The Pay Difference Between College Educated Men and Women

In the United States, the average working woman earns 79 percent of what the average working man earns. Think of it this way: Women receive $4 for every $5 that is remunerated to men.

A quartet of researchers from Harvard, Wellesley, Boston College and Norway’s Institute for Social Research explored Census Bureau data from 1995 to 2008 and found that the average male college graduate by his early forties earns roughly 55 percent more than the average female college graduate in the same age cohort.

 The researchers found that when men and women both keep working at the same company, men see higher salaries sooner. And when they change jobs, as men grow older they move on to higher paying positions and firms more often than women do.

They also identified that while married men and women switch jobs at about the same rate, married men’s career shifts tend to result in higher salary returns than married women’s job changes do. Additionally, jobs in women-dominated roles tend to start with lower pay than male-dominated ones, and that affects salary growth over time.

For high school graduates without college degrees, the researchers found that as age increases, the wage gap widens. However, the most significant discrepancy occurs during the first five years out of school, at which point the gap is 30 percent.

Though college educated men earn more than college educated women, more women are attending institutions of higher education. More women graduated from college than men for the first time in 2015 — 30.2 percent of women compared to 29.9 percent of men, according to Census data

Time for Funding

The hit ABC series, “Shark Tank” has given new attention to the world of business funding. Millionaire and billionaire investors listen to pitches from everybody from the soccer mom with an idea to the veteran business owner with years of experience and millions in sales.

“Shark Tank” sheds light on plenty of realities when it comes to entrepreneurship but one to focus on for this article is the fact that not every business is ready for investors.

How do you know if you’re ready?

Two Types of Funding

Before you go after funding, you have to understand the two types. Debt funding is what you might find at a bank. In exchange for money, you make regular payments complete with interest. The bank doesn’t want to own a piece of your company; it will ask you to put up collateral—your house, your car, your baseball card collection, anything the bank can do to lower its risk, it will.

If your business becomes the next Coca-Cola, the bank gets nothing more than its money back with interest. If your business ultimately closes its doors, the bank will tell you that its sorry to hear that things didn’t work out but it still wants its money back.

In short, debt funding isn’t dependent on how well your business is doing.

The second type is equity funding. If you receive equity funding, you’re receiving cash in exchange for giving the person some percentage of your company. They become your business partner and they’re probably going to want to be a part of the decision making process.

If your business thrives, they make money. If your business fails, they lose their investment alongside of you. Equity finance deals can come with any number of contingencies including royalty deals or debt funding built in but the main difference between the equity and debt funding is that equity funding makes the investor a partner where debt funding is nothing more than a loan.

When Should You Ask For Money?

You might think the answer is, “right now.” Most people who have an idea for a business don’t have a storehouse of cash ready to deploy to get the business off the ground. They need help before the business becomes the business.

The reality, however, is that most brand new businesses will not be eligible for any type of formal financing—debt or equity. Since you have no business, you have no income. Banks aren’t in the business of gambling so they’re likely going to say no. Equity investors are in the gambling business but even if they were ok taking a chance on an unproven business, they often want to see big numbers.

Spending their time on a startup that brings in $20,000 this year isn’t worth the risk.

Where do startups most often find funding? They ask friends, family, and other individuals that know them as somebody who is driven and has a track record of success in everything they do.

Government Financing

Through the United States Small Business Administration, some small business owners are eligible for SBA loans. The SBA partners with banks in your community to take on some of the risk of business loans. This allows small business owners who wouldn’t otherwise be eligible for a loan to get the funds they need. You can read more about SBA loans by going to its website.

If you’re beyond the startup phase, you’re likely eligible for multiple forms of equity financing. Start with the bank or credit union that holds your business accounts. You’ll need detailed financial statements and a rock-solid pitch that gives the banker an idea of what you’re doing, how the money will be used, and why you’re still going to be in business in five years.

Equity Finance Explained

Remember that equity financing comes from investors and although they’ll look at all of your financials, it often comes down to the investor’s gut feeling. Because of this, there are no set rules. Providing you can make a good pitch, it never hurts to ask but there are some realities to consider.

In most cases, you aren’t going to be attractive to equity investors until later in the growth of your business. Investors know that along with an investment of their money comes an investment of time and other resources. If the potential return isn’t high enough to justify the outlay on their part, they won’t invest.

