Allison Sokol, CEO of Specific Beauty, needs to be a risk taker. Her marketing channel, HSN, wants her Miami multicultural skin care company to forge into new product lines. Her buyers want her to expand into Europe. Her business partner, Heather Woolery-Lloyd, wants to showcase the science behind results through infomercials.
But Ms. Sokol approaches risk-taking cautiously.
“I’m not risk-averse,” she said. “I’m just not impulsive. I believe in being sure and taking educated risks.”
Ms. Sokol’s caution mimics many women who run businesses. But when big risks lead to big rewards, female leaders must shift their thought processes if they are going to increase their growth prospects.
How exactly does someone become more of a risk taker?
The first step is a mind-shift. A survey of nearly 250 women by the Commonwealth Institute South Florida found female leaders and owners are optimistic about growth for their businesses in 2014. But while they express interest in expanding product lines and moving into new geographies, most hesitate to take a financial risk.
Most telling: More than 63 percent said they plan to fund growth in 2014 with internally generated funds. That represents a startling figure when research by the Department of Commerce shows most male owners are willing to borrow money to fund their ambition and growth opportunities.
“Women by nature are not gamblers,” said Laurie Kaye Davis, executive director of the Commonwealth Institute. “Some want to grow their businesses, and to do that, they need to take risks. But it’s tough for them. It’s not in their nature.” That might be especially true if they juggle their business with caring for small children or aging parents.
Those women who do consider themselves risk takers generally take a studied approach. “They are not completely opposed to taking potential risks but really think carefully about taking them,” said Colleen Moore Mezler, president and CEO of Moore Research Services, which compiled the survey.
Though Judy Leibovit, CEO of Sweet Endings Desserts in West Palm Beach, Fla., said she is not an inherent risk taker, she is about to take a big leap as her company expands distribution across the country. At the same time, she is augmenting her wholesale business with a retail storefront that will be operated by her twin daughters.
Seizing those opportunities would help her revenues increase by 30 percent in the next year, she said. “When you’re growing a company, there is always risk. It’s about doing it carefully, slowly and smartly and seeing clearly where the risk will take you.” Unlike some business owners surveyed, Ms. Leibovit said she has no fear of incurring debt to fund growth. “If I’m going to grow to the scale I want, I have to take on debt. I don’t think of it as risk.”
Risk can be critical to increasing market share, the outspoken Richard Branson, founder of the Virgin Group, has noted. In this competitive economy, avoiding risk can be its own gamble. Mr. Branson’s wild success in creating a culture of risk-taking at his company starts with encouraging his staff to think about what could go right more than what could go wrong. “It’s important not to be put off by failure,” he has said. “More likely than not, you will succeed.”
Reframing risk as an opportunity to succeed has helped men build more million-dollar companies than women. Of course, some of that may be by choice. Female business owners often work harder at juggling work and family; accordingly, they often have smaller performance expectations for their businesses, according to research by the National Women’s Business Council.
“Women are taking risk consistent with their goals, but their goals aren’t big enough,” said Sharon Hadary, former and founding executive director of the Center for Women’s Business Research in Washington, D.C. “We live up to our own expectations.”
In her research, Ms. Hadary has noticed male owners tend to be impulsive risk takers looking for immediate payoff and high returns, while women seek consistent, long-term rewards.
Cindy Krischer Goodman, CEO of BalanceGal LLC, can be reached at firstname.lastname@example.org