Chicago, Chicago
Entrepreneurial Boom Town

BY JUDIE FRAMAN

hicago is one of the greatest cities in the country for the growth and success of women-owned business," says Hedy Ratner, president of the Women's Business Development Center (WBDC). "The joint forces of Chicago, the state of Illinois, and the U.S. Small Business Administration (SBA) have aligned, and have made firm commitments to the growth and expansion of women- and minority-owned businesses."

A recent study from the Center for Women's Business Research ranks Chicago second among the top 50 metropolitan areas in number of businesses, employment, and sales of women-owned firms.

According to the report, the number of women-owned firms in the metropolitan Chicago area increased 16 percent between 1997 and 2002, while employment in the area grew by 31 percent and sales increased by 32 percent. As of 2002, there are an estimated 186,711 majority-owned, privately held firms in the metropolitan Chicago that employ 382,000 people and generate 44.0 billion in sales.

"People used to say that if you can't do business in Chicago, then you can't do business," Ratner observes. "This is a reflection of the vitality and prospering economy of Chicago."

Ratner says that there is a conscious effort on the part of city and state governmental officials to continue to increase opportunities that will include women-owned vendors and suppliers.

"This year, Chicago met, and exceeded, its 5 percent of goal for awarding contracts and subcontracts to firms owned by women," she points out. "In actuality, Chicago does 7 percent of its business - over $21 million - with these firms."

Ratner believes that this commitment to economic opportunity programs for women-owned businesses is critical to both the growth of those firms and the economic vibrancy of the city of Chicago.

Despite the economic downturn and the downfall of Arthur Andersen, which has its headquarters in the city, Chicago has a thriving and growing economy that is diverse in terms of ethnicity, race, gender, and industry.

"Chicago's strength is in its diversity," says Gerald J. Roper, president and CEO of the Chicagoland Chamber of Commerce. "The region is not dependent on a single industry, so the region is less prone to boom and bust cycles than other parts of the country.

"Although manufacturing, dot-coms, and the travel industry have been hardest hit by the recent economic slowdown, Chicago is still number one in business services, manufacturing, distribution centers, digital telecom, conventions, and business travel," Roper continues.

"The city ranks second in financial centers and Fortune 500 headquarters, and third in high-tech economy in the country. We have more computer programmers than Silicon Valley, and more data running through our fiber optic backbones than any other city in the world."

Roper says Chicago's economic diversity means that it is a market "ripe for women entrepreneurs."

"With a slower economy and unemployment rates higher than in the past, now is a great time for women to start businesses," he adds.

A Supportive Environment
The Center for Research ranks the state of Illinois fifth in number of women-owned firms and notes that employment in these firms is growing more rapidly than that of the national average. More than 385,000 women-owned businesses in Illinois employ over 1.4 million workers and generate $195 billion in sales annually.

"We recognized this trend early on and have designed innovative programs to facilitate and encourage continued growth and expansion," says Pam McConough, director of the Illinois Department of Commerce and Community Affairs (DCCA). McConough adds that the state's goal for contracts and subcontracts to women business owners is 9 percent, which it has consistently met.

Another key factor that makes Chicago a thriving area for women entrepreneurs is the wide range of support, resources, and special programs (see sidebar) that are available to help women start or grow their enterprises.

One of these resources is the WBDC, headed by Ratner and S. Carol Dougal. The mission of the organization, now in its 17th year, is to provide programs and services that support and accelerate women's business ownership and strengthen the impact of the economy.

"We like to think of ourselves as 'silent partners' with women who want to start their own businesses," Ratner says. "We are on hand at all stages of growth. We are also matchmakers, helping our clients benefit from either doing business with one another, or by pairing up so they can win corporate or government contracts."

Ratner notes that women business owners in Illinois are facing the same challenges as other entrepreneurs nationwide.

"The economy is in bad shape, and many women business owners have had to cut staff, trim budgets, and drop expansion plans," she says. "Fortunately, we haven't seen trends to indicate they are any worse off than others. Because of the economic situation, the events of 9/11, and the shake-up in corporate America, we are finding that more and more women are utilizing the programs of WBDC.

"Participation in our entrepreneurial training programs has doubled. We have even added programs to fill in the gaps, such as our Child Care Business Initiative. Women are looking at business ownership as an option to insecure jobs, and as a way to bring more control and security to their lives."

The crown jewel of WBDC programming has been the annual Entrepreneurial Women's Conference and Women's Business and Buyers Mart. This year, the Chicago event was held Sept. 4-5. The conference attracted more than 2,000 women business owners from around the United States, while the Business and Buyers Mart featured more than 250 exhibitors.

Events like the Entrepreneurial Women's Conference present an excellent opportunity for women to develop new marketing opportunities and to meet government and corporate buyers in an environment conducive to establishing new relationships. In fact, Ratner says, the main purpose of most Buyers Mart exhibitors "was to identify certified women business owners who could be added to their vendor and supplier base."

During this year's Entrepreneurial Women's Conference in Chicago, women entrepreneurs learned and shared critical business information through a variety of workshops and panel discussions.

Judith Roussel, Illinois district director for the SBA, says that the contacts women made at the conference will help them grow their firms outside the state.

"Corporations and federal government agencies that are doing business nationwide want to do business with women entrepreneurs," Roussel says. "The WBDC, through its SBA-funded BusinessLINC [Learning, Information, Networking, Collaboration] program and its conference, facilitates the process."

Ratner says she's proud of the conference, adding, "The educational programs that were delivered at the conference are unsurpassed in quality and content." She's not alone in her high opinion.

"This conference is a terrific opportunity for women business owners across the nation to network and establish new business partners and for would-be entrepreneurs to learn from those who have succeeded," says Risa Davis, senior vice president and director of government and community relations at Citibank, F.S.B.

