Balancing money, life and other matters

Teresa Ging, a former stock analyst and owner of Sugar Bliss Cake Boutique. Her initial request for a loan was turned down, but she’s now weighing three offers. Photo: Callie Lipkin

Their ranks may be growing, but young women entrepreneurs still face the challenges their predecessors faced, plus others because of their age. Here’s how they’ve handling them. Access to capital

Teresa Ging spent six years as a stock analyst on Wall Street before deciding to open Sugar Bliss Cake Boutique in the Loop this fall. She has a strong financial background, owns a condo and maintains a good credit history. So she was shocked when she was turned down for a small bank loan.

“The issue was I’m single,” says Ms. Ging, 29.

Although it’s illegal to ask a woman about her marital status, the loan officer indicated Ms. Ging’s lack of a second income was a problem.

“I was astonished,” she says. “If I was a man and had less credit history and was asking for a bigger loan, didn’t have a 401(k) or personal property, this would not have been an issue.”

She wrote a letter to the loan officer’s boss, who apologized profusely. The bank put together an attractive offer. She’s now deciding between that and two others, says Ms. Ging, who declined to name the bank because she doesn’t want to jeopardize their potential relationship.

Her experience is not unique. Venture capitalists and angel investors sometimes shy away from women in their childbearing years for fear their businesses will founder as their families take precedence. As a result, most women end up self-funding their startups with savings or through friends and family, experts say.

The best way to get funding from anyone is to have a solid business plan. Women can take advantage of resources like the Women’s Business Development Center, where counselors help women with business plans and loan applications. And, like Ms. Ging, they should cry foul at blatant discrimination.

“I encourage women not to tolerate it,” she says.

Lack of credit history and collateral

Banks often have good reason to deny loans to young entrepreneurs. They may have bad credit history or no credit history at all because they’re so young.

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Entrepreneurs need to realize it may take a while to build up that credit by demonstrating responsible financial management. They should limit themselves to only charging necessities onto one credit card, and paying off the balance monthly. Student loans must be repaid diligently. And before applying for a loan, they should check their credit scores through services like TransUnion, Equifax or Experian to uncover and fix any mistakes in their credit histories. Aiming low

Female students often are more likely to succumb to self-doubt than their male classmates, says Scott Whitaker, associate director of the entrepreneurship center at Northwestern University’s Kellogg School of Management. Women who wowed professors and won competitions for business ideas choose corporate jobs instead of entrepreneurship. Or they decide to start a small company with no growth plan instead of setting their sights much higher.

“We see that and discourage that thinking,” he says.

Although women-owned firms make up 28% of U.S. companies, they account for only 6.5% of employment and 4.2% of total receipts, according to the Small Business Administration. Part of the reason is 85% of women-owned companies are in retail and service sectors — lower-growth industries.

Managing growth

Women tend to be more risk-averse than men and less inclined to extend themselves financially.

One reason Kim Kleeman, 33, left her teaching job in 2003 to start Shakespeare Squared, a business writing and developing educational materials, was to spend more time with her children. She was pregnant with her second child and figured working at home would provide a better lifestyle.

But after her third child, she found herself trying to shush crying babies while on the phone with clients and waking in the middle of the night to a beeping fax machine. A-year-and-a-half ago, she moved to an office to keep her sanity.

It was an intimidating move involving $4,000 in overhead. So beforehand, she e-mailed editors at large publishers to introduce herself. Once she had eight projects lined up, she took the leap. She borrowed $5,500 from her father to cover the first month’s payroll for her two employees and planned to use extra office space as a tutoring center if it came to that. But, as new projects kept pouring in, it didn’t.

Now Ms. Kleeman has a 5,200-square-foot office, 20 employees and more than $2 million in revenue. And she found space across the street from her house, so she can get to a school play or home for dinner in minutes.

Work-life balance

Krista Kaur Meyers, who owns two women’s clothing boutiques on Southport Avenue, took only 10 days of maternity leave after each of her two children was born because work was so consuming.

She could work from home or bring the babies with her to the stores, Krista K Boutique and Krista K Maternity & Baby. But the challenge of balancing work and family continues.

Hiring trustworthy store managers has been the key, says Ms. Meyers, 35. She leaves them in charge after 5 p.m. so she can have dinner with her family, even if that means working until 11 p.m. after putting the kids to bed. Her husband rearranges his work schedule to make sure he’s home when she needs to travel for buying trips, and they both commit to as many weekends together as possible.

©2007 by Crain Communications Inc.