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By Mark Daoust
You may have seen that the number of women entrepreneurs is on the rise. But even though female entrepeneurship is growing – up 30 percent since 2007 — there is still work to do.
Currently, women only make up 37 percent of entrepreneurs, and if we look at how women participate in entrepreneurship, we see that they are lagging in many key categories.
I reviewed my firm’s last three years of transactions – we help online entrepreneurs sell their web based businesses — to see if I could learn more about how women were involved in this part of entrepreneurship.
We gathered a lot of interesting data, but the number that stood out above all the rest was the fact that out of all the acquisitions we inspected, only three percent of the buyers were women.
Why don’t women look to acquire?
The lack of interest in acquisitions could be a result of natural differences between men and women. Kat Loterzo, a successful business coach, noted what she observed in differences between her male and female clients.
According to Loterzo, for women, their business is something that they allow to be deeply tied in with their identity. So they’ll make their decisions more based on emotions rather than based on outcome. As a result, most women will be less likely to want to buy someone’s business.
Psychology Today has published a lot of information on the differences between genders. Among their observations, it notes that “girls and women tend to input or absorb more sensorial and emotive information than males do.”
Because women have a tendency to view their business more as a part of their identity, it seems that they are less likely to want to make someone else’s business their own.
Women should consider acquisitions.
Depending on the type of business you want to build, there can be many benefitsto building one rather than buying one. For example, if you are looking to disrupt a marketplace, you’ll be looking at a startup.
However, depending your goals, an acquisition may actually help you reach your goals quicker. Acquisitions allow you to do the following.
- Reach profitability quicker. Startups often see little to no profits in their first year or first few years. Buying an existing business allows you to tap into profitability from day one.
- Acquire goodwill. Goodwill is all the non-tangible business assets that are difficult to replicate. This includes a business reputation, its branding or customers offering referrals. Goodwill takes time to build, unless you acquire it.
- View historical data. Starting a business involves a process of testing and experimenting with what works and what doesn’t work. This can take time, money and a lot of effort. When you buy an existing business, however, you have reams of historical data at your disposal.
So what factors should you consider before making an acquisition? Loterzo offers five suggestions for women, who are considering an acquisition.
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