These are not easy times for women in small business. The pandemic has taken a hefty financial toll.
In surveys of women entrepreneurs conducted by Babson’s Diana International Research Institute, or DIRI, 67% have experienced a decrease in revenue, while 30% expected that their business would take more than a year to recover. For 23%, the challenges of the pandemic have proven too great, forcing them to close down their operations permanently.
These daunting numbers speak to the harshness of the current business environment. “People too often attribute a business success or failure to an entrepreneur, but the business environment is an even more important factor,” says Amanda Elam, DIRI research fellow. “The pandemic has just transformed the business landscape.”
These effects on women in small business are only compounded by the many obstacles that they traditionally face compared to their male counterparts. Still, women entrepreneurs are finding ways for their ventures to survive. They are making tough decisions, pivoting their operations, and thinking creatively.
“They are taking a hit, and they are responding,” says Elam. “They are chasing opportunities.”
DIRI is well-positioned to study the effect of the pandemic on women in small business. For some 20 years, DIRI was known as the Diana Research Project, the first research organization devoted to women entrepreneurs, and it regularly held a prestigious academic conference.
That conference is still an ongoing event, but with the name change to DIRI earlier this year, the organization is now broadening its activities and audience, thinking beyond researchers to investors, founders, educators, and policy makers. It’s offering a robust online platform that includes access to research opportunities, newsletters, researcher and educator roundtables, and discussion boards. “We are the pre-eminent platform for everything to do with women’s entrepreneurship,” says Smaiyra Million P’21, DIRI’s director.
In recent months, DIRI has been investigating the negative effects that the coronavirus is having by sending out pulse surveys to women in small business. As Elam points out, women entrepreneurs already faced a slew of challenges that have only been exacerbated by the pandemic.
“People too often attribute a business success or failure to an entrepreneur, but the business environment is an even more important factor. The pandemic has just transformed the business landscape.”
Amanda Elam, DIRI research fellow
For instance, women historically have taken on the greater share of child care, a responsibility made that much more time intensive with schools and daycare centers shutting down because of the coronavirus. Additionally, women entrepreneurs are often sole proprietors, and their relatively smaller ventures are too frequently perceived as a “side gig,” something they’re doing when not busy raising children. That can make obtaining crucial assistance, whether from the government, a bank, or an investor, harder to come by. “There is a bias,” says Elam. “Women entrepreneurs are often discounted, especially if they are mothers.”
Women-run businesses also are concentrated in industries, such as retail, hospitality, and education, that have been walloped by the pandemic’s economic fallout. Despite all that, though, the pulse surveys show that women in small business are doing their best to weather the crisis.
They are adjusting their business models, with 54% marketing or promoting in a new way, 35% streaming services or classes, and 53% offering new products or services. To reduce costs, they have cut office expenses (46%), deferred vendor or lease payments (36%), and renegotiated vendor contracts (24%)
“There is a stereotype that male entrepreneurs are more likely to pivot and try new things,” says Elam, “but the DIRI surveys reveal that women are just as willing to experiment, innovate, and take action.”
For the women in small business confronting the headwinds of COVID-19, Million offers a few key pieces of advice. For starters, know your finances. “That is the piece you can never outsource to anyone,” she says. “You have to understand the balance sheet.”
Don’t be the “superhero entrepreneur” who thinks she must have all the answers. Instead, make sure you have trusted advisors, whether a formal board of directors or mentors you can call on informally, who can offer their expertise. “Don’t do this by yourself,” says Million. “You have to reach out to your network.” When a business begins to teeter, that network can help decide if there is a way to pivot to a different approach.
Whatever you do, says Million, think twice before dipping into personal finances to save a sinking venture. “Don’t always bootstrap your business,” she says. “That’s not always the smartest thing to do.” In the tough business environment of today, women entrepreneurs must accept that not all ventures will survive. “It’s hard. You need to make tough decisions,” says Million. “Know when to say when.”