Why Small Business Is a Big Deal For Women Entrepreneurs
“The backbone of America is entrepreneurship in small businesses.”
Stephanie Breedlove is the co-founder and CEO of Care.com HomePay, the nation’s largest and most comprehensive household payroll and tax firm. Her startup grew to national leadership, was later acquired for more than $50 million, and plays a vital role in the quality and professionalism of the in-home care industry. Stephanie is also the author of All In: How Women Entrepreneurs Can Think Bigger, Build Sustainable Businesses, and Change the World and continues to lead as a role model and mentor in the growing community of female entrepreneurs. She sat down with Heleo editorial director, Panio Gianopoulos, for a Facebook live conversation about how the American entrepreneurial landscape has evolved, the necessity of strong female leadership in small business, and the importance of testing out good ideas.
This conversation has been edited and condensed. To view the full conversation, click the video below.
Panio:You’ve been an entrepreneur for 20 years, which is a very impressive length of time in a difficult career. You’ve been passionate and successful. How [did] you end up here?
Stephanie:You hit on a word that I think is key to every entrepreneur: passionate. [Passion] defines my leap and my journey. So a little bit of background:
I came out of graduate school and went to work for Andersen Consulting, which today is Accenture, in the late 1980s. And although I had a great career, I wasn’t sure if staying in corporate America was for me.
I had two sons while I was with Accenture, 16 months apart, and in the process of returning to work, my husband and I hired a nanny. We decided we wanted to pay her legally, with benefits, a more professional outlook.
Panio:No envelopes of cash.
Stephanie:That’s right. In the same time frame, with two kids, a demanding corporate career, my husband doing the same thing, I started to think that maybe going on our own would be a more fulfilling and successful path.
Panio: I’m curious about that, because you guys were in a position of vulnerability. You have young kids, you’re still building your career—that seems like the last time you would say, “You know what, let’s go try something really risky that we have no experience doing, and just go for it.”
Stephanie:You’re absolutely right. I really didn’t feel like we were running from something though. I felt like we were running to something.
We decided this idea of helping other families do what we muddled through, like the nanny tax and payroll process, could be a successful niche business as the in-home care industry emerged. [So] we launched a minimum viable product—which wasn’t even a term in 1992—and we kept our jobs. We were afraid [of] giving up a paycheck, [so] we would just dabble on the side and see if maybe it might be worth the risk.
Two years in, it started to grow legs. I wouldn’t say that it was highly successful, but it was about half of my salary in corporate America. We weren’t profitable yet, but it grew with nominal marketing and sales efforts, just word of mouth.
And then the thing happened that pulled the trigger: it started to kill us.
It was no longer a few moments in the evenings or on weekends. We either needed to shut it down because it was ruining the balance in our life, or we needed to go full time. So the reality is we didn’t have this idea and say, “I’m willing to take on the risk of jumping into entrepreneurship.” We took a tiny baby step, spent two years dabbling, not giving up any of the comforts of our jobs, and then when it started to grow some legs, we decided that the risk was worth it—for one of us.
Panio:I think that period of dabbling, where you’re first reaching out and trying things, is underrepresented in the mythology of startups. Very often you think they’re just all in immediately.
“Most entrepreneurs have a better chance of being successful if they take the time, with low risk and low expenses, to test.”
Panio:[That] leap worked out great for you and your husband, but I wonder if sometimes it’s an itch and you scratch it for a year—and you realize the market’s not that big, or maybe it’s too much work, or you just don’t like the startup life. [Confronting] the realities of building a business, maybe you think, “You know what? Actually I kind of like having a regular secure job.”
Stephanie:You touched on something that rings true. I do feel that most entrepreneurs have a better chance of being successful if they take the time, with low risk and low expenses, to test.To build the shell of a business plan. To really think about your budget, what kind of runway you need, and funding. And lastly, to figure out if this really is for you.
I think businesses have a higher probability of failing if you just leap. I’m a believer in a slower play before the big leap.
Panio:I was amazed [to learn] that something like 99% of businesses in the U.S. are small businesses. That’s just a staggering number.
Stephanie:The Census Bureau does a study every five years called the Survey of Business Owners (SBO), and a business with less than 500 employees is classified as a small business. So there’s a caveat there, because there’s a big difference between a business with 10 employees and a business with 500 employees.
But those under 500 comprise 99.7% of all businesses in America. The backbone of America is entrepreneurship in small businesses, and to put another stat to that, those small businesses are generating approximately 70% of our revenue and between 65 and 70% of employment, as well. They employ over a third of the country.
