The Million-Dollar Divide
Meet three of the few female business owners leaping across it.
By Leslie Grossman
You’re definitely living the American (Woman) Dream. You own a small, successful business and have no trouble paying your bills. You’re – well, let’s say comfortable. You don’t depend on a boss for your paycheck, and you love being in control of your own destiny. And yet … you’re ready to kick it up a notch.Women constantly say that starting their own business was surprisingly easy once they made up their minds, made the commitment and took the entrepreneurial leap. What isn’t easy is the next leap – the one from “thriving small business” (less than $1 million in revenue) to “really thriving, let’s-roll-up-our- sleeves-and-get-serious business” ($1 million plus in revenue).
The good news, according to Sharon Hadary, executive director of the Center for Women’s Business Research, is that 48 percent of all privately held firms are at least 50 percent female-owned, for a total of 10.6 million U.S. companies. These companies are growing at twice the rate of all businesses, creating twice as many jobs and increasing sales faster than all enterprises.
The bad news? Fewer than 3 percent of those 10.6 million companies generate $1 million or more in annual revenue.
The implications are clear. Most women entrepreneurs believe there is a vast, almost impassable canyon – call it the million-dollar divide – between Grandma’s Corner Bakery and Grandma’s International Baked Goods Conglomerate. But experts and women entrepreneurs themselves have discovered it is possible to leap the divide. “Women can and do play in the big leagues when it comes to business ownership,” Hadary says. “As of 2004, there are close to 280,000 businesses 50 percent or more owned by women that have hit or exceeded the $1 million mark. This is part of a tremendous momentum in the expansion of women-owned businesses.”
Women who pass the million-dollar mark take certain predictable actions. They write business plans, they hire smart employees, and they get out of the office and build relationships. But, paradoxically, they also think in unpredictable ways and break the rules. Their unconventional thinking pays off.
Bypass Bureaucracy: Go to the Decision-Maker
Business owners like Sara Blakely prove there is a time and place to follow protocol, and there is a time and place not to. She is the founder of Spanx, a $45 million company whose footless bodyshaping pantyhose breathed new life into the tired, male-dominated hosiery industry. Blakely, who started out with $5,000 in savings and ran her fledgling business out of her Atlanta apartment, personifies chutzpah. “If I gave up after negative feedback on my initial idea, Spanx wouldn’t be here today,” she says.
Even after being told by hosiery executives her idea was “stupid,” she cold called top retail stores. Her big break came when she hopped a plane to Dallas, went straight to Neiman Marcus headquarters and dragged the retail giant’s buyer into the ladies’ room so she could model her prototype. Within five minutes the buyer had ordered several thousand pairs of Spanx to test at seven Neiman Marcus stores. “I always tell women to go with their gut instinct,” Blakely says. “Even if people tell you something is not possible, you have to trust yourself and keep pursuing your goals.”
Blakely didn’t go through traditional channels like trade shows, where she likely would have been lost in the crowd. By taking the direct and fearless route, she made certain her product got the attention she knew it deserved. Her tagline – “Don’t worry; we’ve got your butt covered!” – reflects her directness.
Think Outside the Money Box: Be Cagey about Cash Flow
Michele Hoskins, the founder of Chicago-based Michele Foods, had a fantastic family recipe, a solid business idea and self-confidence. What she didn’t have was funding, a necessity for manufacturing startups. So the ex-schoolteacher and divorced mother figured out her own solution.
Hoskins’s business structure involved buying ingredients from wholesalers and selling her finished products (syrups that could be used for cooking and condiments) to retailers. She asked wholesalers for longer payment terms: 45 days rather than the standard 30. Simultaneously she asked retailers for shorter terms, promising them 2 percent off their bills if they paid her within 10 days.
“Figuring out the banking part of entrepreneurship is one of the biggest hurdles women, especially minority women, have to overcome,” Hoskins says. “It’s a challenge, but it’s not an excuse. If you want something badly enough, you can and will dream up a way to finance it. Faith, hard work and perseverance go a long, long way.”
Coming up with an innovative way to float her debts (Hoskins calls it “thinking like a housewife”) enabled her to pay bills and invest in the growth of her business. Today her products can be found in more than 10,000 food stores nationwide, including Stop & Shop, Super Wal-Mart, Albertson’s, Kroger, Publix and Super Target.
Know Your Boundaries: You Have None
Most people who run catering businesses don’t consider going after huge, prestigious clients located more than 1,000 miles away. But Jennifer Chandler isn’t “most people.” Four years ago the president and majority owner of Chandler’s Cuisine, now Creative Cuisine Group, a specialty gourmet catering company serving the Dallas-Fort Worth area, found herself working the 2002 Winter Olympics in Salt Lake City.
How did a Dallas-based caterer end up in Utah serving the International Olympic Committee, Sports Illustrated and NBC’s Today Show? It started when Chandler formed a partnership with a fellow caterer, based in Salt Lake City, whom she had met at a trade show. Basically, she saw an opportunity and seized it, despite what seemed like daunting geographical limitations. “We never thought our company was too small, too far away or too anything to go after any account,” Chandler says. “Boundaries are almost always self-imposed, and if you don’t recognize them, they won’t hinder you.”
After she and her colleague met their Olympic-sized goal, they leveraged that experience to move their company to the next level. During her three-year tenure as majority owner of Chandler’s Cuisine, revenue grew an amazing 254 percent to over $1.6 million. Chandler sold her company in 2005.
Leslie Grossman is co-founder of Women’s Leadership Exchange and author of SELLsation! (WPE Press, March 2006).
Stats to Know
Only 4.5% of all 22.3 million privately held firms have $1 million or more in revenue
Just 2.6% of all 10.6 million majority women-owned and equally-owned firms have $1 million of more in revenue
6.2% of all 11.7 million majority men-owned firms have $1 million or more in revenue
SOURCE: Center for Women’s Business Research
This article originally appeared in the August.September 2006 issue of PINK Magazine.
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