Women-Owned Businesses Gaining Market Share But Still Lagging Male Counterparts
Industries typically owned by men, such as construction, warehousing, logistics, and IT, are booming right now. According to data on business loan applications from women-owned businesses, requests were highest in states where construction and tech sectors are on the rise, such as California, Texas, New York, Georgia, and New Jersey.
The areas where we have seen the most funding requests are areas that have rebounded best from the Great Recession. States that have seen the real estate markets come back in a big way — and wherever there is construction and growth – are places where small businesses will thrive.
The average credit scores of women-owned firms that applied for funding last year increased among companies that applied for small business loans on Biz2Credit. Credit scores for women-owned companies rose 595 in 2016 to 598 in 2017. At the same time, credit scores, on average, climbed for businesses owned by men: 618 in 2017, up from 612 in 2016.
The rise in credit scores is a positive sign for small businesses, the driving engine of private sector economic growth in the U.S. economy. We are seeing higher quality borrowers, who refrained from borrowing money for expansion or capital improvements in previous years, re-entered the credit markets. Many of those firms are owned by women, who most often operate companies that provide services (hair salons, spas, cleaning services and others), retail outlets, food/hospitality businesses, and healthcare-related firms.
Since the economy has been strong and interest rates remain relatively low, women business owners are looking for opportunities to grow their companies. However, at the same time, average annual revenues of women-owned business fell from $210,000 in 2016, to $202,491 last year, according to the Biz2Credit analysis, which looked at more than 27,000 applications from business owners during 2017.
The drop doesn’t necessarily mean poor performance by women-owned firms. In fact, the lower annual revenue figure is an indication that many more firms are applying for small business loans for women – some of whom are seeking funding for the first time since opening. Because these businesses have been in operation for shorter periods of time, their annual revenue figures would not be as high as those of older, more established firms.
One thing is certain: although women are becoming increasingly strong in small business, a large gap exists between the funded amounts of male-owned and female-owned companies. It is important to note that newer businesses might be more conservative in asking for money and are carefully managing their expansion plans.
Here are six tips for smart growth for companies that are looking to grow:
Provide better products and services than your competitors
Be the best. If you run a catering business, make sure every tray of food is the best it can be. Provide plentiful portions. Arrive on time, and use a checklist to make sure that everything required for the job is covered.
Offer great customer service
It’s not always the product, it’s the delivery. If you are an accountant and you had to put a small business on extension, do not wait until October; get the job completed as soon as possible. Your clients will appreciate prompt attention to their needs. Further, a business might run into cash flow issues at some point in the spring or summer, and the current year’s tax filing will be instrumental in helping secure a line of credit or some other source of funding.
When you make a mistake in a delivery or some other aspect of your business, do everything you reasonably can to accommodate the customer. A restaurant can offer a free dessert and coffee or perhaps not charge for the meal if it was not to a customer’s satisfaction. Your effort to make amends will help determine whether the patron is willing to give you another chance or go on social media and blast you!
Attend networking meetings
One of the best ways to attract new customers is to be introduced by a current one who is satisfied with your offerings. Networking events provide the opportunity to meet people in person through an introduction from someone they trust. For instance, an insurance agent might be able to pick up new client from attending a local chamber of commerce meeting at which three new companies are present.
Look for ways to expand business from existing customers
If you own a restaurant that has regular customers who work at the same firm, inquire if the firm has needs for catered meetings. Later in the year, as the holidays approach, ask where the company holds its holiday party. Perhaps you’ll get the catering gig or the opportunity to host the party at your establishment and thus bring in first-time customers.
Give back to the community
In an era when social activism is on the rise, customers like to see businesses supporting local groups, such as the Rotary Club, little leagues and other sports organizations, arts organizations, and other causes. You will often find that when a person comes into your establishment to solicit a donation, they will buy something, thereby lessening the financial implication of making the donation in the first place. Meanwhile, you are building stronger customer relations within the community.
Use social media
Don’t have a big marketing budget? Social media costs very little but can be hugely impactful.
Facebook is a great way to reach moms who often control the family purse strings. Work at building followers to your page and create special offers and discounts to lure them in. If someone writes a positive review, be sure to thank them… and tag them in the post so that their friends can see. Facebook advertising is relatively inexpensive compared to TV commercials or magazine ads and can cost significantly less money.
Millennials spend a lot of time posting on Instagram. If your company produces great visuals (ex: jewelry makers, haircutters, caterers, etc.) use Instagram to show off your talents and stay top-of-mind among your followers.
Social media tools do not cost a lot of cash, they do require an investment of time. If you do become engaged in social media, be sure to do it consistently. If you don’t have the time, hire a freelancer or a p.r. firm that might be able to handle social media for you.