Woman of the Year

Finding Financing

On the Money

Women entrepreneurs are experiencing greater success finding financing for their businesses, but is it enough?

In 2001, Amy Hilliard sold her house to raise the $300,000 it took to start The ComfortCake Company, including graphic design and product development costs. Soon afterward, the Chicago entrepreneur delivered her first big order: 500,000 slices of wrapped poundcake to United Airlines.

In 2002, she got an SBA-guaranteed loan of more than $100,000 to get working capital to expand into the school food-service market and Chicago-area grocery stores. That infusion carried ComfortCake into the big leagues. By the end of 2003, Hilliard was selling gift cakes through Amazon.com's new gourmet store and had shipped holiday minicakes to some 5,300 7-Eleven convenience stores.

"South Shore Bank stepped up to the plate and [was] willing to bet on me," says Hilliard, 51. "To do the business at the level that we want to do it, it's hard to get the money." It is hard, but not as hard as it used to be.

As women's businesses have grown, women are finding the financing doors starting to open, though not very wide. Hilliard's ability to line up a bank loan is still the exception: According to the CWBR, about 39 percent of women who run fast-growing companies are able to tap into bank financing, compared to 52 percent of men leading comparable companies.

Historically, women-owned companies have tended to start small and stay small, and that's still the case for many, says Lynn Neeley, professor of management at the College of Business at Northern Illinois University in DeKalb. Today's difference: Women don't expect their small companies to stay that way. But Neeley says it's still tough for most women to bootstrap their growth because they simply don't have the cash flow to justify a bank loan.

In addition, many women start service businesses, which typically don't require much capital, so they tend to have fewer assets to use as collateral for loans. Neeley's research also reveals that women often aren't as skilled as men when it comes to negotiating trade credit and other everyday financial exchanges.

As for venture capital, it's finally getting traction, though by no means as much as most women would like. In 2000, only 5 percent of VC investments were given to firms with women CEOs, according to research compiled by the NWBC.

Springboard Enterprises, a Washington, DC-based nonprofit designed to help women get a hearing with the VC community, has presented 263 companies to VCs since 2000. So far, 40 percent of them have received funding. Just under half of that funding was the second or subsequent round for recipient companies. Springboard alumnae companies are substantially larger than most women-owned companies, with an average of 24 employees and $3.4 million in yearly revenues.

Hilliard wants to be among the few that get the attention of private investors. She's working her network to identify high-net-worth individuals interested in funding a ComfortCake national distribution system. For everyone involved, she thinks, that would be a sweet deal. -J.C.

An Open Door

Helping all small-business owners is the mission of OPEN: The Small Business Network From American Express-but OPEN has partnered with women's business organizations to offer women entrepreneurs special services. From alliances with the National Association of Women Business Owners, the Women's Leadership Exchange and the Women Presidents' Organization, OPEN is committed to helping women grow their businesses.

"We recognize the need of women small-business owners [for] access not only to cash flow, [but also] to information and resources," says Kerry Hatch (above), president of OPEN. "Women small-business owners really like to learn from one another-[they] really value networking. We provide opportunities, be it online or through some of our sponsorships, for women to network with other small-business owners."

Business owners can go online to network with other entrepreneurs in the OPEN Dialogue community and access business articles, expert advice and more. OPEN also provides discounts and rewards on commonly used products and services, in addition to financial and credit services. Visit http://open.americanexpress.com to find out more. -N.L.T.

Resources

Center for Women's Business Research
Offers resources, research, links and more for women-owned businesses. The Web site displays a list of facts about women business owners, searchable by category.

The Committee of 200 (C200)
An organization of women entrepreneurs and corporate leaders capitalizing on the experience of businesswomen in the global economy; provides networking opportunities, research and resources, a speaker's bureau, seminars, scholarships and mentoring.

Digital Women
An online community of more than 15,000 women in business. Offers business, marketing and sales tips; business articles for women; information on grants; and bartering with other members.

National Association of Women Business Owners
A national organization that provides networking opportunities, leadership and business development training, an e-mail newsletter, and special rates to events, conferences, and seminars.

National Women's Business Council
A bipartisan federal advisory council offering advice and policy recommendations to the president, Congress and the SBA. The Web site offers research, a listing of events, and publications relating to women business owners.

U.S. Women's Chamber of Commerce
A network of women business leaders who help create opportunities for other women to succeed. The Web site provides news, polls and surveys, event listings and more. -Steve Cooper


Joanne Cleaver is Entrepreneur's "Management Buzz" columnist. Kim T. Gordon is Entrepreneur's "Staff Smarts" columnist.

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This article was originally published in the June 2004 print edition of Entrepreneur with the headline: Woman of the Year.

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