August 23, 2014

A Rising Tide Raises Financial Strategies For Women Entrepreneurs

A Rising TideThe discussion of women leading business startups gets an upstart with A Rising Tide: Financing Strategies for Women-Owned Firms, written by Susan Coleman and Alicia M. Robb.

The book examines the tactics women-owned businesses have traditionally used, and why those differences exist.

Cole and Robb based their findings on research from a Kaufman survey of over 4,000 new US based firms (There is a chapter dedicated to world trends), as well as real-world stories.

Mixing Academic and Real World Perspectives

The material in A Rising Tide is shaped by three theories, recently established by economists and researchers:

  • Motivational Theory – individuals will take actions they believe will lead to expected and desired outcomes.
  • Resources-Based Theory – that a firm is a collection of resources.
  • Life Cycle Theory – a firm undergoes different stages of operation.

An experience businessperson may perceive these theories as being self-evident.  That same person would be missing the point of theories, and thus the book.  The book sets the expectations of what should shape tactics and assets for running a business.  So having higher expenses and revenue in the survival stage in the Life Cycle Theory is understandable. The overviews are useful for an under represented sector that has a particular relationship to capital, according to the authors:

“Although the percentage of firms increased from 26.5 to 29 percent from 1997 to 2007, women owned firms still constitute less than 30 percent of all firms.”

There’s also the aspect of the motivations, which result in different measure of success.

“Alternatively, women consider their businesses an extension of their personal lives, and they manage their firms in a way that will allow them to fulfill multiple goals and objectives…for too long women-owned businesses have been measured with the same yardstick as men-owned businesses, so we expect to see the same size, growth, rates and standards of performance…if women have different motivations and goals for their firms, their outcomes and measures for success will also differ.”

Insights such as that in the last two sentences  – provided by another researcher, among a number of which the authors introduce and index – places the theories at the heart of the real world challenges.

Motivation Sources for Entrepreneurship

The wonderful quality Cole and Robb infuse in their book is how the motivations enlighten academia and real-world experiences.  That mix makes the highlights understandable and actionable.  For example, read this takeaway about what an entrepreneur should do based on the Resource-Based Theory:

“Understand that your tasks as a new entrepreneur are to assemble, develop and mobilize the resources you need to make your firm successful. These include financial, human and social capital.”

In later chapters you will read how those theories are played out, or not played out, such as the reason why external equity is not sought:

“If women do not seek external equity, their lack of demand may be consistent with the goals they have for the firm: smaller in size and scale, easier to control and less complex….”

The reasons may be complex, but the authors explain it to make the complex straightforward, without speaking down to the reader.

A Rising Tide has dedicated chapters for each business model or stage, so it covers a wide gamut.  A chapter on minority women entrepreneurs notes constraint of capital access compared to men, while another centers on nascent firm concerns.  A chapter with a focus on family-based businesses – acknowledging the familiar loyalty choice between family and career that professional women face – is a savvy inclusion alongside a chapter on technology-based firms.

Public policies and economic data can feel esoteric, but not in this case.  The information is contrasted against the strategy choices women-owned firms make.

Principle In Action segments appear in the chapters, showcasing the thoughts and brief histories from various firms, including:

  • Smith Whiley and Company, a provider of mezzanine and private equity funding.
  • Helen Russell, cofounder of Equator Coffee and Teas.
  • Kate Meyers, who started a web-based legal and medical transcription services firm, Brown and Meyers.
  • Debbie Godowsky, who ships cookie treats to college students in her business Cookies Direct.
  • Vivan Akuoko of Evay, a minority women owned day spa in Hartford Connecticut.

Each brief covers the points Cole and Robb raise.  You’ll also read some thought why some actions are worthwhile, as well as suggestions.  A few resources are offered.  Mentions, such as Springboard and Astia, are not as numerous as the finance and networking resources in Locavesting and Our Black Year.  But combine all these books together and you will be more resource-rich than your competitors.

The best conclusion you will draw from A Rising Tide is how economic reality and trends can affect your strategy.  The decisions you will make after reading A Rising Tide will make your business rise fast.

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Pierre DeBois - Associate Book Editor


Pierre DeBois Pierre Debois is Associate Book Editor for Small Business Trends. He is the Founder of Zimana, a consultancy providing strategic analysis to small and medium sized businesses that rely on web analytics data. A Gary, Indiana native, Pierre is currently based in Brooklyn. He blogs about marketing, finance, social media, and analytics at Zimana blog.

6 Reactions

  1. This book sounds fascinating. Thank you for bring it to my attention.

  2. Great review, Pierre,

    I’ve had the opportunity to work with a lot of would-be women franchise owners, and the authors have nailed it with regards to how women look at business.

    Men reading this may be a little offended, but in general, women look more into the “human capital” aspects of business ownership than men. And, they look at how their business decisions will affect their employees-and are very careful when making them.

    Good stuff!

    The Franchise King®

    • Thanks Joel. I agree ( and not offended! lol) – I think women manage risk well in general, and the research and notes provided in Tide’s text address how that balanced is represented, for good on some instances, and for challenges in another.

  3. Great review–I’ll pick up the book!
    One comment–other behavioral continua might be considered. Type A business women may have more in common with Type B business men than with their more laid-back colleagues. Business owners supplementing a family income will view their companies differently than those whose business provide sole support. Etc.

  4. I read the article and it concurs with what I have know for a while. Quote: “Although the percentage of firms increased from 26.5 to 29 percent from 1997 to 2007, women owned firms still constitute less than 30 percent of all firms.”

    Most female business owners that I’ve met usually have companies that are less than $500k in yearly revenue. Certainly not to cast dispersion on them for size, but most women want companies that they can ‘put their arms around’ and to the point of the article, they like comfort and “a business that is an extension of their personal lives and they manage their firms in a way that will allow them to fulfill multiple goals and objective. For too long women-owned businesses have been measured with the same yardstick as male-owned businesses, so we expect to see the same size, growth, rates and standards of performance…if women have different motivations and goals for their firms, their outcomes and measures for success will also differ.

    That fact that one chooses to stay small for whatever reason is not the point. I think that running a ‘larger’ business appeals more to men and our tendency to think bigger is better. We’re somehow validated by more. This, oddly enough, supports our ‘producer’ complex and plays on our sense of worth and ability to provide. You don’t hear a lot of women talking about running $100 million dollar manufacturing companies.

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