Founders, be fearless ... and be focused

The Times ran an article last week about people returning to work in the face of the cost of living crisis. My good friend and founder of Noon, Eleanor Mills, pointed out in a post here on LinkedIn that ageism is still a barrier to many women in "mid-life". As a result, many are choosing to found their own businesses.

Pre-pandemic, it was very common for women with young children to do the same thing. Unable to negotiate the flexibility they needed at work, they chose to set up in business themselves.

For some, it's a success. For many, less so.

"Women going freelance face bigger gender pay gap."

The somewhat depressing headline in an FT article some time ago, in a Women in Business special report. The only explanation offered for this sorry state of affairs is that women led businesses attract less funding. Mmm. That may well be true, and at the same time I do believe there is more to it than that.

Underlying causes

At the risk of being controversial, I've observed a number of ways in which women going freelance make decisions that inadvertently lead to a gender pay gap. And I can hold my hand up and plead guilty to all of these.

• First and foremost, we are not commercial enough. We don't always begin with a laser sharp focus on the economics of the business: how much do we need to earn, where is the money coming from, who will buy, who's the competition, what's the business model, if we are freelance, what's the minimum day rate we can accept.
• There is an expectation that women will do things for free. All of the women entrepreneurs I know receive repeated requests (framed as "offers") to speak at events for free. There's a spike around International Women's Day. The "sell" is that they will have access to a fabulous audience who will then be more likely to buy what they have to sell. What actually happens is that they gain a reputation for being willing to pitch up and speak for free.
• We are not good enough at saying "no". We want to please, we're keen to expand our network, we're too easily talked into having that coffee, speaking at that event, contributing to that research effort ... with no kick back for ourselves and our own business. This is a particular problem when other people approach you saying "your business looks interesting, I'd love to explore how we might collaborate" ... which can often be roughly translated into "I'd love you to introduce me to your clients."
• Which brings me on to negotiating. We don't set ourselves up well enough when it comes to negotiation. When we lack the confidence in our own value, it's too easy to agree to the first price a client offers, or to accept a knock down in price.
• We follow each other when we should be following the money. How often do you see instagram posts, or LinkedIn posts, attracting a huge number of likes, only to find that the likes are coming from other women working in the same sort of field, rather than potential paying clients or customers.
• We mistake noise for success. A great instagram following, a thriving facebook group, LinkedIn top voice, thousands of followers on twitter, great visibility at networking events, always busy ... but not so much cash coming in. Mmm.

After four years of working for myself building She's Back and making a big impact on the noise front, but earning very little cash, I went into business with two other women to form the Reignite Academy. We all had our own ventures and this time had to sit down and create a business plan that was convincing enough for us to commit our collective time and effort.

Lessons Learnt

We're almost five years in, and despite (in some ways thanks to, but that's another story) the pandemic, we have a (reasonably) thriving business. Here's what I've learnt.

1. Begin with a clear value proposition. What do you have to offer that is worth someone else paying for. Who exactly values what you have to offer? Where is the competition, how are you different, what price can you charge, is there a sustainable business there.
2. Establish your price or your day rate. What do you need to earn to make this thing worthwhile. If you are self employed, how many days will you realistically be working, how many of those will be chargeable to clients, what do you need to earn over the year and how does that translate into a day rate.
3. Beware "lowballing" to get the business off the ground. It's tempting to go in with a lower fee in the early days, to attract new clients and establish relationships. I'd advise caution. Once you've set the bar low, it's hard to raise it. And serving lots of small clients is often far less profitable than building relationships with the few who really value what you offer and are prepared to pay a realistic price.
4. Think cash as well as income. It's fine having multi-national clients but not so fine if they take 90 days to pay you (this has happened to me). Are there ways of generating some cash up front? Could this be a membership model? Can you bill upfront?
5. Follow the money. Question where you're spending your time. Is what you are doing going to lead to a new client, a new opportunity or a way of saving costs.
6. Develop some strategies for negotiation and saying no firmly. "What is your budget?" is a good response to those requests to speak at events. "We're currently busy serving our clients" is very annoying when you hear it on the end of a phone queue but not a bad start when people are asking to meet you and it's obvious they simply think you'll be a potential source of clients.
7. Invest in long term relationships. Whether it's with clients, partners, candidates (if, like us, you're in the recruitment business), supporters most businesses are about people. Invest time in building understanding, trust, friendships, even, and you'll find you don't need to spend too much on expensive advertising and marketing.

It can be tremendous fun working for yourself. And it does offer flexibility. Which is all the more reason for making sure that you set yourself up for success in the long term.

As I said, we survived a pandemic. Now let's see how we deal with a cost of living crisis, inflation in double figures and global instability .... Follow Reignite Academy here on LinkedIn to see what happens next!