This post originally appeared on Entrepreneur.com - #Growing Your Business
Though women own 40 percent of U.S. businesses, making ‘real money’ is oftentimes more the exception than the rule. Here are some things getting in our way.
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Where are the million-dollar women? In 2018, just 1.7 percent of women-owned businesses generated more than $1 million in revenue, and the challenges are even greater for women of color entrepreneurs. Why is it that even though women own 40 percent of all businesses in the U.S., making “real money” is more the exception than it is the rule? What’s getting in our way when it comes to business ideas that make bank?
As a scaling coach and founder of Million Dollar Women, I work with hundreds of women across the country who are scaling up, and I interviewed dozens of successful female CEOs who built multimillion-dollar businesses from scratch in my book. In my experience, here are 10 of the mistakes that tend to get in our way.
Mistake #1: Doing it all yourself
Any entrepreneur who reaches $1 million in revenue likely knows how to delegate, and they usually have one or more full-time staff members, off-site contractors, virtual assistants and/or interns. In my experience, many women tend to be hesitant about delegating, in part due to perfectionism. Even when they know they’re stretched too thin, many women avoid delegating — they’re afraid the job won’t be completed correctly, they don’t want to spend the money or maybe they don’t have as much relevant experience in management. As a recovering perfectionist myself, I believe that until women learn to become “delegation ninjas,” it’s difficult to focus on work and effectively scale ups. In the Million Dollar Women community, we call this a shift from being the do-er to being the leader.
Mistake #2: Lack of internal systems and processes
The secret to scaling up isn’t usually about doing more of what you’re doing and working longer hours. (You probably already work too much.) It’s about working smarter, not harder. Finding the right internal systems and processes for your finances, marketing, sales and operations is crucial. While it can seem challenging to carve out the time to get these right, having good systems helps allow for rapid growth. To reach $1 million in revenue and beyond, we need to fine-tune the “moneymaking machines” at the center of our businesses. This means having a proven strategy, a sales playbook and functioning sales funnel, the right team and software the automates much of the work.
Mistake #3: Not busting limiting beliefs
A quote often attributed to Henry Ford says it best: “Whether you think you can or think you can’t, you’re right.” We may think we’re making rational decisions all day based on facts and figures, but in reality, our subconscious tends to drive the show. Many entrepreneurs think ramping up sales is the ticket to rapid growth, but without the right mindset, many entrepreneurs lack the belief in themselves required “go big.” In my view, it’s rarely competence holding women back — instead, it’s confidence and a mix of beliefs about money, whether they deserve success and the fear of the potential sacrifices involved in going big. A powerful mindset is important because it’s the foundation on which you build your mansion, and it’s the number-one thing the women I interviewed for Million Dollar Women underscored as critical to their success. Replacing limiting beliefs with empowering ones can make it possible to truly embrace success.
Mistake #4: Not understanding the scalable part of your business
Being able to identify the scalable part of your business can mean the difference between hitting a plateau and the “hockey stick” growth that we all aim for. It can also help make your company attractive to investors because your company could feasibly grow X times bigger without having to hire X times as many staff members (or spending X times as much on marketing or infrastructure). It takes approaching your company with that lens of “What is scalable, and how do I productize my services so I can charge more and reach more customers?”
Mistake #5: Not working with coaches, mentors and advisors
In some ways, women aren’t taught to invest in ourselves — we’re taught to put other people’s needs in front of our own. But in my view, the fastest way to scale your business is to learn from people who have been there, done that and can show you the way. Of course you can find your way to success on your own, but it could take significantly longer. And more than 50 percent of small businesses go out of business within the first five years. Having the right coach or entrepreneur program is the way to make sure you avoid the crash and burn scenario and are on track for high growth.
Mistake #6: Insufficient financial know-how
Finances tend to be the “Achilles heel” of business for many women entrepreneurs I know, and this can result in not poor financial planning or management and running out of cash. We don’t need to have finance degrees or MBAs to run our businesses, but we do need to educate ourselves in order to create a cash runway, steward our money better and effectively raise capital when necessary.
Mistake #7: Not having a cash runway
I recall one of my advisors telling me, “You can be low on cash for a long time, but you can only run out of cash once.” Many businesses fail or start sinking simply because they run out of cash. In my research for Million Dollar Women, I learned that women are twice as likely as men to shut down their businesses because they run out of cash. I made some errors in the early days of one of my businesses that almost cost me the company, so this one really hits home. You can better avoid this issue by working with an advisor on your cash flow projections or finding a great accountant who can walk you through your numbers. Don’t be afraid to ask for help or say you don’t understand, and be sure to look at what you owe and what is owed to you on a weekly basis so you can have a healthy cash balance.
Mistake #8: Good on vision, bad on execution (and vice versa)
Every entrepreneur has a different skill set. Some are excellent when it comes to having a vision for their company but not so good at execution. Some are excellent at getting things done but lack the mindset for big-picture planning. Both are essential to your business success, so figuring out your strengths and hiring for your weaknesses (or creating an advisory council to help you) is imperative. Without good vision, how can we create one-, three- and five-year plans for our businesses? And without good execution, how can we build the systems and hire the teams that allows us to keep scaling up? Successful entrepreneurs learn to work on the business not just in the business (or during the work day) and to make strategy a priority. They learn to both “plan the dive and dive the plan” — in other words, take time for planning and make sure everyone knows their role in executing on that plan.
Mistake #9: Improperly tracking marketing spend
One of the dangers of running out of cash (see #7) is runaway marketing spend. Between bidding on Google search terms, trying Facebook ads and other online and offline marketing, marketing is one biggest expenditures for fast-growing companies. There was a time at Little Pim where we didn’t track where our customers were coming from and didn’t know which marketing channels were performing and why. Eventually, we started keeping a closer eye on our marketing spend — that way, we were able to avoid falling into the money pit that marketing can be and begin getting excellent ROAS (Return on Ad Spend). We implemented what I call the “75/25 marketing budget rule” (part of the “moneymaking machine” we built that I referenced in #2). Figuring out which marketing channels work for you and rigorously tracking your spend is a key part of scaling up.
Mistake #10: Not investing in networking or personal growth
I snuck two mistakes into this last one. We don’t know what we don’t know, right? So the only way to learn what we don’t know is to surround ourselves with people who can help us stretch to the next level. Make time for personal and business growth, whether it’s reading business blogs and books, attending conferences, joining organizations for entrepreneurs, watching videos or finding the right coaches and mentors. I did all of these, and most of the women I’ve spoken to who make it to $1 million in revenue and beyond did some combination of the above. Make time for your business and personal growth, and it should pay off in spades.
If any of these resonated with you, now you know what to work on in 2020. Remember that “you can only grow your business as big as you grow yourself” — so here’s to a year of exponential growth.