How women-owned businesses can overcome hurdles

Women-owned businesses are on the rise. Between 2002 and 2012, the number of women-owned firms increased at a rate of 52%, two-and-a-half times the national average of 20%, according to a report from the National Women’s Business Council.

That statistic sounds sunny, but starting a business isn’t as simple as putting an “open” sign on a door, and the challenges are multiplied for female entrepreneurs. Here are a few key hurdles:

Lack of capital

Women start their businesses with about half as much capital as men do, according to the NWBC — an average of $75,000, compared to an average of $135,000. Male business owners frequently have trouble raising necessary capital, too, but industry-specific factors make the process even harder for many women. For example, women are more likely than men to start service-based or retail businesses, which tend to have larger operational costs than software companies, for example, which might have fewer employees and less overhead. Banks are generally hesitant to loan to businesses with high cost-to-profit ratios right from the start.

The resume gap

Another stumbling block for some women is a lack of management or executive-level work experience. Apart from any gender bias that might come into play in corporate hiring and advancement, many female business owners took time to start a family, removing them from the workforce around the time people start making big jumps in their careers. Because of this, many women’s backgrounds don’t resonate with bankers and other decision makers — and that can work against them when they’re seeking small-business loans.

Societal pressures

My female clients often think they have to have a certain aggressive mindset when it comes to business. I teach young girls to have confidence in their abilities: Running a business doesn’t mean forgetting who you are, but rather showing off the best aspects of your business sense.

On the flip side, some women don’t ask for the loan amount they need out of fear that they’ll be rejected. Playing it safe can result in securing less startup capital.

Despite these hurdles, there are ways women can get the support and small-business funding they need to build their dream businesses.

Make your business plan shine

If your business leadership experience doesn’t shine through on a resume, it’s important to showcase your experience and talent in another way. You can do that by mastering the art of the business plan.

All lenders require a business plan with each loan application. It must include an executive summary, company description, financial projection statements, market analysis, and cash flow and balance sheet.

Investors and lenders will be looking for reasons to say no to businesses that require high overhead, such as high labor or facilities costs. Head that off by showing you’ve put thought and analysis into your business and have a plan to keep labor and facilities costs low.

Find alternative funding and resources

If one of my clients is turned down for a loan, I encourage her to consider smaller loans or sources such as crowdfunding. The Small Business Administration also has information on alternatives to bank loans, which could include government loans or grants, and angel or venture capital financing.

If you need support during the business loan application process, contact the nonprofit organization Score, which connects women with mentors who can help them develop business plans. The National Association of Women Business Owners also offers valuable resources and a membership directory that women can use to network and find advisors.

The National Women’s Business Council has statistics and research data, along with news about women in business.

Starting a business is never easy, and women face even more challenges than men do. But with determination and an analytical approach, women who own businesses can overcome these hurdles and soar.

Rita Cheng is chief executive of Blue Ocean Global Wealth in Rockville, Maryland. Learn more about Rita on NerdWallet’s Ask an Advisor. This article first appeared at NerdWallet.