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Creating a Company of Owners
Jan 24th
This content from: Duct Tape Marketing
I believe that one of the greatest opportunities we have as business owners is to create wealth.
By that I don’t necessarily me get wealthy. I mean create an asset, a business, which is worth more today than it was yesterday. All too often this view gets buried in the push to create a paycheck.
In my view there are much easier ways to draw a salary than owning a business.
The real magic in the wealth creation opportunity comes when you also see it as a way to create wealth for all of the people the work to increase the market value of the business.
Image Doug Brown 37 via Flickr CC
The key to this notion is shared ownership.
Sharing ownership with employees has become much more popular in the world of Internet startups and IPOs. The idea is that if people have stock they’ll be more productive.
The problem with this mentality however is that if employees don’t have psychic ownership first and foremost, real ownership probably won’t benefit anyone.
Psychic ownership suggests a culture where employees feel like owners, act like owners and think like owners, even though they may not actually have any formal equity in the company.
The fact is many companies try to explore this idea of ownership but approach it in name only.
If employees don’t feel like they have a stake it what happens, don’t have access to the financial data or can’t make decisions that impact the value of their ownership, then all the stock options in the world won’t help. In fact, organizations that simply adopt an ownership or equity type of environment based on paper only find that it can be a disincentive and create entitlement without accountability.
Until you can create a culture that fosters psychic ownership first – a place where people feel empowered as owners, even if they’re not – you’ll never realize the benefits of providing real ownership.
The combination of a psychic ownership environment and real ownership structure, however, is perhaps the most potent tool for the creation of commitment that can be employed.
Creating a culture of shared ownership
When Sky Factory founder Bill Witherspoon determined, approaching sixty, that he would start yet another company he sat back and analyzed his past failures and successes and concluded that he had never been very good at managing people or the organization once it had grown to a certain level.
So, he decided to throw everything he had ever done or learned about traditional management out and start with a totally new view of how to build, in his words, a “beautiful corporation,” also something of an oxymoron in his view.
Having a background in bioscience he determined that every organization’s DNA lies in the company culture and he knew he had to direct that element over all else. The company’s core beliefs sprung from that thinking, but became much more than words on sign.
Transparency – Now, there’s a word that’s been abused in business writing over the last few years, but taken at face value, and in this context, it simply means sharing everything with everyone in the company.
Every Friday afternoon the entire staff gathers to go over the metrics one by one – even things like how much cash is in the bank is reported. (The only metric that is not public is individual salaries.) Every department talks about goals and challenges and the entire team of 40 can discuss any element that’s shared.
When issues arise that need to be shared quickly, they call impromptu “stand up” meetings and shut down so that everyone can be involved.
Autonomy –There are no vice presidents, no managers, and no shop supervisors at The Sky Factory. If they had an organization chart it would be very flat.
The company is organized into functional teams based on related work and each team uses a rotating facilitation model to keep things moving in place of the traditional manager.
Every week two members of a team take on the role of management (one from last week and one new one.) Everyone on the team takes a turn and Witherspoon feels that this concept allow people to learn, grow and earn greater respect from other members of the staff.
This no hierarchy approach removes politics and frees people to stretch far beyond the confines of the normal job description. The Sky Factory has numerous job descriptions that are tied to functional work that must be done, but the goal is to create a workplace where everyone can essentially do everything.
There certainly are instance where this isn’t practical or possible, but no one gets tethered to one kind of work, no one gets bored and everyone is asked to grow and given the opportunity to do work that continually stretches them.
The Sky Factory also finds that experience built in continuous improvement by letting new people provide a fresh approach in processes and systems.
Consensus – Every important decision made at The Sky Factory is made through a system of consensus. Some decisions are departmental, others are company wide, but if there’s even one no, the decision must be evaluated.
Decenters are asked to explain and own their no votes and more often than not the no simply leads to more research or looking at a decision in a new light, but everyone has a real voice in the process.
