Secrets from Women Entrepreneurs
Four business owners tell how they built successful, tech-savvy businesses
Women in technology have few role models, but the outlook is getting brighter. Four women who founded successful technology-related companies are blazing a trail in this male-dominated industry. The entrepreneurs – Clarice Kennedy, Cheryl Hoffman, Gretchen Shugart and Michelle Madhok – talked about how they run successful, tech-savvy businesses at a recent seminar in New York for Women in Technology International (WITI), a global trade association of more than 2 million professional, tech-savvy women.
1. Know your marketplace.
Madhok, the founder of Shefinds.com , an online beauty-shopping Web site, was formerly a director for women’s content at America Online, which she said helped her to understand what women were looking for in an online shopping experience.
“I realized that women want two things: to take care of their family and to look good,” she said. “However, looking good comes second, and when things get hectic [in a household], women end up with the frump factor.” After doing some research, she realized there was a need to help women look good in minimal time.
“You’ve got to find a real live market need,” said Shugart, CEO of Internet portal Theatermania.com, which owns and operates OvationTix , a Web-based primary ticketing system. “And you’ve got to stick with what you know.” Shugart worked in the banking industry for 18 years, most recently arranging financing for media and telecommunications companies, so she knew how to find funding for this particular need.
Kennedy, president of Chamrock Computer Network, which provides information technology talent management solutions for companies, advises “not competing with the elephant in the room.”
“There’s always going to be the number one competitor that has thousands of employees and resources,” she said. “Define what makes your company different.”
2. There’s no right time.
All the panelists agree: There’s no perfect time to start your own business. Shugart said she started her business at a time that was both “horrible and fabulous” – right after the dot-com bust in 2000. “It was an organic process,” she said. “I just put one foot in front of the other to make it happen.”
Madhok, a self-described “corporate girl” for 13 years, said she knew she didn’t want a corporate job anymore after realizing how miserable she was in her situation.
“I thought to myself, ‘I’ll take this leap; I know I won’t die’ – and I knew I could always go back to the corporate gig if things didn’t work out,” she said. However, until you’re truly ready to venture out on your own, “make your mistakes on someone else’s dime and time,” she adds.
3. Your investors aren’t convinced unless you are.
Let’s face it: You’re going to need money. Fortunately, “there’s often too much capital chasing too few assets,” said Hoffman, a real estate broker who founded Brownfields Capital , which helps fund the cleanup and development of abandoned or underused properties. That’s an advantage for a business owner, but “you’ve got to show them why they should invest in you,” she added. In Hoffman’s case, she created and patented the Brownfields Value Contract and showed investors how they would get five times the return on their investment – and ended up with $2.5 million to make her dream happen.
As a single mother, Hoffman has always been financially independent – and didn’t know any other way to succeed. With roots in Colorado, she arrived in New York without any idea how hard it would be to start a business on Wall Street. “I’m from the Midwest, and everyone is self-employed,” Hoffman said. Still, it was tough convincing investors in New York that a girl from Colorado could succeed “with an idea that wasn’t born on Wall Street,” she added.
Aside from family and friends, Shugart recommends angel investors, who are really just individuals with high net worth who can lend you $50,000 to $100,000. When you ask for money, “your passion really needs to come out,” Shugart said. Hoffman, who also has a banking background, advises women business-owners-to-be to be firm on strategy. Without a clear direction of where you’re taking the company, others will take over. If you’re not careful, “capital will crush your business,” she said.
4. Hire for success, not survival.
“The first five people you hire can make or break your company,” said Kennedy, who admits she was “just lucky” to have hired the right people. Hoffman agrees, adding that “the minute you spot the wrong employee, or the wrong advisor, or the wrong client, end the relationship – quickly. It will make things easier in the long run,” she said.
Shugart credits a trustworthy Board of Directors in ensuring her company’s goals will be met. Her board includes her investors as well as a theater producer. And her five direct reports “know more than I do about the company,” which frees her to focus on strategy.
5. Don’t give anything away.
It’s estimated that 40 percent of women’s businesses fail in the first year. Madhok believes it’s because women are too quick to give away the farm. “I don’t have a lot of money, so I can’t afford to spend a lot,” she said. She advises women to horde their cash by offering to barter for services; she once offered less salary to a site designer in exchange for an ongoing supply of beauty products, which she often receives gratis from manufacturers. Without hesitation, the designer accepted the bargain.
6. Network (with other women) or bust!
To gain the confidence you’ll need to survive as a business owner, put yourself around other successful people. “Network with other women who have done what you’re doing,” such as WITI, Kennedy said. Hoffman says she wishes she’d had a role model when she started out, and she hopes to be one for others. “There’s no path paved for women. There’s nobody to follow,” she said. “We’ve got to find each other.”
Kennedy and Madhok work with Count Me In, a group that provides women entrepreneurs with resources to help grow their businesses. Count Me In launched Make Mine a Million $ Business with a goal to inspire a million women entrepreneurs to reach annual revenues of $1 million by the year 2010.
Whatever type of company you’d like to start, don’t let the financing challenges or the lack of role models hold you back. Like the four women who took the tech-business leap, somebody has to be the trailblazer – it might as well be you!