Each year, the workshops and forums at the Entrepreneurial Women's Conference are designed to discuss and deliver the latest information about technology, business trends, and marketing. A unique feature of the conference is The Business Wellness Clinic, which helps women entrepreneurs increase their business success and get valuable advice about a variety of business ownership issues from business experts.

Ratner also points out the Women's Forum Luncheon, saying that the stimulation and motivation women have received at the event is "one of the real highlights of the conference."

A Variety of Resources
The WBDC is not the only Chicago-area organization that works to increase women business ownership. In fact, a number of not-for-profit and government organizations at the state, county and city levels have recognized the fact that women who run businesses of different sizes need different resources and have put programs in place to help women accelerate their business growth.

"We recognize that emerging technology companies must demonstrate sustainable growth and revenue if they are to be serious candidates for angel financing or venture capital," says Mollie Cole, managing director of the center. "Our goal with the [recently developed] Business Bridge program is to maximize the potential for our clients. Through the program, we act as a trellis between the emerging entrepreneur and blue-chip companies."

The National Association of Women Business Owners (NAWBO) is another excellent resource for women entrepreneurs in the area. Diane Middlebrooks, president of The Business Coach is Barrington, IL, is the president of the Chicago Area NAWBO Chapter.

"What makes NAWBO particularly attractive to women business owners is the ability to connect with other women entrepreneurs who may have already experienced similar challenges, and to learn from their experiences," Middlebrooks says. "Networking is still a key component of our mission. When our members are out promoting their own businesses, they are also looking for ways to connect fellow members to new business opportunities."

Within the Illinois DCCA is another state resource - the Office of Women's Business Development (OWBD). The OWBD works with individual companies and women's professional associations to help women entrepreneurs tackle tough problems. It provides information, referral and procurement assistance and serves as an information conduit to business resources through the state.

"I believe these innovative approaches and out-of-the-box thinking create an environment that fosters women-owned business success in this state," DCCA Director Pam McDonough says.

Finding the Money
Women-owned firms Illinois are concentrated in several categories. Fifty-four percent are in business services or consulting, including marketing communications and computer systems. Retail claims 16 percent, and 9 percent of women-owned firms in the state are in financial, insurance or real estate services. There also is enormous growth among women businesses in the non-traditional business sectors, such as construction and technology.

"We have seen an increase in the number of women-owned biotechnology firms," Ratner says. "They are not allowing the dampened economy stop them."

Next spring, to supplement its continuing work to provide capacity building, equity investment, and venture capital to high-growth, women-run businesses, the WBDC will again help offer a Springboard Women's Venture Forum. Springboard 2003: Midwest is scheduled for April 30, 2003, at Chicago's Union League Club.

The Women's Venture Forum offers resources, coaching, and a platform to introduce equity investors and venture capitalists to women entrepreneurs and their high-growth businesses in areas such as biotechnology.

"Last year's forum produced great results," says Linda Darragh, vice president and director of the Women's Tech and Venture Program at the WBDC. "Nearly $40 million of funding went to 11 companies, more than 200 women gained a real education in the equity process, and we are now developing a new, women's angel fund to serve the region."

Many agree that programs like the Women's Venture Forum are vital.

"Access to capital continues to be the most critical hurdle for women business owners in Illinois, and across the nation," McDonough says.

"In Illinois, the DCCA has a number of participation loan programs designed to encourage banks and other conventional lenders to provide financial assistance to women-owned businesses," McDonough continues. "In addition, we were the first state to address the need for a micro-lending program designed specifically for childcare providers. To date, this program has provided $142,000 in capital for childcare business start-up and expansion."

Wendy Posnock, president of Acceptance Corp. Inc., a commercial loan/banking placement firm, agrees that access to capital is a hurdle for women entrepreneurs. However, she says, the issue is not that banks are unwilling to lend to women.

"Banks want to loan money to solid businesses, be they women-owned or not," Posnock says. "The issue is that women typically are less comfortable borrowing money aggressively for their companies."

Posnock also notes that women tend to look for smaller loans, because they are less comfortable with the risk of borrowing a large amount of money.

"The accessibility is there, but the acts of accessing are not," she says. "Because women are more risk adverse, it limits their access to capital. They are more comfortable using credit cards or borrowing from friends and family, because there is less risk and disclosure involved."

Posnock agrees that it is harder to get loans from banks in the current economic climate because the downturn in the economy has forced bankers to be more conservative. In addition, overall company financial strength has fallen with a weaker economy, a fact that adds to the difficulty in getting bank financing.

Posnock says women have traditionally been excluded for the venture capital markets. "We do not run the types of businesses that the venture capitalists are looking to invest in," she explains. "There are, unfortunately, very few women at the head of super-fast-growing, high-tech and medically related companies, which is where the venture capitalists are putting their money, and have been for a few years."

A former investment banker, Posnock started Acceptance Corp Inc. seven years ago to help small businesses acquire the funding they need to develop and grow their businesses. Her company is the second largest commercial loan broker in the state of Illinois. To date, Acceptance has raised $126 million in small business loans and has access to 500 lenders throughout the country.

"Sixty percent of the loans were placed for women-owned companies," Posnock says. "We succeeded in securing funding for those clients because the companies were solid, well-run firms, and we asked aggressively."

The business community in Chicago and the state of Illinois continues to honor the spirit of entrepreneurship - and all indications are that it will for some time to come.

"Small business is the driving force in job creation and economic recovery," Ratner explains. "Chicago has a growing number of successful, small, minority- and women-owned business that make our community more vital, more alive, and more thriving than ever."

JUDIE FRAMAN is senior editor of Enterprising Women magazine.