Sky Factory also uses consensus to impact operations – The Company was experiencing a high percentage of late deliveries on promised projects. They had tried a number of process improvements to no avail. During one of their weekly meeting an employee suggested that they should tie profit sharing bonuses to delivery. The group agreed and the rule became that if even one delivery missed its promised date during a month, no one in the organization would receive that month’s profit sharing bonus.
Since installing this rule several years ago they virtually eliminated the problem. Everyone in the organization is now concerned about late deliveries and everyone is focused on pitching in and solving any potential snags in any part of the production process. And you can bet that if someone is having an issue with an order they ask for help.
Of course consensus won’t work if there’s no transparency and truly no hierarchy. Consensus as a stand-alone tool is a recipe for disaster, but teamed with complete sharing of information and rotational management, it is the tool that turns everyone into an owner.
Now, Sky Factory also has an incredibly innovative profit sharing and real ownership structure, but the key to making it work in their incredible shared ownership culture.
When an entrepreneur starts a business and it’s just them, they have all the information, have no hierarchy and get consensus on every decision – shared ownership thinking simply takes this to another level.
View full post on Small Business Marketing Blog from Duct Tape Marketing
Holiday Shoppers Are Santa’s Elves for Small Business Owners
Dec 25th
There are signs that the economy is heating up even as winter has officially arrived. The second annual Small Business Saturday gave a big boost to Main Street merchants and spurred an estimated 103 million Americans to shop at independently owned small businesses on November 26, 2011.
The figure is well above the pre-Thanksgiving forecast of 89 million. Increased awareness of the day and dozens of locally organized initiatives helped merchants leverage the wave of consumer support.
Public awareness of Small Business Saturday rose to 65 percent — a huge increase from 37 percent in 2010. Elected officials in all 50 states and Washington, DC, championed the effort, including President Obama, who shopped with his daughters at an independent bookstore near the White House. Nearly 195,000 tweets were sent in support of the event in November, and more than 2.7 million Facebook users “liked” the Small Business Saturday page – more than doubling the 1.2 million “likes” in 2010.
Additionally, 75 corporations, including American Express and FedEx, offered $25 credits to encourage shopping at small retailers on Saturday, November 26, 2011.
Thanksgiving weekend was the best ever for retailers as 226 million shoppers took advantage of Black Friday deals and earlier than ever store openings to spend a record $52.4 billion, an increase of 16 percent over last year, according to the National Retail Federation.
All of this is good news. Consumers are willing to spend when they feel more confident about the future. The continuing European debt crisis shines light on the fact that the fundamentals of the U.S. economy are strong.
Kenneth I. Chenault, Chairman and CEO of American Express, said it best:
“By supporting small businesses across America, consumers are helping to create jobs, boost the economy and preserve our neighborhoods.”
Small businesses are an important engine for U.S. economic growth. These signs of life are refreshing.
Shopping Elf Photo via Shutterstock
Holiday Shoppers Are Santa’s Elves for Small Business Owners
View full post on Small Business News, Tips, Advice – Small Business Trends
Walking Weight Loss – Ideal For Diet & Weight Loss List Owners
Dec 25th
Walking For Weight Loss – A Great Product To Promote If You Have A Diet/weight Loss List. Full Affiliate Center & Support Provided, Superb Sales Letter Continually Improving Conversion Rates, 60% Commission – www.walking4weightloss.com/affiliates.html
Walking Weight Loss – Ideal For Diet & Weight Loss List Owners
Your Total German Shepherd Dog, A Pet Owners Guide
Dec 20th
Practically A German Shepherd Owners Manual (you Know, The One You Didn’t Get With Your German Shepherd Puppy) – High Affiliate Payouts! 55%! Join Us Now To Make Lots Of Money.
Your Total German Shepherd Dog, A Pet Owners Guide
Credit Eases for Small Business Owners Seeking Capital
Dec 15th
The economy is at last starting to show signs of recovery. Consumer confidence surged in November to its highest level since July, an indication that Americans may be more willing to spend. Holiday shopping figures for Black Friday and Cyber Monday were robust. The government jobs report on December 2nd announced that unemployment had fallen to 8.6 percent, its lowest level in 2 1/2 years.
