INSIGHT OF THE WEEK
“The very skills that get women to start a business are the same ones that hold them back when they go to scale.”
-Julia Pimsleur on scaling women owned businesses
Why Only 3% of Women Owned Businesses Make $1 Million+
Julia Pimsleur is a scaling coach, author and entrepreneur on a mission to help one million women get to $1 million in revenues. She is the Founder of Million Dollar Women and the author of the best-selling book Million Dollar Women: The Essential Guide for Female Entrepreneurs Who Want to Go Big. Listen as she and host Kim Ades discuss why only 3% of women owned businesses make $1 million or more and the 3 things you need to overcome this statistic.
In this episode of Resilience Radio, we explore:
- Success rates of women owned businesses.
- The 3 things women need to go big with their business.
- The mindset obstacles women encounter that prevent them from scaling.
- How to know if your business can benefit from extra funding.
Take a Listen!
Links for Female Entrepreneurs:
Julia’s book: Million Dollar Women
About Julia: JuliaPimsleur.com
Why Less than 3% of Women Owned Businesses Make $1M+
Here is a super interesting snippet of our conversation! See transcription (11:18-15:51):
Kim: You wrote a book called Million Dollar Women.
Julia: I did because when I went out to raise venture capital for my company, which was about five years in, that was when I first learned the scary statistic that less than 4 percent of venture capital goes to women owned businesses. And believe it or not, it’s now down to 2 percent. It’s going in the wrong direction, not the right direction.
Kim: Why do you think that is?
Julia: Well, there are a number of reasons, and I’ll get to that in a moment, but there was another statistic that I learned at the same time, which is that fewer than 3 percent of women entrepreneurs ever get to a million in revenues, and fewer than 1 percent are women of color.
Julia: So these are some pretty shocking statistics in this day and age, right?
Kim: Well, they’re not shocking, but they’re sad.
Julia: Well, they were shocking to me because I had surrounded myself with other ambitious women and felt like, surely, we’re all making these great strides. But then when I looked at the stats, it turns out there were actually very few of us. And when I joined Entrepreneurs’ Organization (EO), which is an international organization, there were very few women in that organization and you have to have a million in revenues to join. So all of these things conspired to have me start to think, this is something I want to change or be part of helping to change and it really felt like a calling to help move those numbers.
Kim: Okay. If we were to step away from the stats, give me your instinct on why so few women get beyond a million dollars? Why do so few women get access to venture capital money?
Julia: It’s not really a hunch anymore because I wrote the book on it so I did a lot of research over the last three years. So I’ll tell you why it is. The main reason is that women over-index in businesses that are hard to scale.
Kim: What does that mean in English, for people who don’t understand what over-indexing means?
Julia: It means that they are starting businesses largely in industries that are hard to scale up like service-based businesses, education and healthcare. Some healthcare can be very scalable, but some is not. If you’re sending out nurses to people’s homes and you don’t have a technology play within that, that’s hard to scale. So I would say that’s the number one reason. There are not as many women in tech, which are the most scalable businesses. However, there are a lot of businesses that are called tech-enabled, meaning maybe it’s a product company or a services company, but they have implemented an original use of tech, whether it’s an app or website or somehow using tech in their companies.
The second reason is that the type of women who start their own companies, and I put myself in this category, are kind of type A. Very driven, very perfectionist, they want things a certain way, and so that causes us to hang out a shingle and say, “Okay, I can do this work at a really high level.” But then, that’s often the very same thing that holds us back, because if it’s only you and nobody else can meet up to your standards, then it’s very hard to scale. So it takes a whole different set of skills to start a business than it does to scale a business. And the very skills that get women to start a business are the same ones that hold them back when they go to scale.
Kim: So let’s review this because I think this is very important. You’re saying that women tend to choose businesses that are more challenging to scale, and the very skills that enable them to start a business also get in their way when they are thinking about or wanting to scale. Or maybe they don’t even think about scaling because they don’t think it’s possible to find anyone who can live up to their standards and replace their own quality of production.
Julia: Yes, well said. And I would add that it’s a huge thing around mindset because when I wrote Million Dollar Women, which told my story of building Little Pim into a multi-million dollar business from a $30,000 investment and all of my belly flops along the way, I also interviewed women across the country who had built multi-million dollar businesses. And we all agreed that you really just need three things to go big, and here going big is getting to a million and beyond.
Those three things are the right mindset, the right skillset and the right network. Mindset is the hardest. If you can get those three things right, you can have a scalable business that goes to a million and well beyond. But without those three things, it’s almost impossible.