Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with @CWEChatham. Rebecca Harris, MBA is the Director of the Center for Women’s Entrepreneurship at Chatham University and has over 20 years of experience as an entrepreneur, consultant, and marketing specialist. She has started and managed a number of businesses, consulted on business development, marketing, sales management and strategic planning, and has worked for several non-profit organizations. Rebecca holds an MBA in marketing from The Fox School of Business at Temple University and a Bachelor of Science degree in communication studies from Northwestern University. For more info, visit chatham.edu/cwe
SmallBizLady: Can you provide us with some basic stats about women-owned businesses?
- The number of women-owned firms accounts for 30% of all enterprises.
- Women-owned firms employ 6% of the country’s workforce.
- Women-owned firms contribute 4% of business revenues – roughly the same share they contributed in 1997.
- Only 1.8 % of women-owned business hit the $1 million dollar mark compared to the national average of 5.3%.
SmallBizLady: What are the indicators that women need to take more risks in business?
Rebecca Harris: Between 1997 and 2013, the number of women-owned firms grew at 1-½ times the national average which is great news, however, when you look at the number of women who make it to the million dollar mark and the fact that women-owned businesses still only contribute 4% of business revenues to the economy – which is the same amount they contributed in 1997, I think that says it all – women have more work to do!
SmallBizLady: So how can women get to the million dollar mark as well as increase their business revenues?
Rebecca Harris: The bottom line is that women have to take more risks. And the risks we are going to talk about apply to both women and men in small businesses – as there are certainly lots of men who are small business owners who are risk averse. But, men have an advantage over women from a biological perspective – men have more testosterone. Studies show that women with higher than normal levels of testosterone take more risks than women with less testosterone – and men, in general, have more!
SmallBizLady: What do you really mean when you talk about risks?
Rebecca Harris: When we talk about risks in business, we are referring to both behavioral and well as business risks. Behavioral risks include: calculated risks in order to get to ahead. These types of risks include:
- Getting out of your comfort zone
- Admitting mistakes and soliciting feedback
- Showing ambition
- Stop playing it safe!
SmallBizLady: And in terms of business risks what are you looking at?
Rebecca Harris: When we talk about business risks we are talking about taking “calculated risks.” – Don’t go out today and take out a loan for a million dollars because we told you to take risks! 🙂
Calculated business risks include:
- Hiring more employees (most women-owned firms are owner-operated)
- Taking out business loans (most women-owned firms finance on credit cards debt)
- Embracing change and responding to challenges in the marketplace
- Knowing when to get in and when to exit!
SmallBizLady: How does taking risks in business correlate with the types of industries small businesses are in?
Rebecca Harris: The correlation is significant, especially for women.
The industries with the highest concentration of women-owned firms are: health care and social assistance, educational services, and administrative support.
The industries with the lowest concentration of women-owned firms are construction, transportation and warehousing, wholesale trade, and finance and insurance.
And in general, the industries with the highest concentration of women-owned firms are lower revenue producers than those with the lowest concentrations of women business owners.
SmallBizLady: What are some of the ways to overcome the fear of taking risks in business?
- Don’t be afraid to fail, if you don’t fail sometimes, you are playing it too safe.
- Follow your intuition, for many times your gut reaction is correct.
- Understand that everything won’t be comfortable all the time – you will need to have uncomfortable conversations with your employees and colleagues.
- Realize that doing the same thing over and over will only result in the same outcome – and will eventually lead to diminishing returns and potential failure.
SmallBizLady: Can you actually build a plan to overcome the fear of taking business risks?
Rebecca Harris: You absolutely can. And for many business owners, this is really critical if risk taking does not come naturally. Steps in this planning stage would include:
- Start by taking small and less significant risks that have fewer long-term consequences.
- Develop a specific plan for what business success looks like and work toward that. Having a plan to follow decreases your level of uncertainty about the future and thus decreases risk.
- Ascertain an outside level of the amount of risk you can endure and work to this level (i.e. taking out loans up to a certain level, hiring a certain number of employees).
- Ask, ask, ask! If you don’t ask you will never be in the game.
SmallBizLady: What else can you do to help overcome the fear of taking risks?
- Become more risk forward – think and learn about what taking risks will produce and studying and thinking about this can lead to more calculated risk taking behavior.
- Become an expert in your field and in the future trends in your business sector. Knowledge is power and if you have a good sense of future trends, you will be more secure taking risks.
- Find a mentor who you can work with to help you overcome fears and evaluate opportunities.
SmallBizLady: Why is taking calculated risks taking good for you?
- “No risk, no reward.”
- Taking risks can help you break out of a rut and lead to greater confidence as a leader.
- Risk taking is what moves the world forward, and change is critical in life.
- Risk taking involves learning and engaging in new and different behavior, and learning new skills keeps us motivated and energized.
SmallBizLady: If you are not a natural risk taker can you really learn this skill and be successful in business?
Rebecca Harris: I not only think you can, but that you must do this. You may have the greatest business idea since sliced bread, but if you can’t get out and sell your new idea, finance your operations, grow your customer base, enter into new markets, accept uncertainty and some failure, you will never take your business or yourself to the next level.
“Architect Shaking Hands” courtesy of Ambro / www.freedigitalphotos.net
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