As more and more women are starting and growing businesses, they face issues and experiences related to business loans that they may have never faced before.  Here are some “Fatal Flaws” that women often commit when they decide to approach their lender for financing, and also some tips for avoiding them.

1. Lack of Confidence

Women may not be confident enough when asking for money to fund their company.  “I realized that I had the tendency to lack confidence,” says Monique Elwell, consultant and former Internet entrepreneur.  Confidence can come from a thorough grounding in the facts: by making sure she understands her financials and can explain them to the lender, a women entrepreneur should feel more prepared for her meeting and appear more confident.  Elwell also suggests that it’s important to be emotionally prepared.  “Just before making any pitch, I’d psych myself up to get the adrenaline flowing,” she says.

2. Lack of Toughness

Jeanne Sullivan, Founder and Co-Chair of StarVest Partners LLC, a venture capital firm, suggests that women can learn from men’s “bravado.” Paula Chauncey of Redwood Group LLC in Boston agrees. In a speech she gave at a Harvard Business School® conference for women about entrepreneurship, she mentioned that although women are usually able to understand where other people are coming from, they often “shut down in high-pressure meetings. Men are acculturated to speak off the cuff. Women are not.”

3. Lack of Strategy

Women seeking funding need to do some research to find out which lender in their community is most likely to give a loan to an entrepreneur, find out exactly what qualifications the lender is looking for in a borrower, and develop a strategy accordingly.  Sullivan advises that anyone raising capital should “know what they don’t know,” and then find someone who does.  Approaching the local office of SCORE1 or the Nevada Small Business Development Center2 may be a good place to start, since they have experience in preparing business plans and know the local financial market.

4. Lack of Understanding of the Financials

In Sullivan’s opinion, “money savvy” is a skill that women need to gain in order to be more successful in getting financing. What does she feel are fatal flaws in many women’s approach to getting funded?  “An inability and reluctance to discuss the financials of the company, a pure lack of understanding of the accounting and financial needs of the business, and a lack of awareness that help is needed,” lists Sullivan.

5. Lack of a Tight Pitch

Most women like to talk. But when it comes to selling a lender on a business, knowing how to “talk the talk” may be more important than saying a lot. Women need to make their pitches “skinnier and hard-hitting,” recommends Chauncey.  They need to be able to explain in just a few words what their business does (or will do), why it will be successful, and most importantly, why it will be a good risk for the lender.

6. Lack of a Network

According to Jerry Colonna, one of the founding partners of Flatiron Partners LLC®, women need to “build their network. Your network is about the most important thing you can bring to the table.”  Increasing their “people networks” can help women learn about the issues and how to speak the language of finance, raise money, find the right people for their team, and grow their businesses.

To find out about a business loan3 from Nevada State Bank, visit any of our Business Centers located around the state, or call us at 702-545-6831 (south) or 775-636-7186 (north).  Nevada State Bank is a Preferred SBA Lender.

 

1 For more information, visit scorelv.org (Las Vegas office) or score-reno.org (Reno office).

2 For contact information, visit nsbdc.org.

3 Loans subject to credit approval. Restrictions apply.

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.