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    A milestone hard to reach: Why the $1 million mark has proved to be elusive for women

    Transitioning an idea into an actual business is hard on its own, but growing and scaling that business makes the task all the more challenging. That’s why a large milestone for companies is the $1 million revenue mark, which has become a symbol of success for small-business owners across the United States.

    But for women, that $1 million mark has proved to be more elusive when compared with men.

    About 39 percent of all privately held businesses in the United States are owned by women, but only 4.2 percent of those businesses have generated $1 million or more in revenue, according to NAWBO numbers. Only 1 in 5 businesses with more than $1 million in revenue in the United States are owned by women. 

    Compare that with businesses owned by men, which are 3.5 times as likely to reach that $1 million milestone, according to a Forbes report in 2015.

    While the gap has closed in recent years — women-owned businesses with more than $1 million of revenue increased by 46 percent in the past 11 years versus 12 percent for all other businesses — the disparity is still concerning.

    Why the large difference? There are many reasons, but here are the three largest issues hampering growth for women business owners.

    Limited capital

    It’s hard to imagine that more than 30 years ago some state laws prevented women from receiving business loans unless men signed for them. A 1988 bill, labeled HR 5050, changed all that, allowing women to become independent entrepreneurs.

    But even today, women still run into trouble when trying to secure funding and assistance.

    As they start a business, women find it difficult to raise startup capital. According to a 2017 study by Fortune magazine, women-founded businesses earned 2 percent of all venture capital. Their male counterparts received roughly 79 percent, with joint-owned businesses (male and female) securing the rest.

    In terms of small-business loans, women struggle as well, receiving 4 percent of the total dollar value of small-business loans, according to a 2014 study.

    There three main reasons why women run into trouble when seeking funding, according to a Boston Consulting Group study.

    First, women’s ideas are more prone to pushback. Second, BCG found women are more conservative about their ideas than men, who tend to set more ambitious goals. Third, most investors are male. About 92 percent of partners at the biggest venture capital firms in the Unites States are men. This can be a problem when some of the biggest industries women entrepreneurs operate in — about 23 percent of all women-owned business fall into the services category, like nail or hair salons — don’t generally target men as the audience.

    Lisa Shimkat, the state director for Iowa’s Small Business Development Center in Ames, said the key for women is to present a well-thought-out business plan. She also recommends tapping into Iowa’s resources, like the SBDC, to help develop those plans and find sources for capital.

    “This is a problem that a lot of businesses are running into,” Shimkat said. “What it really comes down to is putting together a solid plan and then knowing what to do with that plan and what avenues there are out there. … You need to focus on establishing business credit, and that will help open doors.”

    Networking struggles

    In order for businesses to find success, founders need to have a strong network of mentors and connections. For women, having this strong network can be a struggle. About 48 percent of female founders report that a lack of available advisers and mentors hinders their growth, according to Inc.

    To find support, women entrepreneurs can turn to the many women-focused business networking organizations in Iowa, like NAWBO Iowa, FemCity and Lead Like a Lady.

    Self-doubt

    Because of traditional gender roles, many women in the United States haven’t been exposed to entrepreneurship. Or they may see other responsibilities, like family life, as more important. This can hamper the growth of women-owned businesses as well, through the unwillingness to seek capital and outside help.

    According to a recent study by SCORE, a business mentoring organization, 25 percent of women sought financing over the life of their business, compared with 34 percent of men. In a 2013 Forbes report, women also were less likely to feel positive about their business opportunities and set their business goals lower than men.

    A lot of that confidence can come from other women business leaders, who can reach out or connect with budding women entrepreneurs to assist in their professional journey.

    “Sometimes we can be our own worst enemies,” Shimkat said. “We need successful women out there to start reaching out to female business owners, female leaders and other females who want to be leaders and introduce them to their networks. Pave the way for them.”

