In our first-of-its-kind survey of women owned businesses, we unearthed what it is that women business owners need to grow their business, and the challenges that they face. We interviewed a few of the women who participated in our survey. Here is what they have to say about the challenges that women face in getting the capital they need.
LISA CHRETIEN, President of EventMover
Lisa Chretien, Founder and President of EventMover, an event transportation service, describes her entrepreneurial spirit as “jump off the cliff and then check to see if the parachute opens.” She is full of life and drive, and when she sees an opportunity she isn’t one to pass it up. In 2001 as she saw the company she worked for diluting its business as they grew, she decided that she could do a better job, and without even knowing what Quickbooks was, decided to branch off and start her own business.
In the first year she made about $275k, enough to have her husband quit his job and join her in the venture, and by 2010 had been able to grow her business to nearly $2 million. At this point, she knew that she needed to do something if she was going to maintain and grow what she had built.
She joined WBEC-West for their certification at the prompting of a client who wanted to add her to their diversity profile. She learned that if she was going to have an opportunity at the growth capital she needed in this post-financial crisis world, she was going to need a CPA that fought like a lawyer, as well as the assets to back her up.
Lisa faces the challenge of being in a service rather than an asset-based company. She is an organizer and mover of intricate puzzle-pieces, with venders, contractors, and employees all working in concert to get things done. A line of credit is vital to keeping the business healthy, strong, and in motion, because clients don’t always have terms of 30 days like her vendors do. So, even with millions in the pipeline, banks aren’t the most friendly to service-based companies because they don’t have assets to use as collateral, and as Lisa says, “[the banks] don’t want to be in the business of owning personal assets.”
Lisa went to 25 different banks with open books, her CPA, and personal assets at the ready before finally finding one that would give her a line of credit. Like many women in similar industries, she has to use her own home equity to back her line of credit, something that she recognizes as an advantage over women business owners that don’t have such resources available.
This is a big point of frustration for Lisa. “You could be in a room of 300 women [at a networking event], and I would like you to find me three women that are doing over a million dollars because you will not find them in the room… they can’t grow their business because they can’t get funding… what could they do if they had the ability and the cash flow to grow their company?” She has seen first hand the lack of options available to women in the missing middle (businesses with $250k-$1milion) and sees the huge potential that gets wasted because of it.
Even with well-known national companies attracted to her WBEC certification, keeping that business would be impossible without her line of credit (LOC). Larger companies tend to set their own payment terms, sometimes as far out as 75 days, and the most she can extend terms for her suppliers is 45 days. Lisa said that it’s difficult as a small business to “play bank” for large companies. And what does the actual bank have to say? “The bank tells you that’s bad business,” said Lisa, followed by a pause and a laugh.
While Lisa got her LOC, she still faces the challenge of keeping the amount available to her where she needs it, because the LOC is reviewed and renewed annually. With a seasonal business like hers (trade shows and conferences slow in the summer and holiday season), at one moment she might only have half her annual revenue secured, and the next, have all of what she anticipated and then some. In 2018 she was just under $4 million, and this year she is projected to make just over $4 million. She attributes a lot of her success both to the mentorships that she’s had and the LOC that she’s been able to maintain through the years.
PAM ISOM, CEO of ICE Safety Solutions
Pam Isom started ICE Safety Solutions twenty years ago, providing safety and CPR training, equipment and medical supplies to corporate clients. Now she employs 12 full-time employees and 20 contractors with revenues in excess of $3 million annually.
Two years ago, Pam realized that “what got us here, will not get us there.'' She innovated technology into the safety training division by using virtual reality technology and the Oculus Go VR headsets. She is now able to deliver safety training using VR headsets, helping clients reduce the cost of training while ICE’s employees are deployed in other revenue generating projects.
Her growth has been slow and organic. While she has received lines of credit (LOC) in the amount of $25-$50K, they only support three operation areas: payroll, credit cards, and payment to vendors within 30 days. “This lack of capital makes it impossible to grow, let alone invest in technology, says Pam. Additionally, she said
The #1 reason why my current Line of Credit cannot support growth is the following: Corporations demand the lowest price and extend payment by 60-90-120 days which forces a business to utilize the Line of Credit for operational purposes and forces us to pay interest on the line, which negatively impacts profitability! The interest charges affect profitability which, in turn, affects our saving money for a ‘rainy day’, then affects our ability to utilize savings to make the investment in technology growth. This is an everyday reality.
It has been a constant challenge to get the financing she needs. She spent five months in meetings with a major financial institution for growth capital to fund the virtual reality division of the company. “Meeting after meeting was focused on us purchasing the bank’s tools - payroll, saving etc. etc. The focus was more on my business buying services from them, rather than on my needs to secure capital to grow,” said Pam.
Looking back, Pam explained that a line of credit for $100K would have enabled her to fund and build the VR technology. “If the lender could have evaluated our 20 years in business, customer list, our traction, success, and scale in the US and how our technology is poised to change how corporations avoid fines and penalties from insufficient safety training from OSHA, if this could have been an option for us, I am confident our VR Safety division would now be growing by leaps and bounds.”