Resources For Women-Owned Businesses
What is the current state of women-owned businesses in America?
Business is a core focus and value in the United States mainstream culture; as the country has evolved, so has the face of its affairs. Especially in the last twenty years or so, the number of women-owned businesses has grown: it increased from approximately 4.6% in 1972 to 42% in 2019 (Zen Business).
While this is a vast improvement compared to history, the female entrepreneurs of today are still fighting for the same opportunities and financing as their male peers. Much ground remains to be covered before the playing field is equal, but women entrepreneurs are leading a movement that’s changing the nature of the game.
Furthermore, the United States Census Bureau found that women-owned businesses with an active payroll are a minority. Around 40% of the nation’s businesses are owned by women. 52% of these had 1 to 4 employees, and 13.4% had no employees. Only 8% had 20 or more employees.
Large businesses led by women are a minority (1 in 5 firms with revenues of at least $1 million were owned by women), according to Zen Business. Still, in the grand scheme of things, this is a hugely positive step. Women continue to break down barriers, achieve more, and increase their contributions in every sector of commerce, albeit leading smaller companies.
Intersectionality also plays an important role in the landscape of American business today. One study found that: “Women of color, which includes Black, Asian, Latina, Native American, and Pacific Islander women, accounted for around 50% of all women-owned businesses but generated a quarter of the revenue.
- Average business revenue for all women: $142,900
- Average business revenue for women of color: $65,800
- Average business revenue for non-minority women: $218,800
This research shows, whether or not someone belongs to a minority is a significant indicator of their business’s monetary success. Although women are increasingly owning more businesses, they usually don’t earn alongside their male colleagues. Part of what skews the overall revenues for women-owned ventures is the type of business that they pursue and rise up in. For example, 50% of all businesses owned by women are concentrated into three categories:
- Services such as nail salons, hair salons, and pet care: 22%
- Healthcare and social assistance such as daycare, and home healthcare: 15%
- Professional, scientific, and technical services such as lawyers, bookkeepers, architects, public relations, and consultants: 13%
Those categories tend to generate less revenue than other business sectors. Although this doesn’t explain all of the revenue disparity between genders, it helps us visualize the effects of the traditional systems present even in today’s progressive society. Women are still pushed into certain jobs which pay less than typically “male” jobs, and women minorities make even less than their non-minority counterparts.
However, that is no reason for despair, as more things become accessible to more people over time. For example, “Between 1997 and 2016, the number of businesses owned by black women increased by 518% and the number of businesses owned by Hispanic women increased by 452%” (Perkins). Women of color are taking the initiative to create their own successful companies, which directly impacts their communities.
Recent studies show that in the U.S., businesses owned by women of color employ over 2,230,600 people and generate more than $386.6 billion in revenue each year. Consequently, this has a great social impact by lifting more people out of poverty, reducing crime, and creating stronger communities. It also allows different worldviews to be seen in the public sphere. Women of color making waves in business is a great start to creating widespread social change.
Not surprisingly, all of these women-owned businesses generate a lot of money: $1.8 trillion/year (Fundera). Although that is a small percentage of the total private sector annual revenue, women-founded companies sometimes far outperform those run by men in a few ways.
According to Forbes, private tech companies run by women achieve a 35% higher return on investment. This significant figure shows that when the right women are trusted with impactful positions, they can make a lasting difference. Secondly, venture capital companies founded by women in First Round Capital’s portfolio outperformed those founded by men by 63% (Fundera). A women-owned business in the venture capital sector is likely to outshine its male-led competition.
Interestingly, although women’s startups have such a high return on investment and so often outperform other startups, they receive only 7% of venture funds. Considering the vital role of venture capital in the current U.S. business climate, women business owners’ success is largely dependent on the amount of funding and resources available to them. “Ideally, venture funds for women-owned or women-led startups will rise alongside debt-funded rates for similar businesses” (Fundera). Grant money is a key piece to growth, but finding options and applying for them are necessary steps.
One article found that women business owners are less likely to seek loans than male business owners. One quarter of women business owners seek financing, whereas one third of males do. This could explain why only 4.3% of the total private sector annual revenue was from women-owned businesses (Fundera). The facts don’t lie; when women and minority women are put in charge and given the right funding, they can affect everything: from business models to entire sectors and trends.
If more women business leaders seek and gain access to capital for growing their businesses, maybe their overall proportion of the U.S. revenue would also grow. It’s hard to get to the top if you don’t put yourself out there. In today’s day and age, everything related to business has to do with who holds the money, so getting backed by venture capital is a strong move.
From the players involved to the dynamics, a lot has changed in U.S. business over recent decades. The number of women owned businesses is higher than ever, and more women are making important decisions that ultimately shape society. Plus, women are excelling at being business owners, especially in certain areas.
One takeaway is that women and minority women should seek grants for their companies to take them to the next level. However, it is impressive to observe the sheer difference in numbers from the 2020s as compared to the 1970s, for example. Many more women nowadays are assuming leadership roles and becoming business owners in the U.S. than ever before.
How has it changed/developed in contemporary times?
Women in business in the U.S. have a lot to be proud of. When measured against the number of women entrepreneurs running businesses 20 years ago as the number now, the data shows a 114% increase (Fundera). There are 114% more women entrepreneurs than 20 years ago in the U.S. and that is something to be proud of! Even though the number of women-owned businesses still is not proportional, things are moving in the right direction.
