April 11, 2012 | Economic Opportunity

Woman of the Week: Maria Otero

Maria Otero of the Women's Venture Fund says women- owners need to take a harder look at the bottom line.

By Anna Louie Sussman

NEW YORK CITY – Women are launching small businesses like never before: between 1997 and 2007, the number of women-owned small businesses grew at double the rate of men’s, up 44% over the decade. Too often, though, they remain just that – pretty small. Average sales for women-owned businesses are 25% of the average sales for men-owned businesses, according to the Economics and Statistics Administration.

Women’s Venture Fund (WVF) founder Maria Otero thinks it’s time to dream bigger. For more than fifteen years, the Women’s Venture Fund has been helping disadvantaged and low-income women in New York City plan, launch and grow their businesses. “These are women coming from minority communities, not sophisticated corporate backgrounds, who are starting local businesses and helping their families,” she said. At the Women’s Venture Fund, they receive affordable training from experienced business counselors, advice from successful entrepreneurs, and loans of up to $25,000. Ms. Otero spoke to Women in the World Foundation about moving beyond microcredit, common mistakes made by women entrepreneurs, and how the government can support the women-owned small businesses that are critical to America’s economic health.

There’s been some buzz about bringing the microcredit model, which has been successful in helping women in the developing world, to the United States. Where does microcredit fit into the U.S. economy?

I think microcredit here emerged as a result of success in developing countries, where it worked as a strategy to alleviate poverty. A lot of these programs early on were not looking at women as though they were really going to start businesses; they were more like “innovative job training,” in which women would get some business skills and then find employment elsewhere. In the decade and a half since this has emerged, while it has done a lot of good, in my experience, microcredit has been really good at marginalizing women. Most microbusinesses are run by women, and most businesses run by women continue to be micro.

Right now in the U.S., more and more women are turning to business because they’re the heads of households, or even when they’re not, they’re looking to supplement their money or even be the sole source of income. As they look to their businesses to be their real source of income, it becomes even more important to look at what we’re doing.

Our model emerged in contradistinction to microcredit. We work with women from diverse communities who don’t have executive experience, or access to credit. Since we started, we were always focused on women as entrepreneurs. We encourage them to really think through their plans, and give them enough support to really move forward with their plans.

What are some of the common mistakes that women make which prevent their businesses from growing?

Across the board, the first thing is that the women who come to us don’t understand their numbers. It takes a while – and I mean a while – of continuously going over it with them, so they understand the terms and get comfortable with the financial data: what it means and what it is telling them about what is happening with their business. Often, the only reason they are keeping financial information is because they have to pay their employees and they have to pay taxes.

Women also tend to hire accountants who really just function as tax preparers. Because revenues are typically small, and the woman doesn’t know what to ask of her accountant, the accountant will only offer tax preparation. But the goal of tax preparation and the goal of building a business are not perfectly aligned. If you don’t understand that, and you don’t understand that you need your accountant to help you understand the numbers so you can see and measure if your strategies are effective, then you aren’t getting the feedback you’re paying for.

There’s a notion that women don’t take risks, but we see women starting small businesses at twice the rate of men. What have you observed about women and risk-taking through your work at WVF?

Women-owned businesses tend to be undercapitalized, and women business owners don’t ask for what they need and don’t know how to calculate their needs. Research suggests that, in terms of risk taking, men are not restricted by their experience to go whole hog, so they will go ahead and pursue a very ambitious undertaking from the start. But they’ll also take more time doing research on the market, and they also focus their research on the bottom line. Women, on the other hand, aren’t motivated as much on the bottom line.  It’s not that they don’t want to be profitable, but there’s the mantra of “Do what you love and the money will follow,” whereas men are more inclined to ask “What’s the bottom line?” But sometimes doing what you love, the way you love doing it, may not yield great results for the bottom line. Women are motivated differently and so they evaluate success differently.

What role do you think the government has in helping women business owners succeed?

The government has a responsibility to set policies that encourage investment in alternative markets. Typically this might refer to low-income markets, but women entrepreneurs would be an alternative market. They’re not necessarily low-income, but they are certainly disadvantaged. For example, policies that affect community reinvestment, which has typically been one source for organizations like mine to build up a pool of capital to lend to clients that the banks wouldn’t look at, have dried up.

You’ve been part of the women’s business community for more than fifteen years. How far have we come?

There’s a lot more attention paid now to women in business and in leadership positions, such as at the Women in the World Summit, which featured entrepreneurs in various roles. Women are moving into new roles, and they are more consciously aware that they need to help others get on the same path.

What is interesting about this new spotlight, and what’s different from how it’s been covered in the past, is how much more awareness there is by the women who are in leadership positions about how the women in their network are able to access opportunity and what is it they can do to help expand opportunities.

Anna Louie Sussman is a writer and editor for the Women in the World Foundation website, and a frequent contributor to major U.S. magazines and newspapers.