When women start their businesses, one of the first questions they face is, “Why am I starting this business?” Some women answer that they are absolutely determined to build something, while others answer that they are starting their business to have more control, flexibility, and autonomy in their lives.
In a recent report entitled 'Factors Influencing the Growth of Women-Owned Businesses' by the National Women’s Business Council they suggest that the reason behind why you start your business directly impacts whether or not you invest in the growth of your business. The reason also ultimately determines how quickly your business will grow. Regardless of why you start a business, in both cases women face a similar and important decision point about 5 years after inception of the business.
After five years, a woman who built her business for flexibility may find that her needs have changed:
- Running a company that covers its costs, offers professional stimulation, but takes a lot of work to generate very little revenue can become frustrating.
- Flexibility may no longer be what she needs the most, and
- She begins to ask herself whether running a business is worth it, or whether going back to a job might be a better alternative.
For the woman who has grown her business over its first 5 years in an aggressive manner, (she may have hired employees, leased office space, etc.) she now worries about things like:
- Making payroll,
- Mounting employee issues, and
- Thoughts about how to continue to grow the company
She’s equally frustrated by how hard she works, but generally the idea of returning to a job is out of the question.
Nevertheless, both women are at a pivotal point – what do they do at the five-year mark with their businesses?
Another interesting point in the research from the National Women’s Business Council is that for women, oftentimes growth is a choice. And in the case of the woman who first launched her business because, come he** or high water she was going to do it, she had already chosen growth. As such, she invested and perhaps took greater risks to grow her company than perhaps the other business owner did. However, the second business owner who built a business that offered flexibility and more autonomy has worked tirelessly over her first 5 years to build a personal brand, develop customer loyalty, and has invested in her business from a time and money perspective. To varying degrees both women have chosen growth over the first five years. And now, both have to choose whether to grow again, but in different ways.
After 5 years, the woman who built a more flexible business must decide whether or not to continue to build her business. And generally at this point, growth may require actions like:
- A review of the services or products,
- An understanding of sales and projections, and
- A careful analysis of the distribution channels (ie, word of mouth is great, but to grow a business needs more than just blind luck that referrals will roll in).
The woman must ask herself:
- Can I generate enough cash to stay in business and finance growth?
- What will it cost to finance growth, and
- How will I generate that additional income?
Cash management becomes essential at this stage of business.
And the woman who built the business on a more aggressive trajectory, she also needs a growth plan. Her growth plan may include strategies like:
- The ability to develop employees into new roles in a growing company,
- A plan for hiring for future growth needs while keeping the business profitable, and
- She must also begin to create operational plans – making sure the company has budgets, performance management plans, and quarterly projections.
Both of these women face hard decisions: the decision of whether or not to grow, and then, what that clear vision of growth looks like. For many of us, this can seem daunting and overwhelming. Where do we go from here? And how do we get there? Luckily there are some wonderful resources to help you navigate these waters, from local SBA offices and Women’s Business Centers to your fellow peers in Her Corner.
But whatever you decide, one thing is for sure. Don’t linger too long in analysis paralysis, as you may find it harder and harder to get motivated to take the next step.