The number of women-owned firms is growing more rapidly than the number of U.S. businesses overall -- an important point to consider in a slow moving economy aching for growth. According to the U.S. Census Bureau's most recent data, there were 7.8 million women-owned firms in the United States in 2007. Those firms generated revenues of $1.2 billion and employed 7.6 million workers. Are those firms important? You bet they are! With an increasing number of women pursuing entrepreneurial careers, it is important to gain a better understanding of the factors that will help them succeed. This isn't a matter of equity. It's not a feminist thing. Understanding and catering to these factors is just good business.
Three types of "capital" play an essential role in the launch and development of women-owned firms: financial capital (funding), human capital (education and experience), and social capital (key contacts and networks). As a business community, we have already learned a lot about the effects of financial and human capital, but we know considerably less about the role of social capital in helping women entrepreneurs to achieve their goals.
The task of every entrepreneur is to mobilize and acquire the resources and capabilities that she needs to make her firm successful. She may have great product development skills, but lack marketing expertise. She may have a company with the potential for dramatic growth, but lack systems and controls to ensure that the fast moving train does not go off the tracks. These are exemplary opportunities for her to use social capital networks and contacts who can help her secure the tools that she needs to succeed.
Social capital is carefully built and cultivated over time, and it is something to which women entrepreneurs need to pay careful attention. A social capital network can include classmates, professors, previous employers and co-workers, family, friends, and associates that you meet through clubs, organizations, or civic events. The goal is to identify key players who can provide access to resources or provide valued advice early on, and develop relationships with them. Don't wait until you actually need something; start now!
Why is social capital so important for women? Your social capital consists of networks and contacts that can help you secure information, expertise, opportunities, and needed resources such as financial capital. Traditionally, women entrepreneurs have not been a part of many important "old boys" networks in the world of business, and it is only recently that they have begun to penetrate those networks while also building their own. Thus, women are still playing "catch-up" on the social capital front.
We'd like to leave you with a few tips for building your social capital:
- Honestly assess your personal and firm resources and capabilities to identify gaps. Those gaps are your road map for a networking strategy.
- Do your homework to identify individuals and groups who can help fill these gaps. Develop a plan for reaching out to key individuals or groups and organizations. For example, attend a meeting or event, or offer to be a guest speaker.
- Be strategic in your approach to networking. Don't just network for networking's sake, because there is often an opportunity cost associated with time spent away from the firm. Target individuals and groups most likely to provide the types of support that will help you launch, develop, or grow your firm.
- Develop a three-minute "pitch" on who you are, what your firm does, and what makes it special or unique. Networking events are often busy and crowded, so you have to be able to get your message across quickly and clearly.
- Be a good listener. Don't start out by talking about what you need or want. Listen to the other person's story to see what they may have to offer and where your firm fits in. Find a way to work in what you are looking for such as new customers, marketing expertise, financing, opportunities for collaboration, or the like.
- Push beyond your comfort zone. We have a tendency to establish linkages with other people who are like us. If you are seeking additional resources or expertise, however, you may need to reach beyond the individuals and groups that you are already a part of.
- Exploit the potential of social media. Sites such as LinkedIn, Facebook, and Prosper.com can put you in touch with others who share your commitment to entrepreneurship and are in a position to provide resources or support.
- Follow up on referrals and say thank you. If one of your networking contacts takes the time to connect you with one of her key contacts or groups, follow up with that individual or group promptly, and make sure to thank the referring party afterwards. People remember courtesy!
- Remember that networking is a two-way street. Just as others serve as a resource for you, so too are you a resource for others. As you build your own networks, pay it forward, and look for opportunities to make meaningful connections.
- Periodically re-assess your firm's needs and the composition of your networks. As your company grows and changes, and as your industry and the economy change, you will need to add new capabilities and resources.