Small Business

Helping Hands for Women's Startups


Veterinarian Jane Linden had long dreamed of opening an animal hospital in Providence, R.I. But the idea of starting her own business -- buying and renovating a property, getting the right equipment, and finding the money to do it all -- was daunting. "I'm a real neophyte in business," says Linden, who specializes in the treatment of small animals. "It was scary thinking about borrowing such a huge sum of money."

Linden found a private consultant who would write her business plan for $4,000, but that was money she didn't have. Then a bank employee referred her to the Center for Women & Enterprise, a nonprofit, largely government-funded agency designed to help women and disadvantaged business owners in downtown Providence.

Mentors at the CWE helped Linden refine her business plan, submit it to a bank, and shepherded it through approval. The best part: The service was free. "I was pinching myself," Linden recalls. "I couldn't believe how incredibly helpful they were." Her Providence River Animal Hospital opened its doors in June, 2004.

PROGRESSIVE POLICY. The CWE is just one example of a nationwide phenomenon -- the rise of Women's Business Centers. Since the first WBCs were established in 1988, they've become important sparks for entrepreneurship among a wide range of women -- particularly those who were formerly underserved both socially and economically, according to a new study.

"WBCs are a great example of a policy initiative that has been a successful use of government funding," says Nan Langowitz, director of Babson's Center for Women's Leadership and one of the study's three principal researchers. (The study, released in June, was commissioned by The Association of Women's Business Centers and carried out by researchers at the Center for Women's Leadership at Babson College.)

Researchers looked at data collected from 52 WBCs in 33 states and the District of Columbia, along with qualitative data from 34 center directors. Results showed that the majority of WBC clients have household income of less than $50,000. Most have modest educational levels: 49% have only high school diplomas, and 6% haven't completed high school. In addition, 42% of clients served by WBCs nationwide are women of color.

GETTING IN EARLY. Women who come to the centers for help are likely to have been affected by the recent economic downturn, Langowitz says. They're looking for alternative income options and considering entrepreneurship, but like Linden, they often don't know how to get started.

The WBCs, which provide a mix of low-cost and free counseling, classes, and support groups, aren't just spreading business theory, the study found. About 60% of their clients are actively managing a startup company, and 42% are managing an outfit that's less than three years old. "Nationally, about 8% of women business owners are running a company that's three years old or younger, so the WBCs are definitely getting women entrepreneurs at the early stages, when they need the most help," Langowitz points out. (Here's a list of WBCs by state.)

Take Lori Adamo. In August, 2003, she sought marketing, legal, and pricing advice to help get her disaster-planning agency, Code Red Business Continuity Services, off the ground in Cranston, R.I. Mentors helped her design postcards and settle on fees that would be competitive but not price her out of the market, she says. And the CWE contacted a Boston law firm and arranged for one of its attorneys to work on Adamo's contractual and consulting agreements on a pro-bono basis.

LONG-TERM PLANNING. "They helped us develop all the legal paperwork we needed," Adamo says. "They also helped us when we landed a huge client who wanted to negotiate their own contracts. [The attorney] worked pro bono via e-mail and conference calls to negotiate the deal and make sure our interests were protected. We wound up signing a very lucrative deal with a large client."

The approach at WBCs is oriented toward long-term relationships, Langowitz says. "Classes are scheduled in the mornings and around lunchtime" to accommodate mothers with young children. Along with traditional business classes, topics include building confidence, learning business etiquette, and overcoming cultural hurdles about becoming primary breadwinners in their homes.

But the WBCs aren't only aimed to assist startup entrepreneurs -- help is also available to women already in business who need a boost to the next level.

PEER ADVICE. Olga Bravo started her bread business in a tiny building next to a Rhode Island farm stand in 1988. She first contacted the CWE in 1997, when the group helped her line up financing to expand into a retail location in Providence. Now, Olga's Cup & Saucer, which incorporates both the wholesale bakery operation and a retail shop and cafe, has 22 employees.

Bravo stayed in touch with the center and four years ago joined its Grow Group, a networking and support group for women who have been in business at least three years. "We meet once a month with expert speakers or have roundtable discussions on issues that we need help with," she says. "It's nice knowing [the group] is there to discuss employee issues [so I can] get input from other business owners."

The major hurdle to sustaining the WBCs success is funding, the Babson survey concluded. The primary sources of money for the typical center come from the Small Business Administration (41%), fees and program income (18%), grants (16%), and non-SBA government funding (14%).

MONEY CRUNCH. "Because funding is a major challenge, keeping staff is difficult, but we found that turnover [at the centers] is very low," Langowitz says. Federal funding has been set at a flat rate of $12 million annually, while the centers continue to expand into new areas, she says. That means there's less money each year for existing WBCs. "That creates a financing-strategy crunch for ongoing operations, and there's always a question every year how the federal budget will go," she notes.

Further diversifying their sources of funding and finding new sources of money is a top priority for center directors, Langowitz says. The good news is that the centers are highly effective, even with very few resources. "I hope they'll continue to garner support from both the government and the private sector," adds Langowitz. It looks like an investment that yields ample rewards.


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