“The backbone of America is entrepreneurship in small businesses”
Panio:A huge part of [All In] is that women entrepreneurs are underrepresented. What are the things holding women back from getting into entrepreneurship?
Stephanie:One is that we are early in the evolution of women in education and in business—women are 50% of all college graduates just in the last decade. Women hold 40% of management positions, but we are only about 17% of the C-suite, and only 35% of business ownership.
So what are the barriers? There’s a long list, but I would say the core barriers are a lack of financial skill and knowledge to be able to start a company effectively, and then to have the right working knowledge or background to get funding.
Panio:The financial knowledge: is that an issue of women not studying economics and accounting in college as much, an actual knowledge deficit, or is it that men just bullshit more about money and think they know what they’re doing?
Stephanie:I found that generally women have less hubris. We have generally less confidence that we can fake it till we make it. And I think that that gets in the way of a lot of progress.
Entrepreneurs, in general, we’re idea people. And although we like to roll up our sleeves and get things done, I don’t think entrepreneurs focus enough on the importance of the financials. It’s something that is ugly and we all like to ignore, [but] it’s critical to the success of our businesses.
Right now, a majority of women that are coming into entrepreneurship are coming from fields that aren’t STEM [or] financial. They’re coming from marketing, sales, or the social side of our industries. So those are their strengths. But you’ve got to add the strengths of the financial and the technology. You can say, “I’m going to hire a bookkeeper, [or] an accountant, or we’ve finally grown to be a size in which we’re going to hire a CFO.” You absolutely should be doing those things, but that doesn’t remove you from the responsibility of knowing and making the ultimate decision.
There’s a third barrier to [women’s entrepreneurship]: a lack of role models. A lot of studies have come out, particularly focused on why we don’t have as many women on corporate boards, and one study by MIT found that, to put it simply, people like people like them. Birds of a feather flock together.
People are three times more likely to start a business or take on the risk to grow a business if they feel they have a role model that’s nearby, or relatable, or that they can interact with. And there’s nothing wrong with a women having a male role model, but I think from a broader context, women want to see more women who have carved a path ahead of them. It’s one of the top three reasons that people in general, and women specifically, aren’t taking those next steps. And hopefully time will change that.
Panio:There’s the work/life balance question, right? And it’s tedious, and any time a woman is interviewed who is in finance or business, it’s always [asked]. And then you interview a man, and it doesn’t come up as the question.
There is an expectation there, that when it comes down to it, the default is women are going to have to deal with the domestic side of things, even if they just have to outsource it some way. But do you find that that is changing at all, with all the other changes going on culturally, with new millennial parents who are maybe going into it in a 50/50 manner around things like childcare and housework?
Stephanie:I do think it’s changing. But I think it’s changing too slowly. Our business culture and our societal cultures are not keeping up with the desires of American couples—I’ll say millennials because that’s the age group, but American couples in general.
I’m not a huge fan of the word balance, because “balance” gives this connotation that you have to look like you’re perfectly balanced. And if you [picture] a physical scale, you’ve got a set of stuff on one side and a set of stuff on the other, and in order to keep it in harmony, nothing can move and nothing can go too quickly, and you can’t take things off and on… Well, that’s not life. Life is a series of peaks and valleys, so I call it integration, and I think that’s a challenge for men and women.
To your point about how things are changing, there was a study done about a year and a half ago by two sociologists, Sarah Theabaud and David Pedulla. The study focused on millennial couples who are dual income, and what their desires are out of family life and work. And the interesting thing that came out of the study is that close to 60% of both men and women preferred equality across the board in life—at home, responsibilities for childcare, cooking, household duties, car pools, and in earning income.
Here’s the caveat: a significant number of couples are reverting back to traditional roles, because as our careers progress, our business culture has not yet caught up with that desire. But I do think culture is changing. We’re watching entrepreneurs build tomorrow’s big companies with more of a focus on the importance of culture and how that also tracks to the bottom line. It’s not just nice and helpful. It’s smart business.
Panio:A final question: what do you wish you’d known when you were first starting out in this long journey as an entrepreneur?
Stephanie:As an entrepreneur, I have one fatal flaw that I can’t seem to fix. Every time I was at a crossroads, or a precipice of making a decision to take the next step—which was a good problem to have, because it meant there was growth—I never took the step until I was in so much pain that I knew I couldn’t stay where I was.
So if I could do it over again, I would try to have a little more self-awareness, a little more broad thinking and confidence in taking that next big step before it was so painful that I didn’t have a choice.