I am seeing a growing number of small business owners registering on our platform for funding. This is a good sign. Meanwhile, credit has loosened in the past month. This has been a trend for most of the second half of 2011.
The big story continues to be the growth of small business lending by credit unions, which granted 57 percent of small funding requests last month. Overall, alternative lenders — credit unions, as well as Community Development Financial Institutions (CDFIs), microlenders and others — approved 62 percent of funding requests, a rise from 61.8 percent during October.
Loan approvals by smaller banks jumped to 47 percent in November. Meanwhile, big banks, which have the most stringent lending criteria, approved 10 percent of small business loan requests for the first time since April. Here is a closer look:
Month 2011 Big Bank ($10B+ assets):
Lending % – Small Bank Lending % – Credit Union Lending %:
- January: 12.8% - 43.5% – 48.9%
- February: 11.9% - 43.9% - 49.1%
- March: 11.6% - 44.2% – 48.8%
- April: 10.4% - 44.6% - 50.1%
- May: 9.8% - 45.0% - 51.2%
- June: 8.9% - 42.5% - 52.3%
- July: 9.8% – 44.9% - 53.4%
- August: 9.4% - 43.8% - 54.2%
- September: 9.2% - 45.1% – 55.5%
- October: 9.3% - 46.3% - 56.6%
- November: 10.0% - 47.0% – 57.0%
It’s not just mom and pop shops that are searching for — and receiving — infusions of capital. Professionals such as doctors, dentists, CPAs and lawyers are also increasingly looking to secure the funding they need to expand their practices.
As the 2012 election year approaches, we can expect President Obama to focus a sizable amount of attention on increasing small businesses lending and helping entrepreneurs grow their enterprises. The President has stressed that American entrepreneurship and business innovation will help lead us through the recent tough economic times. I couldn’t agree more.
Falling Dollars Photo via Shutterstock
Credit Eases for Small Business Owners Seeking Capital
View full post on Small Business News, Tips, Advice – Small Business Trends
Ecommerce Solution. Help Small Business Owners Find Wholesale Vendors.
Nov 28th
New!! Low Refund Rate. Great Conversions. Market Is Hot For This Product. A No Brainer!
Ecommerce Solution. Help Small Business Owners Find Wholesale Vendors.
10 Best Management Books for Small Business Owners
Oct 23rd
Running a small business requires a combination of both leadership and management skills. While leadership and management come easily for some business owners, many find that reading management books helps keeps them informed and current with today’s best management practices.
With thousands of books to choose from, it can be frustrating and overwhelming deciding on what to read. That’s why Small Business Trends has put together this list of top 10 best management books every small business owner should read. (Listed in no particular order.)
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1. “Consider: Harnessing the Power of Reflective Thinking in Your Organization” by Daniel Patrick Forrester.
In today’s on-demand, always-on world, it seems counter-intuitive to take a moment and consider your next decision. Daniel Patrick Forrester interviews leaders in high-stakes and high-risk circumstances who have mastered the art of taking time out to think and process their options before rushing into a decision.
Small business owners will appreciate the many examples and techniques used by great leaders and managers of critical projects to calm themselves down, collect the information that they need and then communicate their decisions and actions clearly.
Read our review of “Consider” (available at Amazon and other retailers)
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2. “No Jerks on the Job: Who They Are, The Harm They Do and Ridding Them from Your Workplace” by Ron Newton
There isn’t a workplace around that doesn’t claim its share of jerks. In fact, working with difficult people is one of the most popular management books topics around, In the book No Jerks on the Job, Ron Newton explains where jerks come from and he gives solutions for dealing with jerks; create a transparent environment, embody your values and huddle up to solve problems.
The biggest benefit that any businessperson can get from this book is being able to identify jerky behavior and not feed into it or make it worse.
