External finance is a vital tool in the remit of every business. Obtaining access to funding will help you achieve your goals, whether setting up a new venture or expanding an already-establish enterprise.
Regardless of who owns the business, funding will be needed. However, when it comes to female-owned companies, the odds are stacked against them when securing finance. Research has found that women are less likely to apply for finance and that, when they do get it, they tend to receive less capital than men.
Due to the funding gap for women, it is even more essential that they succeed when applying for finance. This will enable them to grow their businesses at the same rate as male entrepreneurs, leading to increased role models and paving the way for future female entrepreneurs to join industries.
While work does need to be done to give women the financial support they need in business, female business owners can take steps to strengthen their position and ensure they have the funding they need to achieve their ambitions. Below, we have detailed what those steps are.
Understand what you need
The first step for anyone seeking business funding is to understand what it is you need. This means having an approximate figure of how much external finance you think you need to achieve your goals. With women reportedly more likely to ask for less money, it is crucial to make sure you are getting the amount you need.
Calculating how much capital you need means having a detailed understanding of your business plan and the role that finance plays in it. For example, what will additional capital be used for? What additional income will be generated from this investment? How much free cash flow will this generate? What is the likely additional cost of the finance? These are the questions you need to answer to determine a precise capital figure you need to raise externally.
It’s worth noting that securing finance isn’t just a one-time transaction. External funding will likely come into play at various stages across your business’s lifespan, such as when you want to start a business, grow it or run into cash flow issues. So, you may wish to think ahead to determine how you can use finance to assist your enterprise’s continued running and where you will get that support from at the appropriate times. This will often fall under your financial model.
By understanding your needs, business plan, and financial model, you will precisely identify what funding you need, when, and how much. This will put you in a great starting position to secure it and reduce the chances of not seeking enough capital.
Utilise support
One of the main obstacles cited for women in business is not having access to finance, suggesting that it is challenging to find appropriate sources to apply for business funding. Fortunately, an increasing number of options are available, so the key is identifying where they are and how to ensure success.
This is where support such as networks and advisors can come in. Often, these sources can act as introducers to financiers and investors, putting you in touch with people who will provide the capital you need.
If you use a financial advisor or broker, they will discuss the potential solutions available, depending on your need, which is particularly beneficial if you aren’t sure what kind of finance you should use. Beyond this, they can also tell you where to access that finance, connect you with lenders and even help you through the application process to increase your chances of success.
Alternatively, networking with others or even joining mentoring schemes may lead you towards lenders. You will often establish relationships with fellow entrepreneurs who may have shared the same challenges as you and found routes of finance that assisted them. They may even have connections that they can refer you to. By embracing these contacts, you will gain access to and knowledge of relevant schemes, programmes and funders who could end up granting you the finance you need.
Consider women-specific schemes
In a bid to narrow the gender gap in funding, many institutions have now launched loan and grant schemes that are open only to women. If you are a female entrepreneur, it may well be worth applying for such loans, especially if you have struggled to get finance through more general means.
In terms of loans, the likes of Barclays Rise, RSB and Natwest, with their Back Her Business scheme, are among some of the well-known banks committed to offering money to women. Beyond this, there are many alternative lenders, competitions and investor networks who specifically aim to provide funding to women.
Female entrepreneurs may also benefit from grants from female-exclusive programmes, including the Women In Innovation Award and Global Fund for Women. Depending on the programme, the criteria for receiving a grant may differ, but if there is one that matches your venture, it is worth considering. Grants usually are not repayable, which is an added benefit.
By utilising women-specific schemes, you may unlock the sizeable sums that women are often denied due to their restricted access to funding. This will help you to overcome the barriers and secure the finance you need.
Apply
Once you have determined the level of funding you need and where you want to get it from, the final step is to apply. One report found that, while women were less likely to apply for finance, they had an 18% higher success rate than men. If this is true, women should be encouraged to apply for finance.
When you are applying for funding, you want to make sure your application is watertight to boost your chances. This means understanding what the requirements are for the process, as well as spending time crafting your application and any supporting documentation. You should particularly pay attention to your business and financial plans, as these should show why you need the funding you do and what you will do with it.
It is worth bearing in mind how lenders will assess you and highlight your business’s value at all times. This will enable you to guarantee their buy-in and be more willing to provide funding.
If you are struggling to submit an application, it may be wise to utilise support, such as speaking with a financial advisor or sharing your application with a trusted peer. That way, they can tell you where you might be going wrong and allow you to apply with increased confidence.
Get advice
Securing finance can be a challenge for any entrepreneur, nonetheless women who have to additionally face reduced access to external funding. However, raising it is a fundamental part of achieving your business goals and creating successful enterprises.
By understanding your needs, identifying opportunity and submitting effective applications, you will boost your chances of obtaining capital. As the gender gap narrows, it is hoped more and more women will have access to business funding with increasing ease.
If you are struggling to raise finance for your enterprise, or need guidance on the best route for you, we are here to help. Our team of advisors have knowledge of a wide range of funding solutions, so we can work with you to find the right option for you and your unique business needs.
We will also point you in the direction of relevant lenders and contacts, as well as work through the application process with you, until you reach the holy grail of sufficient funding for your goals.