Before asking for a meeting with every investor you can find, have an expert understanding of your business, your industry, your product, and your competition. If you’re not the smartest person in the room when it comes to your business, the answer will be no. That’s hard to do in the earliest stages of your growth.

Related: 9 Alternatives to a Traditional Business Loan

But How Do You Know The Right Time?

Here’s the answer: If you’re too early, you might blow your one chance in front of that investor or lender. If you’re too late, you’ll come off as desperate.

If you watch “Shark Tank”, you’ve noticed the entrepreneurs who show up desperate. They say things like, “If I don’t get an investment, I have to give up on my dream.” That desperation indicates that the entrepreneur is too late.

The better time to ask for funding is when your business is ready to go to the next level. It’s healthy but needs a financial shot in the arm to grow. When you start to feel those growing pains, it’s probably time to seek funding—not necessarily because you NEED the money but because the money propels you forward.

Trade Services With Other Businesses

There might come a time in your business’s life when you want to barter your services. In fact, you may find it prudent from time to time to trade your services for the services that another business offers. It helps to have a plan in place for this and to have some safeguards against overextending your services beyond what you can support. After all, if you barter all of your services all of the time, then you’ll never earn an income.

So the big question is: When is it okay to barter your services, and when should you pass on any trade offers?

When Bartering Doesn’t Makes Sense

Many businesses decide it’s time to barter when they don’t have the income or can’t afford the services they really want to purchase, or need to purchase, from another business. This is a really bad idea. Bartering should never be done solely on the basis of your budget or on an emergency ad hoc basis.

It makes better business sense to barter for essential business services rather than to barter for services that are luxuries or that are primarily personal expenses.

For instance, let’s say your pipes burst at your home and you find yourself in need of a plumber. It’s an emergency situation and if you don’t hire a plumber fast, you’ll be displaced and will have to move your family out of the house and into a temporary living situation. That certainly would be a bad thing. But should you barter your dog grooming services right now? Do you really want to trust your plumbing to the only person in town who’ll do the job if you shampoo their poodle?

When Bartering Actually Does Make Sense

Bartering services is best reserved for when you were going to make a purchase anyway. So instead of bartering your dog grooming services for an emergency plumber, you could establish an agreement with your shampoo supplier. You know you’re going to need shampoo to run your business. So offer to perform a pet pedicure in exchange for an equal value of shampoo each month.

Or, if you have a plumber whose business you value and your business location has an ongoing need for plumbing services, you could agree to trade your dog grooming services for plumbing services on an as-needed or an ongoing basis. Whatever works for you and your trade partner.

Before you enter into any bartering agreements, however, you must first set a value for the services you are trading. Trade only on the retail value of your services, not their costs.

What To Consider Before You Make A Trade

Other considerations you should weigh when determining whether or not to barter your services include:

  • How much should you barter? Don’t go overboard. Only barter what you feel comfortable with financially. A good rule of thumb to use is to establish a limit on the value of services you are willing to trade. Say, for instance, if the value of the service is more than $100, then the answer is an automatic “No.”
  • Set a limit on the total value of services you are willing to trade for a given period (e.g. No more than $1,000 between all trade partners per quarter). Alternatively, you could set a limit on the number of trade partners.
  • Is the service you will receive essential to running your business? If not, you should probably pass.
  • Can you trust a potential trade partner? You should only enter into trade agreements with business owners with whom you have done business in the past or have a reasonable expectation that they will fulfill their end of the bargain. You shouldn’t barter with people you just met.
  • Don’t enter subsequent agreements with trade partners until they have fulfilled past agreements.
  • As always, get your bartering agreement in writing and make sure all of the details are spelled out.
  • Check with your accountant to find out how to record and report bartering deals to stay in compliance with IRS laws.

Consider all trade agreements just as you would any other business agreement and make sure you annotate all exchanges. You and your employees will spend time performing services for your trade partners, so there are still expenses to be accounted for, and you want to make sure you get a return on that investment. If the services you receive in return do not result in a net positive for your business, then it likely isn’t a good trade arrangement.

As mentioned earlier, stay away from trade agreements that mix your personal finances with your business finances