Read our review of “No Jerks on the Job“ (available at Amazon and other retailers)
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3. “Delivering Happiness: A Path to Profits, Passion, and Purpose” by Tony Hsieh
In Delivering Happiness, Tony Hsieh, the visionary CEO of Zappos explains how an emphasis on corporate culture can lead to unprecedented success.
The lessons in this management book come from Tony Hseih’s own experiences. They include the lessons he learned from poker that he applies to business: Make sure your bankroll is large enough for the game you’re playing and the risks you’re taking, figure out the game when the stakes aren’t high, differentiate yourself and do the opposite of what the rest of the table is doing.
Read our review of “Delivering Happiness” (available at Amazon and other retailers)
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4. “StrengthsFinder 2.0” by Tom Rath
StrengthsFinder 2.0 is an updated strengths assessment published by the Gallup organization. This book includes a password that allows you to take the StrengthsFinder assessment online. After completing the StrengthsFinder assessment, the results will uncover your top strengths. Readers will also get a personalized strengths planning guide as well as 50 ideas that they can put into action in their business and personal life.
StrengthsFinder 2.0 is a great management book for small business owners who are looking for smart ways to balance out the strengths inside their management teams.
(Available at Amazon and other book retailers)
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5. “Carrots and Sticks Don’t Work: Build a Culture of Employee Engagement With the Principles of RESPECT” by Paul Marciano
If you’re looking for a management book that will help you motivate your employees without spending yourself silly with financial incentives, look no further than Carrots and Sticks Don’t Work.
Paul Marciano reviews all the motivational theories we’ve used and abused over the last hundred or so years. He then gives you practical advice on how to upgrade your conversations in a way that will benefit your employees and your business. You don’t need to spend your company into bankruptcy trying to please employees – the answer is much simpler.
Read our review of “Carrots and Sticks Don’t Work“ (available at Amazon and other retailers)
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6. “Making Ideas Happen: Overcoming the Obstacles Between Vision and Reality” by Scott Belsky.
There is a method and a skill to making ideas happen and in this management book, Scott Belsky shows you how to run your brain spark of an idea through a process that converts the idea from a thought to something real and tangible.
Making Ideas Happen takes you through project management, how to maintain your focus, harnessing the power of your community and developing the chemistry of your creative team. It’s a real world management book that you can use daily by yourself or with your team.
Read our review of “Making Ideas Happen” (available at Amazon and other retailers)
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7. “Do More Great Work: Stop the Busywork. Start the Work That Matters” by Michael Bungay Stanier.
If you find yourself feeling unproductive, Do More Great Work is one of the management books for you. Inside this small and well-designed books are 15 maps and exercises that will help you identify the elements of great work and triggers for less-than-great work.
For example, where to find clues to your great work, how to find the sweet spot between what you want to do and what your organization wants you to do tactics to manage the overwhelm and more.
(Available at Amazon and other book retailers.)
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8. “Awesomely Simple Essential Business Strategies for Turning Ideas Into Action” by John Spence.
Awesomely Simple is a management book that gives the small business owner and department managers a clear and easy roadmap to follow in building the business and then planning for growth.
John Spence delivers an MBA in a management book that is easy to read and follow. Ultimately it’s a guide you can turn into management practices in your business.
Read our review of ”Awesomely Simple“ (available at Amazon and other retailers)
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9. “Better Under Pressure: How Great Leaders Bring Out the Best in Themselves and Others” by Justin Menkes
What is it about some managers and leaders that has them perform at their best under pressure and then the others who simply fold? In Better Under Pressure, Menkes reveals the common traits that make these leaders successful.
Drawing on in-depth interviews with sixty CEOs from an array of industries and performance data from two hundred other leaders, Menkes shows that great executives strive relentlessly to maximize their own potential — as well as stoke their people’s innate thirst for their own triumphs.
Read our review of “Better Under Pressure“ (available at Amazon and other retailers)
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10. “Linchpin: Are You Indispensable?” by Seth Godin.
Seth Godin takes his unique way of looking at things and brings it to the world of management. Linchpin is one of those management books about what it takes to become indispensible at a workplace.
