Data analysis skills. We live in a world of data so you must understand your business data and be able to interpret what it is telling you about your business. Only then will you see how to improve internal processes and inventory management.
As a part of our series about “Why We Need More Women Founders”, I had the pleasure of interviewing Tracey Smith. Tracey Smith has over 25 years of experience helping business owners increase their profit and improve their cash flow by providing the data visibility needed to address fundamental business issues. She is the owner of Numerical Insights LLC and its online academy.
Ms. Smith holds degrees in Applied Mathematics, Mechanical Engineering, and Business. Her career spans the areas of mechanical engineering, supply chain, and human resource analytics. She is a Certified Professional in Supply Management and recognized as one of the “Top 50 Global Influencers in HR Analytics.”
Let’s now jump to the primary focus of our interview. According to this EY report, only about 20 percent of funded companies have women founders. This reflects great historical progress, but it also shows that more work still has to be done to empower women to create companies. In your opinion and experience what is currently holding back women from founding companies?
Since data analysis is my area of expertise, I must first comment on the scope of the survey results. It reports that about 20% of funded companies have women founders. We cannot conclude that there is a deficiency of female business owners from this survey since it only tracks companies that sought funding.
In fact, 40% of businesses in the US are women-owned. This data combined with the survey data tell us that women are more likely to start a business which doesn’t require funding. Many of these businesses are small, service-based businesses that can:
1. Easily launch and grow with a minimal amount of cash (no funding needed).
2. Provide flexibility in working hours to provide a better work-life balance.
Can you help articulate a few things that can be done as individuals, as a society, or by the government, to help overcome those obstacles?
In my opinion, the resources are already available. I used several when I first planned to start my business. Future business owners just need to dedicate time to search for them (easily done on the internet) and make plans to utilize the resources. The effort required is worth it. Almost every city has a Chamber of Commerce or a similar business or academic organization dedicated to helping small businesses. Here are a few specific resources I used:
· Local university which offered one-on-one small business start-up advice.
· Personal conversations with other business owners about challenges to expect and technologies they use to run their businesses.
This might be intuitive to you as a woman founder but I think it will be helpful to spell this out. Can you share a few reasons why more women should become founders?
In most societies, it is women who perform the larger share of family responsibilities and many women prefer to keep ownership of this larger share. If they seek greater flexibility in working hours to be able to balance work and home, choosing to create a business that provides that flexibility can be an option.
What are the “myths” that you would like to dispel about being a founder? Can you explain what you mean?
It is often thought that every founder takes large risks. While some probably do, you don’t have to in order to be successful. In my business, I evaluate the risk level before deciding whether to proceed with a new service. What is the upfront cost of that new service? Am I willing to lose that investment if the new service idea doesn’t increase in demand?
Every founder will have their own comfort level about how much they’re willing to risk. I operate on a low-risk model.
Is everyone cut out to be a founder? In your opinion, which specific traits increase the likelihood that a person will be a successful founder and what type of person should perhaps seek a “regular job” as an employee? Can you explain what you mean?
I certainly recommend that a person gain work experience before embarking on creating a business. Without prior business experience, the likelihood of being successful goes down substantially because you “don’t know what you don’t know.” I recommend a fundamental understanding of the following topics:
· Inventory management (if you’re a business that carries inventory)
· Data Literacy (the ability to correctly interpret data)
· How to analyze product offerings over time (80–20 rule)
· Important aspects of customer service
· A basic understanding of technologies being used in business
To become a business owner, you need to be self-driven. If you are the type of person who needs someone else to give you a deadline to get things done, then starting a business may not be for you. As a business owner, you must impose deadlines on yourself and adhere to those deadlines. As an example, I set a daily list of what to finish by the end of the day and my day won’t end until I finish that list.
To become a business owner, you also need to be able to ride through the ups and downs of business cycles and to be able to pivot your business to keep what you provide relevant to customers. If you aren’t prepared to do that, then a “regular job” may be better for you. Additionally, a “regular job” comes with a steady income whereas business ownership does not.
Ok super. Here is the main question of our interview. Based on your opinion and experience, What are the “Five Things You Need To Thrive and Succeed as a Woman Founder?” (Please share a story or example for each.)
1. Knowledge of cash flow basics. Most new businesses don’t fail for lack of sales. They fail for lack of cash flow. For example, if you are a company that sells products, you carry inventory. Cash is tied up in the purchase of inventory until you can sell it. As a company grows, it needs more inventory which ties up more cash. If you don’t understand the impact on cash flow, you can very well become a fast-growing business which goes out of business because it runs out of cash. You MUST understand the timing of your cash flow cycle.
2. Knowledge of inventory management. Without this knowledge, you’ll find yourself guessing at the inventory to buy from your suppliers. You need to understand your customer demand and any seasonal patterns.
3. Data analysis skills. We live in a world of data so you must understand your business data and be able to interpret what it is telling you about your business. Only then will you see how to improve internal processes and inventory management.
4. Technology skills: Whether you’re launching an online commerce store or selling products at a local fair, you need to understand the details of the technology that runs your business. How many days does it take for your payment processing service to transfer money to your business bank account? How does inventory tracking work in your online store? Each piece of technology you select for your business comes with advantages and disadvantages… and the technology changes rapidly.
5. A personality to make it happen. You have to want it, to make it happen. You have to endure it, to deal with the unexpected.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good for the greatest number of people, what would that be? You never know what your idea can trigger.
I would inspire a movement for every person to have a basic understanding of how to read and interpret data. In your personal life, this will allow you to determine when someone has presented the wrong conclusion from a data chart. As a data expert, I see examples of this every day in the news and online articles. That’s why I recently create a course on Data Literacy.
Thank you for these fantastic insights. We greatly appreciate the time you spent on this.