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How female entrepreneurs can overcome key challenges

Jul 13, 2018
The challenges faced by female entrepreneurs need to be proactively addressed to create conditions conducive to scaling their businesses but, with the right approach from the outset, success is eminently achievable. Sheena Doggett shares her top five recommendations for female entrepreneurs looking to grow their businesses.

1.  Change your mind-set and you can change anything

The most important thing is the mindset of the founders. Building up a successful business is a journey – not a transaction. You must demonstrate confidence and stretch. You must be resilient and determined. You need to have the conviction and the ability to bring a team, founders and customers on your journey with you. Critically, for women, don't be afraid to fail. Research projects on entrepreneurship show one of the main reasons women entrepreneurs don't enjoy enduring success is that they are thwarted by a fear of failure. 

Research carried out by the European Commission, Policy Brief on Women’s Entrepreneurship, European Commission 2017, found that 25% more women than men cite fear of failure as a key reason not to start a business. That is a mind-set that women must overcome.

2. Build the right team

The next thing investors look for is the quality of your team. Surround yourself with the best management that you can afford; not just with the right skill set, but also the right fit. I use the word 'fit' because you will be working closely with the team for some intense and potentially challenging times.

A strong leadership team is a critical factor that investors will look at when they evaluate any funding or investment proposal. It is also important to appoint non-executive directors to your corporate board or advisory committee – people who will 'get' you, understand and support your ambition for the business, but who will also challenge you.

Separate your own ownership from the management of the business. Entrepreneurs who share management control are more likely to be successful in securing investment in their business. Be honest with yourself and identify what you are not good at and what you don't know, and invest in those areas to ensure the business has the best bench strength.

3. Get the right type of support for your business

Most businesses start by boot-strapping. It makes sense to use the kitchen table rather than a boardroom table when you are starting up. Invest your own time and money when you can. However, as your business starts to scale, have a well-formed idea for where the business is heading, an understanding of the scale of the market opportunity to be exploited, and a realistic plan for access to the funds required to achieve that expansion. 

As you choose to partner with venture capital or private equity, look to what those partners can offer beyond access to capital. Choose strategic partners as your funders. Look to those with prior experience and access to technology, expertise and networks which you might otherwise struggle to access. 

While the number of dedicated business incubators and accelerator programmes for women is growing, the majority are based in the United States, Canada and Australia. Ireland actually ranks the best among EU countries with several new programmes being launched by Enterprise Ireland.

In addition to incubators, multinational companies can also play an important role. Many of the most successful multinationals in the tech, pharma or life sciences sectors partner with start-ups and early stage businesses as they invest in the future – bringing added value and supporting transformational change way beyond pure cash investment.

Be conscious that you won't need and won't get all your funding at the start, but your business plan should show how you are going to fund your venture until it starts to generate revenue and can fund itself. Your funding commitments should cater for an ongoing stream of finance – with clear milestones and hard numbers over a number of years and multiple funding rounds.

4. Reward talent and protect ownership

While choosing the right funding partners is critical, so too is attracting the best talent. Start-ups will always struggle to compete with established multinationals and those with deep pockets in the war for top talent. Equity is the strongest card you have to play to attract employees with critical skills.

However, I have seen plenty of examples of start-up businesses scaling up, and then a large private equity investment or a sales process comes along and suddenly very early stage minority shareholders have to be dealt with. That can be an unwelcome distraction and could give rise to road blocks.

Document any shareholding relationships very carefully. Understand control and voting blocks from the outset and always have the ability to regain control of equity on pre-agreed terms if you part ways with employees as the business progresses. 

5. Build your network

Finally, get to know people who can help advise and support you as you seek to grow your business. Learn to be comfortable and confident when you need to tap in to that network – be they lawyers, accountants, fellow business owners or mentors who have been on a similar journey. Those networks will assist in designing business plans, assessing funding requirement options and making referrals and introductions.

Fostering untapped potential

The investors I work with look very carefully at the mindset of the founders, their leadership team, the sustainability of their funding investors and their talent pool. In developing each of these, Ireland has a strong and proven track record. Our government, universities and tax regime are all supportive of innovation and entrepreneurship, especially in early stage start-ups. 35% of all high-potential start-ups backed by Enterprise Ireland last year were led by women. The challenge is how to encourage start-ups further, particularly fostering the untapped potential for female entrepreneurs.

I see steady growth in the number of women in leadership roles in banks, investment firms and private equity. These women are helping to support women-led companies in securing access to capital and scaling-up. They bring different perspectives and a broader range of business-types to their investment committees. They challenge the status quo and traditional investment patterns. I would hope that this will encourage more and more women to start businesses and stay with them longer to get the full benefit of their success.

Sheena Doggett is a Corporate and M&A Partner at A&L Goodbody.