Fed up with underwhelming jobs and being chronically underpaid in traditional roles, many women are choosing to put their energy into their own businesses that generate terrific amounts of revenue.
The classic barrier entrepreneurial women face is how to get funding to found and grow their businesses. As a woman entrepreneur myself, I had to navigate this hurdle.
If you’re a woman in business, or thinking of starting your own venture, here are a few ways to secure the money you need to launch and scale your company.
Applying for grants and incubator programs
Depending on where you live, you may be eligible for thousands of dollars of funding through government grants, as well as grants from public and private organizations. Some grants are geared specifically towards supporting women entrepreneurs whose businesses are at various stages: inception (very beginning), start-up (a few years in), and mature (been in business for a while and needs to keep growing). A quick Google search should point you toward finding available grants and eligibility criteria. Some of my favourite sites are Business Development Bank of Canada and the Canadian Chamber of Commerce.
Sometimes, these grants are also linked to incubator programs.
Incubators, also known as accelerators, offer formal business mentorship, tools, and resources for women business owners. Like the name suggests, these growth-oriented programs typically take place during a compressed period of time, say 90 to 180 days, to help female founders take their businesses to the next level. Though not all incubator programs are linked to grants, they have massive intrinsic value from all the learning and strategy work that takes place.
Loans, lines of credit, and other lending products
Women entrepreneurs can apply for a business loan or line of credit at just about any financial institution. But, in my first-hand experience with financing my own businesses, sometimes the qualification structure is better suited to more established businesses.
The earlier you can establish a lending relationship with your financial institution of choice, the better off you’ll be when you do qualify for products, like operating lines of credit (which are extremely helpful when you have a business that has seasonal cash flow).
Hunt around for lenders who specialize in dealing with entrepreneurs. Examples are Alberta Women Entrepreneurs, Women Entrepreneurs Saskatchewan, Export Development Canada and more.
At a minimum, to begin a loan or line of credit application process, you need to produce your business plan, a cash flow statement (or projection), and a personal net worth statement. That last item can definitely be a barrier, because if a woman entrepreneur has few assets to her personal name, she might not secure as much funding as, say, a woman who has $75,000 in her TFSA or owns a home.
Winning pitches with investors
This process is essentially like what you see on TV shows like Shark Tank and Dragons’ Den, where an entrepreneur pitches their business idea to a group of investors (or people who make decisions on behalf of larger funds about what to invest in).
Of course, if televised, this can be great for PR for a business (think about the little labels on websites that say “as seen on Dragon’s Den”). However, just about any pitch platform, televised or not, will be good for getting the word out about your business.
Recently, I learned of Total Mom Pitch, which is a business pitch competition and program that offers a forum for entrepreneurs who are mothers to share their business ideas and gain access to expert advice. More of these kinds of women-oriented pitch platforms should help to break down barriers women face when launching and growing their businesses.
If you’re ready to pitch, these are the ingredients you’ll need: clear communication about your vision for the business, the numbers (your current and future growth story for your revenue, and how you plan to manage your margins), and what the opportunity for the investor is (how much they stand to make and other ways the investment can benefit them).
Don’t be surprised if you get asked what your true motivation for going into business is––, though it might not be deemed very ladylike by dinosaur investors you won’t want to take money from anyways, it isn’t wrong to say ‘TO MAKE MONEY!”
Whenever you’re getting ready to pitch, it’s essential that you have two versions. The first, is an elevator pitch that’s two minutes long. The second is a comprehensive pitch that’s 30 to 60 minutes long. Often you’ll start with your elevator pitch and, if it’s effective, it will get you in the door for your comprehensive pitch.
Money from family and friends
Anytime you mix family or personal relationships with money, you open yourself up to relationship challenges. Watch out for investments, loans, or gifts that come with extra strings attached. My advice is to pitch family members who understand what you’re doing, and set out a super clear framework for how you’ll either pay them back or reward them with dividends or equity. For example, my aunt is an experienced entrepreneur herself and, when I was starting my business, I ran my business plan and my pitch by her to see if she’d be interested in investing. She was, but she also gave me boatloads of feedback to help strengthen my business
Grow with your cash flow
As you start increasing your revenue, you’ll want to ensure a portion gets reinvested towards your business growth––for example, new product lines or talent. But, this needs to be balanced with paying yourself. This business model is called “profit first,” and I recommend studying up on it. It’s where you, as an entrepreneur, ensure you are paying yourself while you grow your business…and remarkably, that means paying yourself first before paying other expenses.
Of course, you can use your savings to boost your business too, and you will almost certainly have to use some… I certainly did. But, don’t overdo it because you also need to take care of your personal finances so that you’re properly prepared for emergencies and, ultimately, retirement. It’s important to look into other financing options, like those mentioned above, to accelerate your business growth.
Authored by – Lesley-Anne Scorgie
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