Woman-Owned Businesses Growing But Still Not Equal

Women Susan B Anthony Money

A common theme in business and finance circles is that women are underrepresented, less capitalized, and face an uphill battle when it comes to building and financing their small businesses.  While the statistics may bear this out to some degree, the women-owned business horizon is markedly better than the picture painted by this conventional data.

It is true that though women represent slightly over half of the U.S. population, they only own 30% of the businesses.

Women Climbing RiskIt is true that they employ a mere 6% of American workers.  And it is true that their sales are 25% of those of male-owned small businesses.  However, it is also true that women-owned businesses are growing at a rate of 1,200 per day, far outpacing the growth rate of those owned by men, and one and a half times the national average. Four out of ten new businesses are now owned by women. And women own a greater share of enterprises that are in high growth service industries, like education and health care, giving them a great deal of opportunity for continued expansion.

Women-owned enterprises do tend to be smaller than those owned by men, but small is mighty.  Businesses owned by women had revenues of nearly $1.5 trillion last year, up nearly 80% since 1997.  In addition, women-owned businesses added more than a half million jobs to the economy between 1997 and 2007, a time when the overall job rates plummeted.  Clearly, the economic impact of businesses owned by women is more significant than common statistics would indicate.

ROI investment graphSmall business lenders see similar trends in their borrowers–women tend to seek smaller loans than men.  At Dealstruck, after controlling for a variety of factors including industry, revenue size and FICO score, we find that our male borrowers, on average, request $10,000 to $20,000 more than our female borrowers.  So, while women-owned businesses are performing as well as their male-owned counterparts, they are taking on less risk, or leverage.

But these smaller loan amounts are in no way inhibiting motivated women with the drive to build successful enterprises.  If you tell these women that the statistics are against them, they will show another perspective.  Just ask Winter Taylor and Leanne Abraham, two borrowers who are living proof that, while woman-owned businesses may take less risk, they are flourishing.

Following a lucrative career in retail,  Winter Taylor left the workforce when 12 hour days began to take their toll during her pregnancy.  She soon launched Mommy Makes the Money, LLC, an eCommerce reseller of consumer goods. After initially self-funding, Taylor secured business financing from an online lender, enabling growth of nearly 30% that year, with 2014 revenue surpassing $500,000.  Taylor feels that the potential for her business is even more significant.

“The one thing that makes me optimistic about my eCommerce future is that I’ve been very willing to try new things … I really feel like I’ve just hit the tip of the iceberg.”

Leanne Abraham, CEO of Premierhire Executive SearchAnother business owner, Leanne Abraham, CEO of Premierhire Executive Search and Staffing has gone gangbusters with her business, with 300% revenue growth in 2013 alone.  Her staffing agency continued to expand and Leanne realized she needed capital to weather the ebbs and flows inherent in her industry and sustain continued growth. “Since we took financing, we’ve almost doubled our business again, and we’re able to continue to grow with them as our lending partner.”

Many of the companies owned by women are smaller, making business financing a challenge.  When a company is too young or too small to qualify for an SBA or traditional bank loan, small business owners have historically had few options.  Since the economic downturn in 2008, traditional banks have shifted focus to small business loans in excess of $1 million.  But the majority of small businesses seeking capital are looking for less than $250,000, leaving a large unserved segment.    It is estimated that $550 billion of small business financing is left unaddressed by traditional banks. A new generation of online Glass Half Fulllenders has filled that gap.   Alternative lenders fill that void by offering a variety of financing options to provide access to capital for companies that otherwise would have no means to obtain money to finance growth.

Growth of the women-owned businesses sector of the U.S. economy continues, despite much negativity in the air surrounding the statistics.  But women entrepreneurs are a “glass is half full” lot and pay little heed to the naysayers.  For every report that says men own two-thirds of the country’s businesses, women business owners cheer that they control a third.  A mighty third.  And that’s growing.


Candace KleinCandace Klein is Chief Strategy Officer at Dealstruck. She is an attorney with experience as a small business owner. Candace was founder and CEO of Bad Girl Ventures. She received her BA from Northern Kentucky University and her JD from the Salmon P. Chase College of Law. She continues to serve as General Counsel for Women Investing in Women, a global NGO focused on increasing access to capital for female entrepreneurs and access to capital markets for female investors.

 

 


 

 1 Small Business Administration, http://www.sba.gov.
2 “Women Owned Businesses in the 21st Century”, U.S. Department of Commerce Economics and Statistics Administration for the White House Council on Women and Girls, October 2010.
3 “High-Achieving Women-Owned Firms Increasing Faster Than Expected”, American Express Open Forum, July 9, 2013, https://www.americanexpress.com/us/small-business/openforum/articles/high-achieving-women-owned-firms-increasing-faster-than-expected/?linknav=us-of-topics-findmore-stateofwomen-ownedbusinessesreport-article.
4 “Women Launching 1,200 New Businesses a DAy, New Research Shows”, American Express Open Forum, August 13, 2014, https://www.americanexpress.com/us/small-business/openforum/articles/women-launching-1200-new-businesses-a-day-new-research-shows/?linknav=us-of-topics-findmore-stateofwomen-ownedbusinessesreport-article.
5 Julie Weeks, “Women-Owned Firms Springing Up All Over”, American Express Open Forum, May 18, 2015, https://www.americanexpress.com/us/small-business/openforum/articles/women-owned-firms-springing/?linknav=us-openforum-search-article-link5.
6 “Women Owned Businesses in the 21st Century”, U.S. Department of Commerce Economics and Statistics Administration for the White House Council on Women and Girls, October 2010.
7 “Joint Small Business Lending Survey 2014”, Federal Reserve Bank of New York, February 17, 2015.
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