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Women business owners have a huge impact on the economic health of New York City. Not only do their companies add to the overall wealth of the city by adding jobs and revenue, but their businesses have a ripple effect by supporting families and strengthening the neighborhoods where they operate. To get a sense of the resources available to women business owners and how the city can help them finance and grow their companies, SmartCEO spoke with Rachel Van Tosh, deputy commissioner of the division of business services at the New York City Department of Small Business Services (SBS). WE NYC is an initiative of SBS that seeks to create equity of opportunity for all women business owners. Here, she discusses what the city is doing, why access to capital is so important to women-owned businesses, and how mentors can help a small company grow.
By Susan Caminiti
SmartCEO: What was happening with women business owners that prompted the city to look into ways to help?
RVT: We became really interested in this topic because we know women contribute to the economy in a very significant way. And when they grow their firms it contributes not only to their households, but to the whole community. One of the first things we found out is that while women have a really big impact on the economy—there are 360,000 women entrepreneurs in the city, they employ 200,000 people, and generate $50 billion in revenue—there is also a very troubling entrepreneurship gap and we needed to find out what the barriers were.
How and when did you start?
We have great private partnerships in the city and worked closely with city community development to do an extensive outreach effort beginning in 2015. With their help we spoke with more than 1,500 women in New York City in addition to 1,000 male entrepreneurs so we could understand the differences in what they were experiencing. We did surveys, interviews, and we had a robust community-based platform where we did multiple workshops to find out the challenges.
What did you hear from these women?
The top issue of concern for women small business owners is access to funding. So many of them told us they used personal savings as the main source of capital for their companies. Men, on the other hand, were twice as likely to use traditional banks to fund their businesses. Women also tended to under-capitalize their companies.
Aside from funding, where else did these women say they needed help?
One of the things we heard from the women that was somewhat surprising was their difficulty in finding access to mentors. I wasn’t anticipating that, but it was a real need that these women had. They felt like they didn’t know how to find someone to guide them through the process of growing their business. About half of the women we spoke to mentioned this.
Once you had all this information, what programs were you able to put in place?
We have a lot of support from City Hall for this initiative and as a result we were able to roll out a number of different programs that addressed the major gaps we discovered. One of the first things we did is to launch two programs around financing. The first one was about helping women to build credit. Many of the small business women we spoke to do not have a strong credit history or have never built business credit because they’ve always used their own personal funds. Our program teaches women about business credit and then provides one-on-one credit counseling to help women increase their credit scores.
The second finance-related program we launched was around creating a capital plan. When women are starting, and even when they’re growing their companies, they actually need very small amounts of capital. For example, half of the women we spoke with said they needed less than $10,000 to start or grow their company. That kind of business funding is not always accessible from a commercial bank. They usually don’t want to make loans that small. So we developed a class and online tool on our portal that introduces them to alternative funding sources outside of commercial banks, such as community development financial institutions, credit unions, and crowdfunding platforms, that really focus on micro-loans.
How did you address the mentor issue?
We launched the WE NYC mentor program in January 2016. This program has an interesting take on mentoring. In doing the outreach with women, they told us they weren’t looking for a one-on-one mentoring relationship. They didn’t feel like they could get everything they needed from one person. Rather, they liked the idea of an advisory board of women with different skill sets. So we reached out to our network and selected about 25 successful women who have a range of skills sets and backgrounds. For example, we have women who have made it big in food service, baking, the tech world, finance, marketing, and accounting. They all hold regular office hours in the city and we advertise that on our Facebook group and on our portal. If you need help with marketing, for example, you go to our marketing woman. Small business owners have an opportunity to have meetings with these women when they have specific questions about the areas in which they are interested.
How are you measuring the success and impact of WE NYC?
When we launched most of the programs about a year ago, we were committed to serving 5,000 women over three years. In our first year we’ve served 3,000 women already, so that’s a really good sign. Soon we’ll be tracking the increase in revenue and hiring among these firms. We also ask if they like the program and if they would recommend it.
So what’s the ultimate goal of WE NYC?
When women enter are able to thrive, they contribute not only to their own households and pockets, but to entire community and really lift it up. So for us, we see our role in helping to narrow the gap around entrepreneurship for women and ensuring that they’re fully able to contribute to NYC’s economy.
This interview has been edited for length and clarity.
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