In 2018, SCORE, a nonprofit organization of volunteers offering mentoring services to small businesses, released a report called The Megaphone of Main Street: Women's Entrepreneurship.1 The report looked at women-owned business success, financing as it pertains to female entrepreneurs, and the impact of mentoring on female business success.

The findings about mentorship show that it increases the likelihood that a business opens its doors and stays open. The organization also found that working with a mentor for five or more hours "greatly" increases an entrepreneur's likelihood of business success. The third finding the report highlights is that women entrepreneurs experience success when they are mentored, regardless of the gender of the mentor.

"The findings from this research study corroborate outside research indicating that mentorship is closely linked to small business success," the report's authors say. "First, mentoring increases the number of entrepreneurs who transition from merely thinking about starting a business to actually launching that business. Research by Gallup shows that adults with access to a mentor are five times more likely to start a business than those who do not have a mentor. Second, mentoring also increases the number of businesses that survive. Data from the SBA shows that 25 of every 100 businesses launched in the U.S. will fail within their first year of operations."

The rate of failure is reduced by nearly half for businesses that receive mentoring, according to SCORE. In fact, the report cites data from the Small Business Administration (SBA) indicating that small business owners who receive three or more hours of mentoring report higher revenues and employment growth.

SCORE's own survey found that 87 percent of businesses launched in the past year by the organization's clients are still in operation. That compares to the national average of 75 percent. The survey found that 41 percent of business owners who received two to five hours of mentoring experience increased size or revenue, while the number was 47 percent for those who received five or more hours. The organization points out that this amount of mentoring has virtually the same effect on businesses run by either gender.

"Along the same lines, there is a positive correlation between the number of interactions an entrepreneur has with a mentor and the growth of his or her business, as measured by size and revenue," the report says. "A mentoring interaction was defined as a one-on-one mentoring session or an educational workshop."

The survey found that 30 percent of business owners (of either gender) who had a single interaction with a mentor reported business growth. For those who had two interactions, it was 32 percent. For those who had three to five, it was 36 percent, and for those who had over five, it was 43 percent. In other words, the more mentoring sessions, the better chance for growth.

The report acknowledges previously published research2 showing that women have found accessing mentors to be a challenge in the past, but notes, unsurprisingly, that when they do have the same access as men, their success rates are equal.

The type of mentorship needed depends on what stage a business is in, and is not based on the gender of the owner. This is perhaps the key takeaway from SCORE's research. There was no statistical difference between responses given by male and female owners when asked what services were most critical to their business success. Instead, the differences in responses depended on whether a business was in its pre-start phase, its first year of operations, or in business for more than a year.

Those in the pre-start phase were most concerned with obtaining start-up assistance, while those in the start-up phase were concerned about human resources issues, growth, and marketing strategies. Those in business for more than a year were concerned mostly with human resources issues.

While it's no surprise that SCORE would report positive statistics around mentoring, given the nature of its very purpose, it stands to reason that mentoring has tremendous value to any entrepreneur.3 According to the organization, traits of an effective mentor include: helpfulness, listening skills, accurate assessment of the situation, providing relevant advice, and treating clients with respect.

 

1. https://s3.amazonaws.com/mentoring.redesign/s3fs-public/SCORE-Megaphone-of-Main-Street-Women%E2%80%99s-Entrepreneurship-Spring-2018_1.pdf

2. https://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest/women-entrepreneurs-are-key-to-accelerating-growth

3. If you are interested in finding a mentor to help your Nevada business, review this NevadaSmallBusiness article.

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC