How Women Business Owners Can Build a Financial Support Network
Women-owned businesses are an economic force, employing almost 10 million Americans and generating $1.8 trillion in revenue in 2022. Yet, despite their positive impact, women entrepreneurs often face more challenges when it comes to accessing funding and financial support. For example, female founders received just 2% of all venture capital in 2022 and were more apt to fund their businesses with personal savings than their male counterparts.
In this context, it’s critically important for women entrepreneurs to build a financial support network — a suite of resources they can tap for guidance, connections and, of course, capital. But how do you create such a network, especially when you’re already trying to build a business?
Fortunately, the work of establishing a financial support network likely mirrors much of the work you’ve already done to start your company. A smart combination of learning about the resources available, casting a wide net for opportunities and establishing industry and financial service connections goes a long way.
Consider these five recommendations for building a financial support network that puts you and your business on the path to success.
1. Identify your financial needs
This may seem simple, but entrepreneurs have a lot on their plate. It’s easy to get bogged down in the endless daily tasks and not step back to understand your short- and long-term financial picture. However, take the time to consider what your business requires to get started and what you need to sustain it while you’re building revenue.
For example, you may need a specific amount to develop your initial product. But you may also require a few months of additional funding to cover your expenses while you wait for your first customers to pay their invoices. Model your best, worst and average financial scenarios to gain a deeper sense of how much money you may want to raise or borrow and the timeline for doing so. Also, consider your own personal finances and how they’re coming into play. When will you need a paycheck? And how much of your own savings do you want to contribute?
2. Learn about all your funding options
Once you have an idea of how much funding you need, you can begin to look for funding opportunities. There are multiple ways to fund a small business or startup, including angel and venture capital, business loans, home equity and personal savings. Each option comes with advantages and considerations, and what works for one entrepreneur may not work for another.
For instance, venture capital is ideal for companies that make a scalable product and for founders who are willing to trade equity for an investment. Meanwhile, SBA loans — loans backed by the federal Small Business Administration — are available to a broader range of business types and loan applicants who may not qualify for conventional business loans.
Other resources include programs and grants designed to support women entrepreneurs, crowdfunding platforms, pitch competitions and more. The key is to educate yourself and uncover all of the available options so that you can access the capital that works best with your business goals and financial needs.
3. Network with other entrepreneurs
Finding other entrepreneurs who understand your needs and have already explored their own capital options is essential. Look for industry associations, entrepreneur groups, small business or startup events and conferences where you can make connections with your peers.
Networking with other female entrepreneurs can help you gain insights into challenges people have faced and funding solutions they’ve found. But don’t restrict your networking to only female-focused groups. Cast a wide net that encompasses any business owner you think may have guidance or advice related to business funding. Emails, coffee meetings or even a quick virtual chat with someone who has been in your shoes can help you uncover new ideas and options for capital that you may not have considered.
4. Connect with your bank early
Your business banker or commercial lender can be a secret weapon when it comes to learning about funding options. That’s why it’s imperative to connect with your bank early in your business journey. For instance, Northwest Bank’s small business team can help assess your business’s funding needs, provide guidance on what types of products work best with your company and financial scenario and recommend a timeline for when to apply for these funds.
Just as importantly, our mortgage loan officers and small business experts are tapped into the small business and startup ecosystems in their regions. They can also point you toward other resources, events and potential avenues for funding if a conventional bank or SBA loan doesn’t make sense.
5. Be persistent and stay focused
Building a financial support network takes time, and you may face some rejections or setbacks along the way. But don’t let them prevent you from moving forward. For example, an investor who says they’re not the right fit for your business may give you a lead on one who is — if you ask. They may connect with an accelerator geared toward startups in your industry or give you a piece of advice that helps your business grow. Continue to look for connections, follow up with people and ask those you meet if they know of others you should approach.
In addition, remember networking works best when it’s reciprocal. Offer what you know to others and take the opportunity to make introductions and point people toward resources you’ve found. It’s work, but this effort pays off in multiple ways and well into the future.
Get support building your financial network
Building a financial support network can help women entrepreneurs overcome or sidestep some of the gender-based obstacles that plague the business world. Find ways to tap your small business or startup ecosystem and leverage its financial resources, and you’ll set your business up for future growth and success.
Interested in learning more about the financial resources available to women entrepreneurs? Connect with a Northwest Expert near you today.