It’s been hard to start a business. But with COVID-19 fully in effect, it’s even harder. You will face even more challenges if your business is located in certain areas of the world or you are a member of a specific demographic, such as a woman or minority. Investors and business lenders have to decide how risky new franchise owners and entrepreneurs are. In the past, women entrepreneurs were often considered high-risk.
This is changing, however, as more investors see the tremendous value of female-owned businesses. There are many reasons to invest in female-owned companies. Here’s how.
1. Untapped Markets Offer Potential Investment Opportunities
Female-owned businesses can reach customers traditionally sold to by male-owned companies. The majority of female customers shop for cosmetics, jewelry, and women’s fashions. Women business owners often have better insight into their customers than men. This means that investing in these companies can help you tap into the sales and profits of these customers and give you a return on investment.
2. More Business Leaders are being supported
Over the past several decades, women who have made it in business have shown that they are as capable as their male counterparts. Although their leadership style is different from that of men, they can still be as inspiring in creative ways. Women can bring different perspectives and ideas to an executive board. However, they have proven that they can still make a difference at the lower levels of management. If a woman can be a leader, it’s likely that you will invest in a well-run female-led business.
3. Many female-led companies have very sound financial practices
Numerous studies have shown that women-owned businesses can balance their books and use sound financial practices. This could be due to many reasons. One example is that the woman who owns the business may be a single mom who has learned how to balance her family’s budget and save money so she can provide for her family. They may have ideas for reducing business expenses or finding cheaper alternatives. Keep in mind, however, that women business leaders do not have to be spendthrifts.
4. Women Business Leaders with great track records are out there
After hearing how successful female-led businesses can be, you may wonder who these female leaders were. Here are some examples of female leaders who have been successful:
- Susan McGalla
Susan McGalla is a business leader with a long history of helping to build businesses. She was president and CEO for American Eagle and its affiliates for many years. She was one of the first women to hold such a high-ranking position in a publicly traded retail company. She went on to serve on several foundation boards and start her own consulting company. Today, McGalla manages the NFL’s Steelers fan merchandise department. McGalla made American Eagle a top-selling fashion outlet in the country, and they had more female customers.
- Nina Vaca
Nina Vaca founded one of the most well-respected female-led tech staffing companies in 2014. Vaca started the company in her apartment in 1996. She had to overcome financial obstacles and make sacrifices to keep it going. She persevered through it all and was awarded the Woman of Distinction award in 2017 by the Women’s Business Enterprise National Council. She was also presented with a medal by former President Barack Obama at an eminent ceremony.
5. Angel Investor – Invest in Female-led Businesses
You can support women-led businesses and possibly earn passive income by becoming an angel investor. You would be able to take a stake in the company and watch it grow as an angel investor. The owner would need to agree on the amount of control you would have over the company’s operations. You could also let the founders manage the company, and take a small cut of the profits.
6. As a Philanthropist, Invest in Female-Led Companies
You can help new women-owned companies by investing more in philanthropy. Partnering with organizations like JUST is one way to do this. JUST, a company that provides funds for female entrepreneurs in under-served areas, is one example of a partnership. These partnerships can help empower women entrepreneurs and provide support for communities with great needs.
7. Lending Organizations: Investing in Female-Led Companies
An online lending platform is a way to invest in female-led companies without having equity. Online lending platforms are a more popular way to finance startup businesses, including female-led ones. They’re usually easier than regular banks to fund. These lenders are also known as microlenders or peer-to-peer loans. They receive funding from private investors. You can invest with these lenders to get your money back, sometimes at higher interest rates than those of junk bonds.
Bottom line, female-led businesses are just the same as their male counterparts in the US and worldwide economies. They have every chance of succeeding. You should invest in female-led businesses to increase your portfolio or to support charity. Get to know them and learn about their values.