How often have we heard that behind every good man is a good woman? Whether we agree with that or not, what is certain is that women are the ones holding forth in most thriving businesses today.
While the growth rate of new businesses has remained fixed in the U.S., recent government data shows that the share of women-owned firms has climbed.
According to preliminary U.S. Census Bureau data released last month, the total number of U.S. firms rose a mere 2% to 27.6 million between 2007 and 2012 while the number of women-owned firms grew much faster, rising 27% during the same time period to a staggering 36% of all firms. The number of self-employed women and the number of women running businesses with employees both increased, pushing the total number of women-owned firms to 9.9 million in 2012.
While the growth rate of new businesses has remained fixed in the U.S., recent government data shows that the share of women-owned firms has climbed.
Despite this increase in numbers, these businesses tend to be smaller than those owned by men, with an average of roughly 8.5 employees compared with 13.5 employees for male-owned companies.
Some companies, especially financial ones, are one-man shows with women running their stock or Forex businesses on a totally one-to-one basis. Others are CEO’s of large financial service brokerage houses handling millions of dollars on a daily basis.
Growth 4x Higher
“Women’s entrepreneurial appetites are at an all-time high,” said Carla Harris, chair of the National Women’s Business Council, a nonpartisan federal advisory council in a recent statement.
The NWBC release revealed that women-owned firms have an economic impact of $3 trillion that helps create and/or maintain 23 million jobs, 16 percent of all U.S. jobs. These jobs provide income to the individual worker and contribute to the financial security of their families, bolstering the economic energy of their communities in particular and the nation as a whole.
The statement confirmed that the rate of growth of female-owned businesses was almost four times the rate of businesses owned by men.
“But women continue to face challenges accessing capital and other obstacles to growth” Harris said.
A policy report published last June by the Kauffman Foundation, one of the largest private foundations in the United States, backed up the NWBC assessment. The Kauffman report showed that a number of obstacles were inhibiting the rate of start-ups by women to half the rate of men, particularly during the prime business formation years, between the ages of 35 and 44.
According to the Kauffman Foundation report which was posted in Inc.com, an online business magazine, one of the most significant challenges facing women entrepreneurs is the lack of mentors. Since entrepreneurship is empirical by nature, good teachers are important. However, there are fewer women mentors than there are men. This may just be because there are fewer women-owned businesses to begin with but the lack is still noteworthy.
Another challenge facing women entrepreneurs is the difficulty in acquiring financial assistance. Women on average start their businesses with half as much capital as men and they also have only a 30 percent chance of attracting angel and venture capital funding. They are increasingly being turned away by banks for small business loans. Perhaps these lending institutions feel threatened by successful women or continue to work under the belief that men are better businesspeople than their female counterparts. Fortunately, women can take advantage of other options such as online loans, peer-to-peer loans and crowdfunding. Government grants are also available to them.
In fact, perceptual gender bias is a definite obstacle to women entrepreneurs. A recent study, conducted by University of California Santa Barbara asked participants to evaluate almost identical business plans from entrepreneurs whose genders were revealed. Support for plans formulated by women was weaker than for men's unless the women's plans had an intentional tilt toward innovation.
Fewer Failures
Interestingly, findings from research conducted by private bank Kleinwort Benson indicate that despite having more obstacles to overcome, female entrepreneurs are less likely to fail in setting up a business than their male counterparts are.
Kleinwort Benson surveyed 500 business leaders and found that female entrepreneurs are more risk averse and “position themselves better to create long-term value.”
Of the business leaders surveyed for the report, just 11 per cent of female respondents said they had failed to set up a successful business, while 17 per cent of men admitted to the same.
At its recent Women’s Entrepreneur Network Summit, tech giant Dell announced the results of the first-ever Global Women Entrepreneur Leaders Scorecard. The data was gathered from 31 different countries and the opportunities and challenges facing women were evaluated.
The results show that gender-based differences “stifle the growth of women-owned businesses” in almost all areas. The majority of the 31 countries in the study scored below 50 percent. This, according to Dell, demonstrates a significant growth gap between female- and male-owned businesses.
Even the U.S., that ranks No. 1 on the list as the best place for women entrepreneurs due to its overall favorable business environment and women’s job mobility in the private sector, scored only 71 out of a 100-point scale. The U.S. was followed by Canada, Australia, Sweden and the U.K.
More Resources Needed
Dell believes that women must have equitable access to resources such as education, financing and training. They recommend that more women should receive leadership positions in small as well as large businesses and governments across the board should award more public-procurement contracts to women-owned businesses.
Some federal initiatives to this end are already in place. An example of this was recently reported in a local newspaper in Upstate New York. A program is to be set up in Ithaca, home to Cornell University, one of the country’s Ivy League institutions, to encourage entrepreneurship opportunities for women and has been awarded a $50,000 federal grant from the federal U.S. Small Business Administration.
Women impresarios are having a tremendous impact on the small business landscape worldwide. They bring unique attributes to entrepreneurship, are less proud and assume a more sophisticated approach to taking risks.
We can honestly say that behind every good company stands a good woman.