Tipping the Balance for Women in Business (10 Million Strong!)

Women are starting 1,200 new businesses per day; they are inventing products, solving problems, creating jobs and supporting their communities. Moreover, research indicates women-owned businesses are at a crucial tipping point: to insure that women entrepreneurs can not only start businesses — but also expand in the way men-owned businesses do — will changes be made to increase the growth of women-owned businesses through better access to capital and markets? 

First, a look at the facts: even before the National Women’s Business Council (NWBC) released their 2015 Annual report on women-owned businesses, it was evident that “women-owned and women-led businesses are resilient, vibrant contributors to their communities … creating jobs and strengthening the economy.” NWBC’s report —based on an early release of findings in the 2012 Survey of Business Owners — showed that women-owned businesses reached a milestone of 10 million businesses growing and thriving in the United States.

Another positive fact: although only 10.6% of all women-owned firms are employer firms, those firms employ 8.9 million people and generate receipts of $1.4 trillion. Furthermore, the number of women-owned employer firms grew at three times the rate of men-owned employer firms, while the total number of women-owned businesses grew by nearly four times the number of men-owned firms.

Reasons for Women Triumphing as Business-Owners

Women entrepreneurs are succeeding because of several factors:

• Greater interest in the entrepreneurial ambitions of women has led to a growing acceptance and discussion of women entrepreneurs in the media.
• There has been increased support from lenders, investors, support organizations, and state and local governments.
• An improved financial climate, including lower interest rates and improved access to cheaper capital, along with more women in finance as angel investors or venture capital investors, has given women-owned businesses better access to the funds to move their entrepreneurial dreams forward.
• The greater demand for goods created by women or specifically for women means increased opportunities for women-owned businesses to fulfill those needs.

Keeping at the current pace, the number of women-owned businesses will increase by more than 50% in the next five years. NWBC also stated that “the majority of these businesses are sole proprietorships and generate $233.2 billion in revenue.” All of this is great news and cause for celebration. That said, there is still substantial work to be done to attain economic and leadership parity. While many of those businesses are pursuing a passion or seeking only to generate extra income, a far greater number want to expand but can’t, due to barriers such as regulations or under-capitalization.

Where do women-owned businesses stand financially?

• Only 1.8% of women’s businesses scale successfully past the $1 million revenue mark (versus 6.3% for men).
• Women own 36.2% of all non-farm and non-publicly held businesses, but women-led businesses still receive only 2.7% of all total venture capital funding.
• Companies with a woman CEO received only 3% of total venture capital dollars, or $1.5 billion out of a total of $50.8 billion invested during 2011-2013

New Needs for Future Female-Helmed Success: 

• Access to Capital – Recognizing the need is not enough; it is crucial to devise ways to increase women’s access to capital. The Council’s recommended solutions include an Infographic Toolkit to teach women the process of obtaining capital and to offer tips and best practices, as well as to explain various types of capital, including crowdfunding, purchase order financing, and angel investing.
• Access to Markets – Access to markets results from networking.  Business networking evolves from social networks; therefore, the quality of the networks in which women are connected is important. One way in which women-owned businesses grow is via regional ecosystems. NWBC is exploring what works and how communities can offer greater support to women-owned businesses. Education about Corporate Supplier Diversity Programs is also an important goal for increasing women entrepreneurs’ access to markets. Research indicated that many women did not realize the programs existed, nor did they know how to participate.
• Job Creation and Growth – Job creation helps everyone. Women-owned businesses that want to expand and create jobs need support and guidance to do so. Although many government entities are working to devise ways to teach women the ropes, so to speak, perhaps the simplest way is for women to assist other women directly. The Council also noted that accelerators and incubators will continue to be instrumental in ensuring women succeed.

Women have always been problem-solvers, banding together to promote what is good for one another. And women absolutely have the power to increase the momentum of women-owned businesses to traverse not only these current obstacles, but also any that arise in the future.