An increasing number are creating their own opportunities. In contemporary times, many women have made their own small businesses for different reasons; “Small Business Trends Alliance (SBTA) reports that of the female entrepreneurs interviewed, 29% said they were ready to be their own boss, 20% shared that they wanted to pursue their passion, and 13% expressed being dissatisfied with corporate America as a whole” (Perkins). Pursuing a passion for money is something that would have been nearly impossible for the women of past generations. But now women have more autonomy and options.
The number of micro-businesses opening globally is only rising. Microbusinesses are typically classified as an organization with fewer than 10 employees that earns less than $250,000 a year; they comprise 90.3% of the organizations that women own, compared to 82.3% for men, according to the Bureau of Labor Statistics (Perkins). One possible explanation for this is that female entrepreneurs have been shown to work more with freelancers and other service providers to fill in gaps while keeping their focus on the core business offerings.
They have fewer fixed employees, for example. Still, even a pandemic couldn’t slow the rise of women-led startups. Between 2020 and 2021 alone, women-owned small businesses and franchises in the U.S. increased from 27% to 31% (Perkins). This has a positive effect on the economy. When women and minority women have more power, it also creates great social change and lifts entire communities out of poverty. As more women tackle the tough challenges of owning a business, it’s important they utilize the countless resources available to them.
How has U.S policy making shaped the course of women-owned business?
The United States government has taken many impactful steps in order to propel women-owned businesses forward in the running, from grant opportunities to funding and counseling programs. For example, the Small Business Administration’s Office of Women’s Business Ownership (OWBO) helps entrepreneurs through programs coordinated at district offices. Programs offered include business training, counseling, federal grants, and access to credit and capital (SBA).
An additional tool includes the 8(a) Business Development program, which helps small, disadvantaged businesses compete in the marketplace. The Small Business Administration also suggests checking with WBCs and their Lender Match tool to find capital.
Another program that helps small businesses owned by women compete for federal contracts is the Women-Owned Small Businesses (WOSB) Federal Contracting program. It is designed to help level the playing field for women in certain underrepresented industries. Lastly, the National Women’s Business Council is a non-partisan federal advisory council which acts as an independent source of advice to the President, Congress, and U.S. Small Business Administration (SBA).
As far as the government goes, the Council is the only independent messenger for women entrepreneurs’ voices. It tackles important, relevant economic issues. Some of their focuses include rural women’s entrepreneurship, women in STEM, and access to capital and opportunity. They have done a lot to connect women’s voices to policymakers and enact change at the federal level, and even provide venture capital themselves.
Where is it going?
Entrepreneurs have a lot to be excited about nowadays, and organizations led by women show even more promise. Studies show that women-owned businesses have a 84% growth rate since their inception, compared to a 78% growth rate for male-owned companies. Interestingly, only 23.8% of women receive funding for their businesses, whereas 33.9% of men do (Perkins). The difference between growth rates speaks to the potential for female-led startups to excel, including providing innumerable job opportunities, and the incredible return on investment that they can achieve.
Keep in mind that Forbes found that private tech companies run by women achieve a 35% higher return on investment than their male counterparts (Fundera). This significant figure indicates to the women entrepreneurs of today that now is the moment to push your way into traditionally male spaces and get a share of the goods for yourself.
“In fact, the total global income of women is expected to increase by more than $5 trillion over the next five years.”
Despite historically poor funding for female-run businesses, investors and venture capitalists cannot keep ignoring the positive impact that working with women has on their ROI. This is a positive change for women business owners moving forward, because there will be more equal opportunities and resources available to them than their predecessors (Perkins). However, investors have to get the ball rolling with the new way of doing things, in order to not be left behind in the dust.
Regardless of the fact that it’s challenging to make financial predictions during the ongoing pandemic, there is an increase in funding opportunities for women. Goldman Sachs is just one example; they created a $500 million investment fund dedicated to supporting organizations founded and led by women. Similarly, We-Fi recently set aside $49.3 million in funding for female small business owners (Perkins). More investors and sources of capital are starting to focus on these underrepresented businesses and finding incredible talent and ROI.
What sort of resources/avenues exist to serve women business owners?
Due to the difficulties that women have faced historically in the economic sphere, there has been a big push over the last few decades to promote their success. Traditionally, women have faced many more challenges and fewer opportunities to access credit, and are less likely to successfully find investment for their ideas. Also a big problem is that they have been underrepresented when big decisions get made. This is changing of course, but there significant obstacles still exist.
Therefore, women entrepreneurs should absolutely take advantage of the numerous resources, certifications, and funding opportunities available (Zen Business). Certain resources can help you start a business, improve your business, access business loans, access business grants and funding, or access government contracts.
For example, American Express usually focuses on nonprofits, but in 2020, it held a large grant program for Black communities. At least 25% of those grants were for women-owned businesses, and each business received up to $5,000. It’s not just American Express; other companies routinely offer grants that people may not even know about.
If you have a passion for business, whether you’re a baker or an inventor, look into the WomensNet Amber Grant. Monthly grants of $10,000 are given out and an annual grant of $25,000 is awarded as well. Smaller grants are also available monthly; a business-specific grant of $5,000 is available, too.
Another option is the Cartier Women’s Initiative regional awards, which provide up to $100,000 for seven women-owned and women-run businesses. There are also several fellowship programs and social capital to take women’s businesses to the next level. One requirement is that the business should have met at least one of the United Nations Sustainable Development Goals (Zen Business).
Lack of funding is one of the most real reasons that businesses fail nowadays. Women are much more prominent as business owners in the U.S. than ever before, and their numbers keep on increasing. Yet their revenue and capital lag behind. Thankfully there are tons of resources, grants, and programs available to women business owners to try and balance the gender disparity.