Godin warns that it’s no longer good enough to treat people like factory workers, nor is it enough for workers to simply just do what they are told.
Today’s world of work asks more of both employer and employee.
Read our review of “Linchpin” (available at Amazon and other retailers)
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With this guide to best management books, you will get concrete advice on how to manage your company and your team in a smart way. Go ahead — set a goal to read all 10 books. Then integrate the ideas from these management books into your daily work and create a world class business.
Looking for other business books to read? Here at Small Business Trends you will find new business book reviews each weekend, and over 225 business book reviews in the archives.
10 Best Management Books for Small Business Owners
View full post on Small Business News, Tips, Advice – Small Business Trends
Micro Pigs or Teacup Pigs Complete Owner’s Guide
Sep 19th
A complete Micro Pigs Owner’s Guide. 174 pages full of vital information written by a micro pig expert. Real good value for money therefore low refunds. Hardly any other ebooks available online. High commission rate at 65%.
Micro Pigs or Teacup Pigs Complete Owner’s Guide
Great Contests With Awesome Prizes for Small Business Owners
Aug 21st
This list of contests, competitions and awards for small businesses is brought to you every other week as a community service by Small Business Trends and Smallbiztechnology.com.
If you’ve entered and won a contest or award listed here, let us know so we can share your news.
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Top 10 Facebook Page Contest
Enter by August 22, 2011
Social Media Examiner is accepting nominations for its “Top 10 Small Business Facebook Page” contest. Nominations are made via comment on this post about why you like the page you are nominating.
Winners will be selected based on the quality of their Facebook pages, the frequency and quality of their wall activities and fan engagement. Think part readers’ choice and part Oscars. In addition to online exposure, each of the top 10 winners will also get free tickets to Facebook Success Summit 2011—the Web’s largest online Facebook marketing conference.
Avaya Small Business Innovators Contest
Enter by August 30, 2011
Do you have an idea that will change the way your business serves your customers? Innovation is the engine that makes every business more productive and helps it to grow. To enter Avaya’s Small Business Innovators contest, fill out their ROI tool and send them the results. Include how you would spend the winnings over the next five years to innovate new ways to serve your customers, staff and suppliers. Grand prize of $50,000 worth of IP Office equipment and software and $5,000 cash. Five runner-up prizes of $10,000 worth of IP Office equipment and software.
Supreme Studio Makeover Contest
Enter by August 31, 2011
MacMall’s second annual Supreme Studio Makeover Contest features $26,000 in total tech prizes for small businesses and creative studios, including highly sought-after products such as Maya 2012, Adobe CS5.5, HP Designjet large format printers, an HP 24-inch DreamColor monitor, Microsoft Office for Mac and Apple Time Capsule storage units.
The Promotion Promotion
Enter by August 31, 2011
The UPS Store is launching an online contest to give one lucky entrepreneur a $50,000 marketing makeover. “Like” the UPS Store’s corporate Facebook page for a chance to win up to $3,000 in weekly prizes including American Express gift cards, Square mobile card readers and more. See Facebook page for details.
Vonage iPad 2 Giveaway
Enter by August 31, 2011
Vonage is introducing the Time To Call app for Apple iPhone and iPad mobile devices, bringing affordable phone calls that can be charged to your iTunes account. To spread the word Vonage has partnered with blogs from around the world: each blog listed on the left of this page has an Apple iPad 2 32GB WiFi mobile device with US$15 of credit for voice calls to give away to their readers.
Next Big Business Idea Contest
Enter by September 1, 2011
BizSugar.com is giving away two $50 Amazon gift certificates in a random drawing, to the two best business ideas left in a blog post comment. All you need to do is leave a short comment containing a new business idea. Go here for details.
Small Business, Big Innovation Competition
Enter by September 5, 2011
The recession that started in December 2007 dealt a crippling blow to U.S. small businesses. Facing tough times, many entrepreneurs did something creative, imaginative or cutting-edge with their business models, which allowed them to survive and thrive. The Wall Street Journal invites eligible businesses to apply by telling them about the challenge your business faced; the innovative solution you put in place; and the significant milestone – such as vastly improved revenue or expansion into new markets – that has resulted since Jan. 1, 2009.
