Two decades ago women embraced business ownership and have never looked back. Last week at the Ernst & Young Strategic Growth Forum, the impact of women-owned businesses was celebrated. Today 8 million businesses are owned by women with total revenues of $3 trillion, employing 16 percent of the American workforce (23 million jobs). In fact, if women-owned businesses were its own country, we’d control the world’s fifth largest GDP.
But despite these accomplishments, entrepreneurial women are “stuck,” with most of their businesses generating less than $1 million in annual revenue, compared to the average small business, which brings in more than $3.5 million. Scaling Up, a new report issued by Ernst & Young at the conference, says that although women start businesses at twice the rate of men, they start these businesses with much less capital, which is only one of the factors that seem to be inhibiting their company growth. Other reasons, according to Beth Brooke, E&Y’s global vice chair, include “our reasons for starting businesses, the lack of role models, differing personal characteristics and access to networks.” And, Beth adds, “women-owned businesses actually start out growing faster [than those owned by men] but then they plateau.”
Last year, to celebrate the women who have broken through the $1 million revenue barrier, E&Y created the Entrepreneurial Winning Women competition, an annual awards program “designed to accelerate the growth of high-potential businesses founded by women.” Nine women won this year’s contest and I got to talk to six of them.
In 2005, Michelle Tunno Buelow founded Bella Tunno, a company that makes fashion-forward, mom-targeted accessories for babies and children. Today she brings in between $1 million and $2 million, selling her goods to 4,000 retailers like Nordstrom, Target, and Baby Gap. Like so many of us, Michelle didn’t set out to be an entrepreneur; she was happily working for a corporation until her brother died and her “priorities changed.” After taking time off, she decided she couldn’t go back to work. Then she got pregnant, had a baby, and launched a business. Her daughter was a sleeper, allowing Michelle “lots of time to be creative.” Her mother had given her a sewing machine to help her cope with her brother’s death and Michelle started sewing funky baby accessories. People would stop her on the street asking, “Where did you get that?” and her business was born.
Michelle, who donates part of her revenues to a fund honoring her brother, swears she’s now “a social entrepreneur” for life and embraces business ownership because “it enables you to do what you want to do.”
Jennifer Scully started her career in nursing (as so many women used to do). She moved up the corporate ladder as a nursing-home administrator until her company was sold, and she was faced with the age-old question, “What do I do with the rest of my life?” People all across the country would call asking her to recommend nurses, and she realized “there’s a business there.” She took all the money she made when her company was sold and stepped “out of the corporate world.”
Realizing she needed to differentiate her business idea from all the other health-care staffing companies out there, she focused on the burgeoning senior market and emphasized her nursing expertise. It obviously worked. In only three years, Clinical Resources does business in 46 states and brings in more than $5 million annually.
Sherry Stewart Deutschmann, founder of LetterLogic, a premium letter shop that offers printing and mailing services, is one of the most generous entrepreneurs I’ve ever met.
- Her 31 employees evenly split 10 percent of company profits every month. Her rationale: “Everyone gets the same amount so they realize no job is more important than any other.”
- She helps employees come up with a down payment for a home
- She pays 100 percent of an employee’s medical and life insurance
- She incentivizes workers who carpool, take the bus or walk or bike to work.
- She gives employees $100 if their winning suggestions (from the suggestion box) are implemented in 30 days.
Perhaps Sherry is so generous because she remembers what it was like to work in a company where she was “constantly apologizing to customers” and her input was often ignored. That, in fact, was why she spent six months thinking about quitting and then finally started a similar business out of her basement. (Yes, she was sued by her former employer.) Sherry soldiered on because “I was too stupid to know to be scared.”
While writing her business plan, she realized she didn’t have “anything special” to offer potential customers so she came up with a money-back guarantee. That worked: This year LetterLogic will bring in $18 million and projections for 2010 top $25 million.
Talia Mashiach, founder of Eved Services, is a self-professed tech geek who loves automating business processes. Five years ago, she accompanied her band-leader husband to the Hilton in Chicago and realized the hotel needed help coordinating all the tasks for special events. Talia realized she could automate and manage that process, borrowed more than $300,000 from her home equity line and signed two Hilton properties as clients. Today Talia’s company manages 4,000 events, boasts over 8,000 customers, and will bring in over $9 million this year.
But that’s only the beginning for this mother of four (with one on the way). Next month Eved will transform into a software-as-a-service company, allowing buyers, sellers, and vendors to “engage and interact with one another.” From the beginning her focus has been on “what does the customer want?” Talia has always bootstrapped her way through the business, and once again is tapping her home equity line to fund Eved’s evolution.
For serial entrepreneur Susan Wilson the proverbial lightbulb went off when her husband, who worked at a court, come home from his job and told her about an unpaid judgment. Her first reaction was “huh?” since she thought paying a judgment was mandatory. She spent the night doing research, and once she learned that 80 percent of judgments went unpaid, she started her business the next morning. The Judgment Group purchases, enforces, and recovers portfolios of unpaid court-ordered money judgments.
The recession has slowed Susan down a bit, but not much — 2009 revenues will hit $5 million, which she projects will double next year. For Susan, business is everything: “I can’t sing or dance. Business is my art.” Susan’s advice to other women business owners is to “get over the stigma of thinking we’re not good enough to ask for money.”
You might not recognize Shabnam Rezaei now, but that’s likely to change after her TV show premieres in January on 27 PBS stations across the country, reaching 30 million viewers. Shabnam, who was born in Iran, worked in banking when she realized there wasn’t a lot of information about the Persian culture available in media. She started Persianmirror.com, an online magazine exploring Iranian culture. From there, she expanded her focus and formed Big Bad Boo, a media production and distribution company dedicated to teaching children about different cultures.
Her first project was a direct-to-DVD cartoon called Babak & Friends, which tells the story of little Babak, a young boy who is stuck between his Iranian and American cultures. Shabnam sold 20,000 DVDs, mostly via grassroots marketing. Next she gave Babak a group of friends from Korea, Cuba, India and the U.S., and Mixed Nutz, the cartoon series was born. Animation is expensive and Shabnam had to knock on a lot of doors to raise money. “I was laughed out of many rooms,” Shabnam recalls, but ultimately she raised over $3 million in 18 months. It took more door knocking to get on PBS.
You don’t get rich selling to PBS, so, in January, she’s also launching oznoz.com, a Web site with games, products, and licensed merchandise. Her newest production, animated episodes of 1001 Nights, including the original stories of Aladdin, Sinbad and Ali Baba, came in sixth out of 1,200 kids shows presented in Cannes.
By highlighting accomplished women like these, E&Y puts a serious dent in the dearth of role models for entrepreneurial women. These women were so inspiring, I came back with a notebook full of new ideas. While only a few may see the light of day, I’ve already started planning a series of products to help entrepreneurs start and grow businesses.
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