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“Entrepreneurship is essential to our standard of living and economic growth,” said Stephanie Breedlove, co-founder of Care.com Homepay.
“Entrepreneurs create new wealth and new jobs,” Breedlove told several hundred people attending Capital Factory’s Women in Tech Summit Wednesday afternoon in downtown Austin.
Yet entrepreneurship has been shrinking for the last 30 years, Breedlove said. The number of transformational entrepreneurs, someone who starts a business for reasons of aspirational growth, is also shrinking, she said.
Economists predict that U.S. growth is going to fall from three percent to two percent unless the U.S. can tap some untapped resources, Breedlove said. Many believe women are those untapped resources, she said.
Women-owned businesses have grown from 26 percent to 36 percent in the last 20 years, but there is still much more work to be done, Breedlove said.
Women currently employ 6.2 percent of the workforce and only 2 percent of women-owned companies cross the $1 million in revenue mark annually, Breedlove said.
The best way to minimize obstacles is to build businesses of value and scale and to change those statistics, she said.
Then Breedlove recounted her entrepreneurial journey which began while she was working at Accenture in Denver when she had her first son in 1991. Most women at Accenture didn’t return to the workplace after having a child. But she did. She and her husband hired a professional nanny. They wanted to pay her like a regular employer, provide benefits and withhold taxes. They thought if they treated her well, the nanny would provide great care. From that experience, Breedlove saw the need for a payroll and tax business for parents to easily pay their nannies and she launched a business to do just that in 1992. A year later, she had her second son and she eventually left Accenture to focus on Breedlove and Associates full time.
Breedlove and Associates provided families with tax preparation and filing for their nanny, payroll management, human resources and labor law guidance and unlimited access to expert support and advice.
As the business grew, Breedlove poured everything back into it and she went two and a half years without a paycheck. It was bootstrapped and ran on revenue. She never raised venture capital. But times were not easy and money was tight. She recalls how she and her husband would mail in their mortgage payment and hope the check didn’t clear before the money was in the bank.
Through her struggles, Breedlove learned that “everything worth really doing is also really, really hard and nothing is insurmountable and that there is a solution for almost every barrier.”
Breedlove and Associates turned the corner in year three with $300,000 in revenue and moved into a 700-square foot office that reeked of mold and had no running water. Her husband joined the venture full time and their only employee had a desk in the supply closet.
But it’s was a huge milestone, Breedlove said.
Around the fifth year, the company crossed the $1 million mark in annual revenue.
“The rest of the story looks like what you read about in Inc Magazine,” she said.
There were tough decisions and crossroads, but the business was on its way and it experienced a compounded annual growth rate of just under 20 percent for the duration of the business, Breedlove said. It never had a flat or down year, she said. The team of four quickly grew to 15, then 30 and started to move on to 50 employees, she said. The clients moved from a few hundred to 12,000 active clients at the time of acquisition.
About the $10 million mark that introduced a new level of scale, Breedlove said. Care.com approached the company about an acquisition and after a few discussions, Breedlove decided to sell. She stayed on with her husband for two years after the sale.
The company has doubled in less than three years since our exit, Breedlove said.
Next, Breedlove offered entrepreneurs advice.
First, create a core differentiator for your business, Breedlove said.
“What does your client perceive when they are buying your product?” she asked.
“We were not delivering payroll and tax services,” she said. “Our mission became to enhance the quality and the longevity of the household staff relationship.”
Next, maximize this differentiator by incorporating your unique talents and values into the core of the business and weave it into the fabric of your efforts, she said.
“The real secret sauce is to deliver state of the art, ease of use high-value tech, and quality of product, service, and touch,” Breedlove said.
“Every company is a tech company and every tech company is a service company at some level,” she said. “Those that can master both with efficiency will exceed market expectations and will garner the big wins.”
For example, Breedlove and Associates invested $2 million in technology and software when it had $5 million in revenue, she said. That set the company apart from its competitors.
Also, entrepreneurs need to change when they graduate from startup stage and focus on execution and growing profitability.
“How you view thinking big and working on your business matters for the trajectory of the growth of your business,” she said.
Lastly, be on a constant mission to grow your personal skills and close your skills gap, she said.
Entrepreneurs don’t have to do everything themselves but they need to be knowledgeable in many areas so they can delegate properly.
She advised entrepreneurs to focus on financial capital for funding, human capital, and social capital, a company’s network.
“Strong entrepreneurs know that they don’t know it all and they are ok with that,” Breedlove said. “And they go to work learning for a lifetime.”
“The most valuable lesson that entrepreneurship has taught me is that it really is about the passion, about the opportunity to get to develop and exercise your best talents and to get to offer something of value to the world,” Breedlove said. “The clichés are true. It’s not about an exit. Entrepreneurs should always be smartly planning for next, and an exit is on the list. But an exit is a byproduct of your success, not a mission. I can say with absolute certainty that I would do this all over again independent of a successful exit.”