3 Reasons Women-Owned Businesses Fail to Grow by Kim Kiyosaki

The 3 Things Women Entrepreneurs Need Today

Moving from policy to practical solutions will help pave the way for more females to run their own businesses

According to a 2015 study conducted by the Kaufman Foundation, women are half as likely as men to start a business.

This is true despite that fact that women make great entrepreneurs. If you're part of the Rich Woman community, you already knew this, but as confirmed by Kaufman:

  • Women entrepreneurs have a more nuanced view of risk, identifying more strongly than men as financial risk takers, while remaining concerned about "fool hardy risks."

  • Women display greater ambition to become serial entrepreneurs than their male counterparts.

  • More broadly, an increase in the number of women in business leadership positions is correlated with increased business returns and payout ratios.

Among the barriers Kaufman suggests keep women from entrepreneurship are:

  • Lack of mentors

  • The perception of starting a business as masculine, not feminine

  • Work-life balance issues (i.e., being a working mother)

Unfortunately, the Kaufman report falls short in its recommendations to help more women become entrepreneurs. For the most part, they point to investments in programs such as "develop and report metrics for entrepreneurship programs and initiatives" or "increase the number of women represented in entrepreneurship programs" — not investments in the women themselves.

Those suggestions that aren't programmatic are soft, like "celebrate successful women entrepreneurs" and a call to "decrease the risk of entrepreneurship" through government policy.

I'm sorry, but women don't need more programs and we definitely don't need the government to make it “easier” for us. What we need is proper financial education, a can-do mindset, and access to capital to help fund our businesses.

Women and financial education

Our nation has a lot of work to do when it comes to making sure women, especially young women, understand money and how it can work for them. The current state of affairs looks pretty bleak:

  • As Fortune reports, a FINRA study found that only 18% of millennial females demonstrated high financial literacy, compared to 29% of males.

  • Only 54% of millennial women report feeling in control of their finances, compared to 76% of men in the same age group.

  • According to a survey from Novi Money , just over half of millennial women say that money is the most stressful thing in their lives — and 55.3% say that just thinking about money is overwhelming.

  • The same Novi survey also shows that women are twice as likely as men to lack confidence in their own financial decisions.

Now, I can’t turn a blind eye to some of the reasons for this disparity: there’s still a wage gap in the workplace that causes women to earn less income; a pink tax on female-marketed products which means we have to spend more than men on basics; and the fact that we live longer, which means we’ll need more money for cover our retirement and healthcare costs. But since I’m not convinced that any of these issues will ever be fixed, women have to learn a way around them.

Do you want to help fix the gender gap in entrepreneurship? Start with fixing the gender gap in financial literacy.

It’s clear that women need to rise up and take control of their own financial education. Here are a few ways for women entrepreneurs (or any woman for that matter!) to get started:

  1. Read books

    There are hundreds of books about money and investing for those of you who are just getting started and for those who are seasoned investors. Might I suggest starting with my book, “ It’s Rising Time!: What it Really Takes to Reach Your Financial Dreams .”
  2. Listen to podcasts

    Your drive time is a great time to learn. Subscribe to podcasts about finance, investing, management, personal development, and more.
  3. Read financial newspapers and magazines

    The Wall Street Journal , Investor’s Business Daily, and Barron’s are three newspapers heaped with investment information. Reading those daily will dramatically increase your financial knowledge.
  4. Play educational games

    If you’re more of a hands-on learner, try your hand at CASHFLOW, the investing and wealth building boardgame Robert and I created. Or start with CASHFLOW Classic to play for free . Or join a CASHFLOW Club in your area — there are almost 2,000 CASHFLOW Clubs throughout the world. You can find a local one by you by searching “CASHFLOW Club” on Google. Most clubs play the CASHFLOW game on a regular basis, support one another with their investment goals, bring in guest speakers, and learn together how to make the most of their financial futures. It’s a great way to surround yourself with like-minded individuals.

A can-do mindset

Your mind is a powerful force — have you ever noticed how you can build yourself up or knock yourself down with only a few fleeting thoughts? Henry Ford’s quote sums it up best: “Whether you think you can, or you think you can’t — you’re right.”

"Which beliefs are holding you back from achieving your goals, and what are you going to do about it?"

A few months ago, I wrote a post called, “Overcoming Your Limiting Beliefs.” In that post I shared how my mistaken beliefs about how eating three meals a day lead to weight gain were holding me back from getting the fitness results my trainer was trying to help me achieve.

In that post I wrote:

“The point of this story is that I had a set belief that actually hindered me from making progress and achieving my health goals.

Although I have heard since I was a young girl that I should eat three meals a day, I never believed that the benefits were real. I had the information, but it wasn't until I actually applied it — and ate the three meals a day consistently — that I had the experience and the true knowledge of what worked best for me.

Obviously, this simple truth can be applied to any situation in our lives. So, the question for you is, "Which beliefs are holding you back from achieving your goals, and what are you going to do about it?"

This led me to wonder: Which comes first, the chicken or the egg? In other words, is it the reports that say women entrepreneurs are disadvantaged and underrepresented in the marketplace or the fact that women hearing those reports are tapping out before they even begin?

I say believe you can start a business and you will. There will be challenges, for sure. But everyone, regardless of gender, faces challenges. Don't let a negative mindset — yours or someone else's — hold you back.

Now is the time for you to shed your limiting beliefs and be honest with yourself about what’s holding you back from achieving your dreams.

Access to capital

What does most every entrepreneur need to start and run a business? Money! Yet women are constantly facing a battle to secure the funding they need. The Kaufman Foundation report shared a powerful chart regarding women entrepreneurs and funding:

Identifying the gender financial gap infographic | Rich Dad Financial Education Blog

Let’s look at some more numbers:

  • Nearly three-fourths (73%) of women entrepreneurs cite lack of capital and cash flow as their top challenge, reports StartUpNation .

  • According to Entrepreneur , women-owned businesses receive just 7% of venture capital investment money. The numbers are even worse for minority women entrepreneurs — black women only obtain 0.2% of venture capital investment dollars.

  • Women receive just 16% of all conventional small business loans made each year.

  • Men are almost twice as likely to raise at least $100,000 in funding than women, reports StartUpNation .

It's a fact. Women do have a harder time getting funding than men. Like I said, there are challenges. Thankfully, though, there are also solutions. So where can you find the money to fulfill your dreams?

First of all, capitalize on your network. The fact that only 5.4% of women utilize their "close friends and acquaintances in search for funding" is absolutely crazy! I think this comes down to a mindset issue. Ladies, don't be afraid to use your network and ask for what you need.

Another place to look for capital is through the power of technology. Online crowdfunding allows smaller investors to pool money together to invest in start-ups. Data shows that the disparity between funding men and women entrepreneurs is vastly different between these platforms and traditional venture capital firms. For instance, UK-based SyndicateRoom has more than 50% of it's businesses raising money led by women, compared with just 9.7% of US venture-backed companies.

The money is out there, and, more importantly, it's there for the taking.

While it may feel like the deck is stacked against us sometimes (and in some ways, it really is), it’s truly up to each woman to take control of her own financial future and make the changes she wants to see in her life.

By increasing your financial literacy through education and hands-on learning opportunities, cultivating a positive attitude that helps you see the possibilities, and looking for ways to raise the capital needed to begin your business, nothing can stop you from achieving your true potential.

Are you ready to join the ranks of millions of other women entrepreneurs? Then ask yourself, “What steps can I take today to get the ball rolling?”

Original publish date: July 30, 2015