By Susan Zongrone, Key4Women Chair, KeyBank
It’s tough to be optimistic right now for many business owners. This year has brought about changes and pressures from the pandemic that are taking a major toll on women-owned businesses, according to the latest Key4Women Confidence Survey. Compared to previous years, confidence among women business owners in their personal finances is down 22%, along with a 23% drop compared to two years ago among owners who say they are confident in the financial health of their business.
What we’re seeing out of this pandemic is how resilient and capable of change so many businesses are, while also recognizing just how much relationships matter in supporting the needs or adjustments of our business clients. Since the point of the pandemic beginning, 70% of women business owners say they have relied on their primary bank to some degree for financial guidance. More than half of respondents say their primary bank proactively reached out to them when the pandemic struck.
The numbers show just how important the foundation of a relationship is for business owners to have with their primary bank. Obviously, the bulk in which we’ve seen this support has been through the highly publicized Paycheck Protection Program. More than one in three women small business owners in the Key4Women survey applied and received Paycheck Protection Program funding in the first wave. Nearly one in five relied on resources from state and local government. While government sources of support have been fully utilized, the demand still exists. 54% of respondents say they are likely to apply for additional funding, if it is made available again.
Obstacles aplenty
With support, adjustment to the pandemic has still not been easy. About one in three women business owners say they have low optimism they will achieve their business goals over the next year. Six in ten report the pandemic directly impacted their business negatively.
Among all respondents, the three top challenges posed by the pandemic include adjusting to a new operating model, having trouble attracting customers and having trouble maintaining staff productivity.
Many businesses are putting their plans for growth on hold for now as well. In 2019, 90% of respondents said they planned to expand within the next two years. That number has now dropped to approximately 75%.
That lack of faith in being able to expand and grow in the future is exactly where banks and financial institutions can help offer their support right now. Between the 2019 Key4Women Confidence Survey and right now, the confidence in the ability to handle finances is down 11%; the confidence in the ability to obtain credit is down 13%; the confidence to conduct negotiations is down 10%.
These times are difficult for business owners. Banks understanding and knowing their clients in the ways that can help restore this confidence is a major key towards our collective recovery.
Optimism abounds
While this all may feel like a lot of doom and gloom, there is hope on the horizon. While we’re all glued to the herculean medical effort towards a potential vaccine, it’s the outlook of many women business owners, 59%, who believe we could be back to normal business operations within the next year. Only 28% believe their business won’t be back to normal for more than a year. The remaining respondents either have returned to normal or weren’t affected by the pandemic.
Everyone has learned a lot from this pandemic. From the banks supporting clients in unprecedented demand, to business owners making necessary adjustments. We have experienced the acceleration of business trends, and in many cases, the abrupt halt of expansion and growth. These changes have shown how a business owners’ relationship with their primary bank has never been more important. Key4Women will continue to take steps to help support businesses with insight and advice for women in business to strengthen their networks.
About the author: Susan Zongrone is Key4Women Chair and vice president for Key Private Bank in the Capital Region. She may be reached at 518-257-8744 or [email protected].
SIDEBAR: Thinking of starting a business? You’re not alone
According to Economic Innovation Group, a Washington D.C. based think tank, business applications are up 19 percent year over year as of mid-September.
If you’re thinking now is the time for you to start a business, here are four tips to help you avoid the number one issue women-owned startups make—overestimating initials sales.
- Understand your reason. Why are you starting your business? To fill a void in the market, change your lifestyle, make a difference? Six in 10 Key Private Bank advisors say that when business owners first become clients, few know whether the goal of their business is to support their lifestyle or to reinvest back into the company for long-term growth. Knowing the type of business you’re operating is not only the first step to determining how you define success, but it is also critical to understanding how business decisions can impact your wealth in retirement.
- Know your pitch. What is your value proposition? Being able to articulate why your product and service will matter to customers, and sharing it with as many people as possible before you open for business, will give you a sense of how well it resonates with people and if they are willing to spend money for it.
- Create a business plan. Business plans are important because they allow for educated projections of future performance. Also, understanding the market and your competitors is a great way to forecast your first three years of sales and expenses. The Small Business Development Center (SBDC) and your local office of SCORE can provide guidance with research founded industry statistics to help with your business plan, especially with revenue projections.
- Build an advisory board. Tapping into your network to form a reliable group of advisors who can offer objective analysis and bring new skill sets where yours may be weak (technology, legal and financial are common areas) is critical. Start with who you know and trust as well as those with experience in your industry—make sure you have them sign confidentiality agreements. Organizations such as Chamber Women’s Business Council, Entrepreneurs Organization (EO) and Women’s Presidents’ Organization (WPO) can provide guidance and support.
Another thing to consider when starting your business is that good business doesn’t always mean a strong bottom line.
Being a socially responsible business will also add to your community’s vitality, improve customer loyalty and help drive employee recruitment and retention.
At the end of the day, there are many factors that contribute to a business’s success or failure. Due diligence and thoughtful consideration can go a long way toward establishing a strong foundation for growth.