All entries that match the criteria will be featured on this blog. Readers will vote for their favorite stories and a panel of judges will select 10 finalists – and an ultimate winner – who will be featured in the Journal’s Small Business report, which publishes Nov. 21, 2011
Intuit Entrepreneur Day 2011
Enter by September 9, 2011
Intuit is scouting for start-ups and entrepreneurs to partner with. Whether it’s mobile, cloud computing, or data analytics technology, Intuit is looking for companies that have a solution that will support its mission to improve the financial lives of its millions of customers. Those companies who apply and then get selected will meet with Intuit business leaders and have one-on-one time to demo their products.
The deadline to apply is September 9th and the actual event with Intuit’s founder, Scott Cook, and CEO, Brad Smith, along with many other influential executives, will be held on October 6th at Intuit’s Mountain View, Calif. campus.
America’s Favorite Small Business
Enter by September 11, 2011
Dell, MasterCard and Microsoft are teaming together to search for “America’s Favorite Small Business.” This 13- week contest invites small businesses to submit a short video explaining why they should be America’s Favorite Small Business (AFSB) and claim the $75,000 prize package.
Cleantech Open Idea Competition
Enter by September 12, 2011
The Cleantech Open runs the world’s largest clean technology business competition, and they’re looking for the best clean technology ideas from around the world.
Enter to win a prize package of services worth $100,000 to help you start a business and grow your idea. If your idea beats out the competition in the National Competition, you get to represent your country as a Global Ideas finalist at the annual Cleantech Open Awards Gala on November 17, 2011, in San Francisco. There, your idea will be presented in a five-minute pitch in front of a crowd of 2,500 investors, entrepreneurs, sponsoring companies, corporations, members of academia, press and others interested in hearing your ideas and getting involved. The crowd will vote via text message for the “People’s Choice” winner.
Women Who Mean Business 2011
Enter by September 16, 2011
The Washington Business Journal announces the eighth annual Women Who Mean Business awards program. This award is designed to honor the region’s most influential businesswomen. We’re looking for women from every industry and profession; women who’ve made a difference in their communities, blazed a trail for the rest of us and are leaving a mark on the Washington-area community.
Nominees must be female residents of the Washington area who are employed in the region.
A nominee should be an established business leader with a strong record of innovation in her field, outstanding performance in her business and/or a clear track record of meaningful community involvement.
Dream Big Grow Here Business Grant Contest
Enter by September 23, 2011
Northeast Iowa Business Network and MyEntre.Net, Iowa’s online community for Iowa entrepreneurs and small business, have announced the launch of the new “Dream Big, Grow Here” contest for small businesses in Northeast Iowa.
Applicants can submit a video or email about their business and share their dreams for how they would like to grow their Iowa company and what it means to them to be in business in Iowa.
Other visitors to Dream Big Grow Here will have the opportunity to vote on the ideas they like the best, with the winning entrepreneur will receive $5,000 for their business. Regional winners can then go on to compete for the grand prize of $10,000 against the other regional winners.
ProjectREV
Enter by September 30, 2011
Project REV was launched in 2010 as a contest that gives small business owners a chance to receive a yearlong marketing makeover. Each participant is teamed up with a Deluxe marketing advisor and a business counselor from SCORE. At the kick-off event, the business owner will work with their advisor to analyze the business’s current marketplace situation and create a customized plan applying up to $15,000 in marketing products and services from Deluxe, including website design and hosting, branding, social media marketing, SEO, email marketing and more. See the website for more details.
Road Warrior 2.0 Challenge
Enter by October 6, 2011
Hyatt Place has launched the Road Warrior 2.0 Challenge, asking real-world business travelers to help redefine today’s Road Warrior for a chance to win a head-to-toe business traveler makeover. To enter the contest, visit www.facebook.com/hyattplace and tell how you embody or define the modern day Road Warrior, and create an original, fun name for the modern day Road Warrior.
