Woman of the Year
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The traditional image of women-owned businesses as small, slow-growing and consumer-directed is being annihilated. They start small but grow faster than the overall business expansion rate, selling not just to consumers, but, overwhelmingly, to other businesses. And they sell services just as much as stuff.
Between 1997 and 2002-the most recent figures compiled by the Washington, DC-based Center for Women's Business Research (CWBR)-the number of privately-held businesses owned by women grew 11 percent, compared to an overall rate of 6 percent. Women-owned businesses saw their revenues grow by 32 percent in the same period, compared to an overall rate of 24 percent.
"Women are creating jobs. Their expansion rate in hiring is faster than in the creation of new businesses," points out CWBR executive director Sharon Hadary. This breakneck growth means nearly half of all privately held U.S. businesses are at least 50 percent women-owned. One of every seven U.S. workers is employed at a woman-owned business, and over half of those employees are women.
Finally, women business owners are being taken seriously when it comes to getting bank loans and investments from VC firms. The CWBR reported in 2003 that 40 percent of women-owned businesses with external equity investment received it from corporate investors or VC firms.
That women have continued to expand their companies through a recession and lackluster recovery underscores their drive and experience, says Connie Duckworth, a former managing director at Goldman Sachs & Co. and co-author of The Old Girls' Network: Insider Advice for Women Building Businesses in a Man's World. "Often the best time to start a business is at the bottom of the cycle," she says. "If you can [get] traction, you can ride that positive wave up as the cycle improves."
Of the women who have launched their companies in the past 10 years, 65 percent have managerial or professional experience, and 45 percent have earned at least a bachelor's degree, reports the CWBR. Duckworth says that combination of on-the-job and book learning has positioned women to push their companies harder and faster than women entrepreneurs have done in the past. -Joanne Cleaver
Meet the winner of our Woman of the Year contest, and learn what sets her apart from the competition.
The power to create has always been a woman's prerogative. And for Liz Elting, the winner of OPEN: The Small Business Network From American Express and Entrepreneur magazine's Woman of the Year Contest, that means creating a life and a business that anyone would want to emulate.
Selected as the woman entrepreneur who best exemplifies competitiveness, compassion and clarity of vision, the president and CEO of TransPerfect Translations Inc. in New York City does not measure success in sales alone. Although she expects 2004 gross sales for her company-which provides translation, interpreting, typesetting and multicultural marketing to companies worldwide-to hit $35 million, for Elting, 38, success is wrapped up in the goals she meets for her business as well as the company culture she offers her more than 160 employees. "We are very entrepreneurial, very much a group of people building a company together," says Elting. "They're part of a professional organization with goals and a vision. It's a great place for overachievers."
People who want to control their own destinies flourish in the meritocracy that Elting has created. She prides herself on offering not only raises and opportunities for advancement (typically faster than other companies), but also benefits programs that include comprehensive medical coverage, a Caribbean vacation incentive, and company-wide celebrations that include networking and training exercises twice a year. Employees even get their birthdays off. Though they work hard, long hours are not as painful with the free dinners and car service that anyone from vice presidents to interns can use when working late nights.
Starting in 1992 out of her dorm room at New York University (NYU) with $5,000 in startup funding from credit cards, Elting set a goal: In six months, the company would move into office space. It did. She continues to set specific goals with her team each year, detailing the cities they want to expand into, the sales they want to reach, and the milestones needed to get there. "[It's good] to have a business plan," she says, "but you need annual goals."
This focus on goal setting and an employee-friendly corporate culture have helped Elting achieve her competitive advantage. To gain the customer service edge, she says, she and her employees listen and go above and beyond their clients' needs: "You don't need a novel idea-you [just] need to do it better."
Elting rounds out her business/life strategy with charity and community service-from involvement at NYU, where she speaks to student groups and does seminars to encourage the next generation of business leaders, to her company's contributions to charities that help children, support cancer research, fight for human rights and more. This entrepreneur, philanthropist and mother says, "I haven't found [that running a business is] more difficult being a woman. It's more about what you do than whether you're a woman or a man." -Nichole L. Torres
How to Win at Business
Want to emulate Liz Elting, President and CEO of New York City-based TransPerfect Translations Inc.? Try her tips for success:
1. Check your ego at the door. "[There's an] old saying: 'Hire people who are smarter than you.' Throughout TransPerfect's growth, I've sought out people whose strengths complement mine."
2. The harder you work, the luckier you get. "Year in and year out, I've watched hard work pay off for employees who have accomplished great things for us and [have] grown to be leaders at the company."
3. Keep your eye on the prize. "I set very specific goals for myself and TransPerfect. I communicate those goals and expect results."
