Key Facts about Women-Owned Businesses

Dec 21, 2011 | Starting Up, Brainstorm

Women are becoming more active in the equity capital markets, but in a survey conducted in late 1999, just 9% of the institutional investment deals and 2.3% of the dollars among the investors interviewed went to women-owned firms.

Women business owners are philanthropically active: seven in 10 volunteer at least once per month; 31% contribute $5,000 or more to charity annually; 15% give $10,000 or more. Women business owners are more likely than men to serve in leadership positions in their volunteer pursuits.

High net worth women business owners and executives are active and generous philanthropists. Over half contribute in excess of $25,000 annually to charity; including 19% who give $100,000 or more.

The workforce of women-owned firms shows more gender equity. Women business owners overall employ a roughly gender-balanced workforce (52% women and 48% men), while men business owners employ, on average, 38% women and 62% men.

Women and men business owners are equally likely to be using the Internet for business – 61% of women and 55% of men use the Internet for business. Among Internet users, 50% of women- and 54% of men-owned firms have web sites.

Most women- and men-owned firms are engaged in e-commerce, but are more likely to purchase good and services for their business (75% of women, 74% of men) than to sell their products or services online (52% and 51%, respectively).

On a personal basis as well, women are active Internet users, yet women business owners are much more likely than other working women to make personal purchases online – 57% vs 40%.

Although most women are attracted to entrepreneurship for positive reasons, the past 20 years have seen a rise in such motives as frustration with work environments, the desire for greater challenges and more flexibility.

A new generation of women has emerged – women who have started their business within the past 10 years have more managerial experience, education and have the same overall business revenue and employment profiles as women who have been in business 20 years or more. They are more similar to their male cohorts in these respects, and are also more growth-oriented than women who have been in business longer.

Latina entrepreneurs are an integral and growing part of the women business owner population. They are in a wide variety of industries, and have owned their firms for an average of 12 years. Two-thirds were born in the U.S., and those who are first-generation have lived in the U.S. for an average of 30 years.

Women and men business owners have different management styles. Women are less hierarchical, may take more time when making decisions, seek more information, and are more likely to draw upon input from others – including fellow business owners, employees and subject-matter experts.

Women-owned firms in the U.S. are more likely than all firms to offer flex-tie, tuition reimbursement and, at a smaller size, profit sharing to their workers.

Internationally, women entrepreneurs’ key business concerns are a blend of day-to-day business management issues – maintaining profits, finding good employees, managing cash flow; and external factors – the economy, government business laws, access to technology, and access to capital.

In research conducted internationally during the past two years, women business owners voice similar needs for their business’ development – access to capital, access to education / training, access to networks and markets, and to be taken seriously.

According to the Census Bureau, as of 1997, there were 5.4 million majority-owned, privately held women-owned businesses in the U.S., generating $819 billion in sales, and employing 7.1 million workers.

From 1992-97, the number of women-owned firms in the U.S. grew at 2.5 times the rate of all U.S. firms, and the number of women-owned employer firms increased at 6 times the national average. In addition, sales increased at 1.5 times the national average, and employment expanded at over 3 times the U.S. rate.

Women-owned firms continue to diversify into all industries. Construction, manufacturing and transportation have seen the largest recent increases in the number of women-owned firms, although services and retail still make up the largest share of women-owned firms.

As of 1997, there were over 900,000 firms owned by a woman or women of color – amounting to 1 in 6 women-owned firms (17%) in the U.S. Overall, the number of minority-owned firms increased by 29.6% between 1992 and 1997 – over four times faster than for all U.S. firms.

Nearly 3/4 (72%) of women business owners have investments in stocks, bonds or mutual funds, compared to 58% of working women.

86% of women entrepreneurs say they use the same products and services at home that they do in their business, for familiarity and convenience.

Women-owned businesses are just as financially strong and creditworthy as the average U.S. firm, with similar performance on bill payment and similar levels of credit risk.

There has been significant improvement in access to capital for women business owners in the U.S. From 1992 to 1998, their use of credit cards dropped form 2% to 36%, and their use of business earnings to finance growth nearly doubled to 65%. Over half of women (52%) and men (59%) business owners had bank credit as of 1998.

Fast-growing women- and men-owned firms differ from other businesses in the appetite for and use of capital. They use a wider variety of sources of capital, and are more likely to use bank credit. Yet, only 39% of women who own fast-growth firms have a commercial bank loan compared to 52% of men owners of fast-growth firms.

Access to capital is more problematic for women of color. As of 1998, fully 60%of Caucasian women business owners had bank credit, compared to 50% of Hispanic, 45% of Asian, 42% of Native American and 38% of African-American women owners.