    A bright future ahead

    Despite the potential roadblocks, many women are still finding overwhelming success as business owners. Research suggests companies run by women made 78 cents per dollar funded. Male-founded companies only made 31 cents per dollar funded.

    That’s partly because women are more methodical in how they build their companies. According to Barclays and the University of Cambridge, women strive for “steady, profitable expansion and prefer to re-invest business profits than take equity investment.” Women find greater growth and success despite not having the same investment opportunities as their male counterparts.

    Because of growing opportunities for women in entrepreneurship, the number of women-owned businesses is growing at a rapid pace. The Annual Survey of Entrepreneurs found the number of women-owned businesses increased 2.8 percent in 2016, double the rate of men-owned businesses, which was 1.4 percent. There are also a significantly higher percent of women (57 percent) earning bachelor’s degrees than males, who earned just more than 40 percent.  

    Doors are continuing to open for women as entrepreneurs. Even if those women do run into some troubles along the way, they are seizing on opportunities. And as more women fill more prominent roles in businesses, younger women will have more mentors to turn to, creating a positive ecosystem for potential women business owners across the nation.

    After winding path, Kendra Erkamaa finds her passion

    Kendra ErkamaaIt was time for Kendra Erkamaa to do some searching.

    After having her positon eliminated in catering management in 2004, Erkamaa knew she had to find a new job. But after a few years in the food service industry, she understood it wasn’t the right career path for her. So she set out to do her own research, taking stock of her personal interests, passions and skills.

    For as long as she can remember, Erkamaa has enjoyed helping people. Because of that altruistic desire, she just couldn’t find the right fit in education and in her career.  

    Growing up in Iowa City, Erkamaa was the daughter of a helicopter mechanic and a nurse. She loved science and math, eventually attending Iowa State University as a George Washington Carver scholar and initially studying chemical engineering. But she struggled to find a passion, switching her major four times before graduating in 2002.  

    “I wanted to do something where I was making a positive impact on people’s lives,” Erkamaa said. “As much as I loved learning, I didn’t feel a burning passion for what I was doing.”

    With that in mind and presented with a new opportunity to find a new industry, Erkamaa wanted to make sure her next career choice was the right one. One field highly interested her: financial planning. She could serve as a guiding influence in many people’s lives while helping them reach their financial goals.

    To find out more about the industry, she picked up the phone and started calling financial planners.

    “That’s when I realized that this is a powerful profession to be in,” Erkamma said. “Because so much of my family’s history was struggling with finances, I love to be on this positive side of creating financial wealth and doing good things for people.”

    After those calls, she joined Triangle Financial Services in 2004, eventually taking over the business in 2007, where she has been ever since. During those three years, Erkamaa learned and soaked up knowledge about the industry, covering securities, financial planning, insurance and more. 

    She experienced trouble right away. After buying the business just months before giving birth, Erkamaa guided the company through the deepest market crash in 70 years in 2008. Today, the company has seen unprecedented success, still taking a client-first, holistic approach to wealth management, working side by side with clients along the way. Triangle Financial Services is a fully licensed firm from fee advice, insurance, stocks/bonds and mutual funds.

    Later in 2007, Erkamaa connected with NAWBO Iowa through a client. Erkamaa was looking for a support network to help her navigate the challenges of being a first-time, female business owner. Since joining, she has felt the benefits of the organization through the growth of her business and network.

    “NAWBO Iowa has been incredibly valuable for me, and it’s more than just an impact on my business,” she said. “The organization is also my network of some of my closest friends. There’s some powerful and fantastic connections.”

    Erkamaa was tabbed to lead NAWBO Iowa as co-president alongside Kathryn Towner, owner of WinCommunications, in 2018. In addition to her commitment to NAWBO, Erkamaa is on the board of the Money Smart Week, Jumpstart and Zenith Chamber Orchestra organizations. She is also a budget counselor at Beacon of Life.

    In 2007, Erkamaa was named the Women Business Owner of the Year by the Greater Des Moines Noon Chapter of American Business Women’s Association (ABWA).