Women entrepreneurs say startup capital scarce
By Joyce Smith
Knight Ridder Newspapers
KANSAS CITY, Mo. — Access to capital, affordable health insurance and the state of the economy top the list of concerns for America's female business owners, according to a study.
The National Women's Business Council polled women attending entrepreneurship summits in five cities under the "Women Entrepreneurship in the 21st Century" program in 2002.
The summits were put on by the U.S. Department of Labor and the U.S. Small Business Administration, with support from the council, and were held in Washington; New Britain, Conn.; Nashville, Tenn.; Houston; and St. Louis.
Most of those attending were business owners. Government and corporate leaders also took part, along with representatives of organizations that provide services to female business owners.
More than half the women surveyed found it difficult to secure the capital to start their business. The majority of respondents were likely to rely on personal savings as their primary source of startup capital, followed by reinvested earnings, loans or lines of credit. Friends, associates, the Small Business Administration and private banks were considered the most helpful sources of information about business financing options.
"Access to capital has been a recurring concern for women business owners," said Sandy Licata, executive director of the Kansas Women's Business Center in Lenexa.
"I think that affordable health insurance and the state of the economy are unfortunately affecting all business owners. The key factor is to get help, to get support, and I think you do that in a variety of ways: training, mentoring, networking, consulting."
The National Women's Business Council is a bipartisan federal government panel that reports to Congress and others on economic issues of importance to female business owners. The council would like to see additional research to identify specific barriers to acquiring capital and the relationship of those barriers to demographics, geography and type of business.
Fewer than half the respondents said they were able to provide healthcare benefits to employees. Cost was the biggest barrier. Some female entrepreneurs were able to absorb increased healthcare costs, but many either were passing the increased costs along to their employees or planned to change the coverage offered. The female respondents overwhelmingly supported reforms, including the use of tax credits and combined bargaining power to make coverage more affordable.
Female business owners did not generally view the federal government and its contracting systems as helpful or easy to approach and work with. Strong leadership was considered the best way to ensure that women-owned businesses were awarded the congressionally mandated goal of 5 percent of federal contract dollars.
Other findings from the survey:
• The key concerns of female business owners also include the competitive business environment, taxes and workforce issues. Healthcare reform, tax reform and access to capital were seen as the most urgent priorities for Congress to address.
• More than half of those surveyed did not provide any type of retirement plan to their employees. Inconsistent profits and plan costs were cited as the most important challenges in offering retirement plans.
• Making a profit and being one's own boss were the primary reasons for becoming a business owner. Having an interest in a particular field and making more money also were common motivations.
• Increasing their client base and profits were top objectives for business growth.
• Personal networks and mentoring were named as the key factors to helping women start and expand businesses. Training and technical assistance programs, access to capital and access to services such as day care also were named.
• About 48 percent of the respondents planned to finance their retirements by investing in IRAs and 401(k) plans, but 28 percent said they had not made specific plans. About 12 percent planned to use money from the sale of their business.