Weekly winners receive a free night at Hyatt Place, and a grand prize winner will win a complete head-to-toe business makeover to help this “Road Warrior 2.0” maximize their efficiency on the road, and have a little fun along the way.
To find more small business events, contests and awards, visit our Small Business Events Calendar.
If you are putting on a small business contest, award or competition, and want to get the word out to the community, please submit it through our Small Business Event and Contests Form (it’s free).
Please note: The descriptions provided here are for convenience only and are NOT the official rules. ALWAYS read official rules carefully at the site holding the competition, contest or award.
Great Contests With Awesome Prizes for Small Business Owners
View full post on Small Business News, Tips, Advice – Small Business Trends
Why Are Women Business Owners So Reluctant to Raise Their Debt Ceilings?
Aug 18th
The U.S. debt ceiling has been making news for weeks (really months), but women business owners have debt ceilings of their own that could be holding their business growth back, the recently released PNC Women Business Owners Outlook survey reveals.
Overall, women business owners are optimistic. The survey found that almost half (48 percent) of U.S. women business owners believe their own companies’ sales will grow in the next six months, and 37 percent expect profits to rise. Six in 10 say their businesses are meeting or exceeding their sales expectations, and eight in 10 are optimistic about their businesses’ future prospects.
Women business owners have reason to feel good. According to the survey, in the most recent 10-year period, the number of women-owned businesses in the U.S. grew by 44 percent (twice as fast as men-owned firms) and, women-owned firms added 500,000 new jobs.
Despite these figures, just 41 percent of the women entrepreneurs surveyed plan to make capital investments in the next six months. Nor are they eager to take on new outside financing. Instead, PNC found, most women business owners are funding their businesses with credit cards and personal savings. Nearly 60 percent use a business credit card and 44 percent are using personal or family savings to finance business growth.
We all know it’s tough to get financing these days, but I think these statistics reflect ongoing issues among women business owners just as much as they reflect the state of small business lending. Many women entrepreneurs are reluctant to take on outside financing—whether because they want to keep their businesses manageable, don’t want to owe anyone anything, or don’t believe they could succeed at getting financing from banks, angels or venture capitalists.
And while bootstrapping your business is sometimes a smart idea (and sometimes it’s your only option), as your company matures failing to seek outside financing can hamstring your business and keep it from becoming a real player in your industry.
There’s also the irony that relying solely on your personal capital can put your personal finances at risk, explains Beth Marcello, director of Women’s Business Development at PNC, in announcing the survey results.:
“While women business owners often describe themselves as being debt-averse, those who rely strictly on savings and credit cards leave few options to weather downturns without cashing in personal assets or taking a hit to their personal credit history.”
PNC found that women business owners rely on an average of 2.7 sources of money to fund their businesses. Additional sources of capital include a line of credit from a financial institution (38 percent), personal credit card (34 percent) and a business loan from a financial institution (26 percent). If you’re not already doing so, Marcello says it’s crucial for women business owners to establish separate business credit and use it wisely. As you do so, keep in mind the four C’s of credit:
1. Capacity: What is your company’s borrowing history and track record of repayment? How much debt can your company handle?
2. Personal Capital: Good news for women who have bootstrapped their success: While banks don’t want you to put all of your personal assets on the line, having some level of personal capital invested in the business makes bankers more inclined to lend to you.
3. Collateral: Banks will want you to pledge business collateral, which can include real estate, inventory or accounts receivable.
4. Character: Banks are more likely to lend to business owners who have good credentials and references. Make sure your business credit report is clean and make all your payments on time to keep your reputation spotless.
If you have plans for expansion—as many women business owners in the PNC survey do—now is the time to start expanding your scope beyond personal sources of capital and laying the groundwork for outside financing.
Why Are Women Business Owners So Reluctant to Raise Their Debt Ceilings?
View full post on Small Business News, Tips, Advice – Small Business Trends
