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Growth a Challenge at Women-Owned Businesses

Mary Harrigan has spent the last two years getting ready for the future by building out her management team. Stonefire Grill Inc., the company where Harrigan serves as chief executive, has added 50 employees in the last year even though it hasn’t opened a new restaurant. The new employees are managers preparing to open more locations later this year. “We’ve been fortunate the last few years because our segment of the restaurant business – the fast casual segment – has continued to grow,” said Harrigan. “The biggest obstacle is the management skills to run a business. For me, the best advice I’ve given myself is to look for people who are smarter than me in areas where I’m weak. I readily look for that assistance.” Stonefire Grill ranks as No. 1 on the Business Journal’s list of Largest Women-Owned Businesses in the greater San Fernando Valley, ranked by number of local employees. So you might think it were natural that the company would find management among its biggest challenges. But female chief executives at smaller companies face similar challenges in managing growth. Consider An Empowered Woman, a business training and networking company for women entrepreneurs in Westlake Village that ranks No. 39 on the list. Chief Executive Desiree Doubrox, who has just two local employees, said a lot of women entrepreneurs are using the Internet and social media to market their products, quickly giving them a global audience. However, as they grow, they run into the same challenge as brick-and-mortar women entrepreneurs – namely, organizing a management team capable of growing the organization. “A lot of them are single locations that want to expand or franchise,” she said. “The challenge is whether the home base is strong enough. The solution is hiring and creating teams and that often involves a lot of technology.” Harrigan, who has 550 local employees and 750 firmwide, hopes to open one new restaurant a year for the next three years, and then accelerate to two new locations every year. The chain currently has seven outlets, all owned by the company. Ideally, Harrigan wants to provide strategic vision for the company, but delegate to others to execute the plan – and in the process lessen her workload. “I was working seven days a week, at least 12 hours a day for many years,” she said. “My next restaurant will be the first time in 13 years that I will be the coach and watch others do it.” Money questions Jane Pak, chief executive of the National Association of Women Business Owners, Los Angeles Chapter, said one key for women chief executives looking to build a better team may lie in diversifying the ranks. “Just like those companies that underperform because they lack the diversity of experience and perspective of having women or minorities, there are many women-owned businesses that lack a male perspective, if anything, just for balance,” she said. “It sounds strange coming from a women’s business organization, but many women would benefit by having not just trusted female advisors, but male advisors as well. Capital – another ingredient for growth – is a whole other issue for female entrepreneurs. Harrigan, for example, plans to finance her new restaurants with the cash flow of existing locations. Pak said women are typically more financially conservative than men. They launch their business in the same way as men, with whatever money is available, but later they tend to avoid debt and prefer to grow with reinvested profits. “Many women I know have healthy companies with no debt,” she said. “They’re proud of this despite the fact that they’re missing out on the tax benefits of carrying some debt.” Lidia Gorko, chief executive of Alpha Aviation Components Inc., a West Hills precision machine shop that ranks No. 15 on the list with 35 local employees, said it was relatively inexpensive to launch her business because it was a small operation. Financing growth, however, has been difficult. While she has used regular bank financing and SBA-guaranteed loans, she prefers to use the profits from one year to finance the following year’s growth. “Purchasing equipment, hiring more employees, renting more space – it was always challenging,” she said. Last year, the company grew revenue about 15 percent and Gorko expects to grow the same this year. She hasn’t taken out additional loans for two years and doesn’t anticipate doing so for the next phase of growth. “We are such a small company that acquiring additional customers or expanding the volume of business with existing customers to give us that kind of growth is possible,” she said.

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.
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