Top Challenges for Women-Owned Small Businesses – And Tips for How to Solve Them
In December 2022, ADP was invited to partner with the National Association of Women Business Owners (NAWBO) in conducting an online survey of their membership. Out of that survey, five primary challenges emerged from members' responses: hiring, financing, access to growth resources, employee experience and access to payroll and HR tools.
These challenges are made no easier by the ever-shifting workplace and consumer landscape of the last few years. The foundations these women-owned small businesses have been built on — persistence, passion, creativity, connection and sheer tenacity — take them far. But these attributes alone aren't enough to keep businesses growing and thriving.
Women small-business owners need to stay informed on market trends and industry insights so they can adapt their business strategies and resourcing as they go. Access to capital, growth tools, software, and services that can heighten the employee experience and optimize time are critical to helping women strengthen their businesses for the long haul.
Keep reading for insights from the survey and some strategies to help navigate these challenges.
While hiring has been challenging in many industries, survey results show that 41 percent of NAWBO members report hiring is more difficult than ever before. Many reported losing an applicant to a competitor. Forty-three percent had no staff, so losing out on an applicant could mean the difference between missing or making an order fulfillment deadline.
The good news is that there are strategies to help ease the stress of hiring. Smaller businesses may even have an advantage in making themselves more appealing to applicants, says Kiran Contractor, director of talent acquisition at ADP: "As a small organization, you can take a personalized approach." She encourages small business owners to do their best to determine what applicants value and incorporate that into the offer.
Financing is tight
Financing is another challenge women small-business owners are facing this year. Of the 560 respondents, only 10 percent reported having secured a small business loan. More than half use personal savings to finance their business, and a small percentage use loans from family and friends or other private loans.
At first glance, this may not seem like a big deal, but imagine (and some reading this will not need to imagine) pulling from your personal checking to keep the lights on in your new shop. This not only puts women small-business owners' personal credit at risk but also puts family welfare at risk. Surprisingly, while the average age of the businesses represented in the survey was 14, less than a third have a business credit rating.
Creating a funding plan can help ease the financial stress women small-business owners face. Experts suggest mapping out areas designated for more spending and areas to hold back for the time being. Making plans to secure funding is another way to mitigate this challenge. Sometimes, starting small is the best way to go. This could be applying for a low-limit credit card or small loan under the business's tax identification number to build credit. Make sure you only bite off what you can chew and remember to align your spending budget with where you know you'll get a return on your investment.
Check out more tips for small-business financing on NAWBO's blog: On The Money.
Access to growth and training tools
Access to tools that help with growth and training is another challenge for women small-business owners. Many are interested in learning about tools to help with e-commerce and other growth-related technology platforms. Almost half of the respondents expressed a desire to access social media training to help with growth. Others noted the need for tools to find, contact and hire new employees. In addition, technology training specifically is exciting to micro-businesses, while hiring tools are of more interest to larger women-owned small businesses. This shows that getting the right resources is a significant challenge.
Small steps can have a big impact when it comes to growth and training tools. Instead of worrying about what you don't have, focus on one area first. Suppose social media marketing is the most attractive tool to you right now — consider taking a short online course to learn about social tools and how to use them. If hiring is your biggest priority, consider connecting with an agency that could help you find and hire employees.
Tools for growth and training can go a long way in improving business processes that affect sales and overall profit. But for overworked small business owners, the time savings could be even more critical. Using the right tools to help optimize your workday is an investment that can pay huge dividends.
Improving the employee experience
Prioritizing an excellent employee experience is not exclusive to larger organizations with deep pockets. Today's small businesses know a positive employee experience helps them win and retain top talent. Almost 40 percent of those surveyed are interested in offering an employee assistance program, an employee discount program, and an employee recognition program. This signifies a desire to provide employees with enrichment benefits and shows an understanding that people value getting more from work than just a paycheck. Strategies for improving employee experience are numerous and can sometimes include offering more benefits. But there are other avenues if the budget is tight. Regularly checking in with your employees in one-on-ones can go a long way to building a better employee experience. Taking the time to learn about your employees' personal and professional goals is one way experts suggest elevating the overall employee experience.
Get more details by downloading the above infographic: Five most challenging pain points for women-owned small businesses
Most business owners do not specialize in payroll, HR, compliance or tax law, and that's okay. There are experts who do. Partnering with them frees you to keep being an expert in your small business.