this was a particularly powerful exercise. The group was able to ask questions and provide feedback to gain a deeper understanding of each resource.
From that activity we quickly launched into a discussion about how to change the culture around capital. The presentations by the funders gave the opportunity to describe the challenges with their language and assumptions that many of the lenders use in their communication. The funders were able to then address those concerns and provide some excellent education that debunked some common myths. As a group, we developed guidelines and action steps from that conversation. Below is a summary of the conversation highlights with ideas for action steps and requests for feedback from people who might not have been in the room:
Women assume that banks will not lend to them. That is their baseline and when you look at the statistics on capital and lessons we are taught about money, you can see where this assumption comes from. However, businesses need capital to grow and there are many capital options out there. Everyone needs to work on their communication and actions in order to change the culture around women business owners and capital.
Almost every funder described the need for a business to be “profitable” in order to qualify for funding. Since we rarely talk about numbers, the term profitable meant several things to different people. For women, profitable often equals successful. Since many women struggle with feeling like they are successful, they pull from the media stereotypes and headlines of “successful entrepreneurs” who make a lot more money than they do. Simply translated, when a bank says profitable, women often assume they are not included.
Language and building a common understanding was a trend that came up again and again. As an ecosystem we need to spend more time in interactive settings that allow us to build a common language. When it comes to marketing, in order to overcome the current culture, we need to be strategic about the terms we use when talking about capital and resources. Women assume education on capital = investors and pitching which they know is probably NOT applicable to their business. In addition…no one wants to attend a workshop on financial literacy. Most business owners are smart people, no one would say they are illiterate.
One of the best practices we developed around communication was to put exact numbers and figures when talking with women business owners instead of general terms like profitable. We also discussed the most powerful way to change the culture around access to capital would be providing examples of real women business owners and the process they went through to get funding. This approach bridges the gap of knowledge that many women business owners suffer with because of the lack of experienced mentors. Again, instead of saying….we help women, show how you educate and build trust by sharing stories women can relate to.
One of our participates mentioned the importance of having a diverse staff because it shows that you are committed to help people that look like us. When it comes to building trust with women business owners, words are cheap, actions are successful.
The week after our meeting Seed Spot did an excellent blog on crowdfunding with real life examples, and already a few funders have sent me content. If you have content or stories about women and funding please forward them. If you are interested in sharing this content with your members, let me know.
One of the benefits of having so many types of funding in the room was that it highlighted that there are SO MANY TYPES OF FUNDING AVAILABLE! Explore your options. Capital is sometimes broken into general categories: loans / crowdfunding / investors. There are a lot of options within those categories.
Don’t get overwhelmed with options, build a team. A good CPA should give you guidance on when you need funding and what you need to do to prepare for capital in the future. If you are a networking leader or a resource provider, it means that we need to make sure we have several good CPA’s and bookkeepers in our network. Several of the financial experts in the room said CPA’s are their many referral source.
This is another idea that has stuck with me since the meeting. I will be reaching out to CPA associations but I would love to hear ideas and feedback on how we can get more CPA’s actively engaged in our ecosystem.
In addition to CPAs and bookkeepers you need a banker on your team, build a relationship with a banker NOW. Many of us struggled with this since building a relationship with a banker doesn’t fit into the standard “networking” definition of building a relationship and bankers are not necessarily great networkers (sorry bankers). Several of the funding representatives in the room urged us to consider building a relationship with a banker just like we would any other networking contact. How do you find a good banker? Here are some guidelines to help make it more tangible:
Ask your network for referrals for a good business banker or go into a branch and ask to meet the business banker.
Take them out to coffee, ask them about their expertise. Even if you’re not a fit now a good banker will be willing to sit down with you. You are not wasting their time, you are interviewing them. And if they act like you are wasting their time, they likely would not be a good fit anyway.
Just like a good networking contact, you can send them referrals and invite them to networking events with you. Just like any industry, there are a variety of people with a variety of skill sets, assume you will have to interview 4-5 bankers before you find a fit.
This best practice could make a very powerful campaign. If anyone would like to lead this campaign or is willing to share their own experiences interviewing bankers please email me.
In addition to a banker and a CPA, there are also several of our community partners that have training on financial health and navigating all the financial options. Jeff Swenson with the Maricopa SBDC provided the group with a checklist they present to all clients on the items they need to prepare prior to going after funding. Not only will the SBDC help you during the process, they can make you feel more confident when going in and talking to lenders.
Overall, we had an honest discussion that benefited all of the diverse stakeholders in the room. It wouldn’t have been possible if not for the amazing facilitation skills of Laurie. I have gotten great feedback and already several people have requested that we repeat the event but open it up to a boarder audience. Thank you to everyone who participated.
Please comment and provide feedback on the bold questions above.
Our next meeting will be another large summit with all the stakeholders to discuss opportunities and challenges in the ecosystem and allow for everyone to connect. We will be sharing data, updates and information that all stakeholders need. If you would like to be a part of the leadership committee on this event please email me. Hold the date for October 14th from 10:00 AM – 12:00 PM at ASU Sky Song. This summit is ideal for multiple board members and staff to be invited.