4. Think positive. "Attitude really is everything. An upbeat, can-do attitude makes a world of difference in both how we feel and how we're perceived."
5. Proactivity prevails. "[For both entrepreneurs and employees], anticipating what your clients, your supervisor, your co-workers or your company needs, and acting on it without being asked, are key to being a success." -N.L.T.
Growing Your Business
Good as Gold
The best way to grow your business may be right under your nose: Connect with the customers you've already got.
If women entrepreneurs excel at building relationships, then why do we so often neglect our best customers? It can cost up to five times more to win a new customer than to keep an old one. Rather than chase prospects 24/7, it may be more profitable to adopt programs that increase the value of current customers by enticing them to buy more often.
Are you ready to up-sell your existing customer base? Here are five ways to increase sales from your best customers.
1. Build a database. Solid customer information is the foundation of every effective marketing program. It's vital to know who your best customers are and what, when and how often they buy. You can use this to refine your media selections and adjust your product or service offering, thereby saving money and increasing sales. Best of all, tracking customer information-and assembling it into a useful database-helps you identify your top customers and understand and fulfill their needs.
2. Offer multiple sales channels. Customers who shop through multiple channels-such as direct mail, in-store and online-spend more and shop more often. Consumers want convenience and in-depth information before making purchases, so if you don't already have a Web site, it's time to get online. It's particularly important for retailers to add e-commerce. In fact, according to The Dieringer Research Group Inc., for every $1 spent online, the Internet influences $1.50 in brick-and-mortar sales.
3. Contact customers often. Two of the most effective relationship-building tools in any entrepreneur's arsenal are direct mail and e-mail to in-house lists. With a comprehensive customer database and an effective Web site, you're ready to conduct an ongoing campaign targeting current customers. You can set up a tiered program and reach your best customers more frequently, thereby adding value where it will be most appreciated.
4. Get customer feedback. Do you know what your customers like about your company and its products or services? How about what they dislike? It's essential to formalize the way you "listen" to customers by initiating surveys, online or off, and inviting feedback through your Web site (perhaps via message boards) and e-newsletters. Customers appreciate this one-on-one connection, and you'll gain information and testimonials to guide your future marketing decisions.
5. Create a reward program. Customer loyalty or reward programs can help your business increase sales, particularly if you're in a price-sensitive area or if you and your competitors offer parity products. In-kind rewards work best. If you sell music CDs, for example, you might reward your best customers with a free CD after 10 purchases. Begin by offering a reward at enrollment, then provide graduated rewards that entice customers to buy more and shop more often. -Kim T. Gordon
Whether you need a mentor or want to be one, here's what you need to know to get started.
Long before Marianne Vermeer became an entrepreneur, a female boss mentored her, teaching her to trust her instincts. That mentor helped Vermeer gain the maturity and confidence that would be vital to starting her own business, Vermeer Consulting Group, in Richmond, Virginia, in 1996. It also led Vermeer, now 46, to start network support organization EntreNet for local entrepreneurs and to mentor other entrepreneurs, including her current protÃ©gÃ©e, Kae Zulager.
In a 2003 study for the National Women's Business Council (NWBC), formal mentoring programs were found to be a strong predictor of success. "If the protÃ©gÃ©e is a woman, I think it's even more valuable if the mentor is a woman, because women experience things through a different lens than men," says Julie Weeks, executive director for NWBC. "They bring different sets of circumstances to business leadership."
Zulager, 36, wanted to raise money for The Bill Police LLC, her wireless bill-auditing firm in Richmond, Virginia, but didn't have the connections to do it on her own. Through the Technology and Business Center at the College of William & Mary, which works with EntreNet, Zulager was paired with Vermeer, who looked over her business plan and plugged Zulager into her network to help finance the startup.
Beyond the financial rewards, Zulager found being mentored by another woman has advantages. "There's a conversation that occurs somehow at a different, unspoken level," she says. "There's an ability to be very candid and share some things that you wouldn't necessarily share with a male counterpart. It's a vital part of female-to-female relationships." The rewards aren't just for the protÃ©gÃ©es, either. Says Vermeer, who's been mentoring Zulager for close to two years, "It's gratifying to see someone take my advice and actually get someplace."
If you'd like to get involved in mentoring, the NWBC recommends looking for a program with structured interaction, including a well-planned orientation with a discussion of expectations, goals, time commitment and effective communication processes. The NWBC's Web site is a good starting point to find programs for women, including Athena PowerLink, The Committee of 200's Growing Entrepreneurs Mentoring Program, and the NAWBO Mentor Program. Peer-to-peer networking programs include the Commonwealth Forum for CEOs and the Commonwealth Institute's eMerging Women Entrepreneurs Program.
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.
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
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.
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.
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.
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.
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.