You are here
4 Pillars to Advance Economic Gains for Women Business Owners
Women entrepreneurs are the fastest growing sector in the small business community, starting new businesses at a rate of 1,288 a day. Women’s economic impact is significant and growing. Women play a vital role in impacting the national economy and are making great strides as the number and economic contributions of women-owned businesses continues to grow. Recent studies show that the majority of women are optimistic about the economic outlook of their business. In fact, a resounding 89% of women surveyed are optimistic about their overall business performance, which leads us to believe women are in full stride towards economic stability. Despite the difficult economic climate during the recent 2007–2010 recession, women-owned businesses not only survived the recession but thrived by outperforming their peers. Throughout the recession, women-owned businesses were active in the largest industries and had a greater percentage of firms making more than $1M in revenue in several industries, including retail trade, wholesale trade, manufacturing, and construction. Women-owned businesses also lost a smaller share of jobs than their male counterparts. Fast forward to 2014, the small business sector has led the way out of the recent recession and the current uptick in today’s rapidly growing start-up culture is proof that our nation’s entrepreneurial spirit has been reignited. Women entrepreneurs clearly have economic staying power, but in order to continue to advance, the womens' entrepreneurship agenda should focus on 4 key areas: Access to Capital, Access to Markets, Job Creation, and Data Collection.
Numerous studies indicate that women rely heavily on personal savings to start a business, which results in women-owned businesses commencing with lower amounts of start-up capital. Our research suggests that there is a direct correlation with access to capital and revenue generation. Data also shows that male-owned businesses have more capital at the start than women-owned businesses which could explain why male-owned businesses generally generate higher revenues than female-owned businesses. More importantly, male-owned businesses generally get started with diversified sources of capital in addition to personal savings. We believe that getting more capital in the hands of women entrepreneurs will contribute to greater revenue generation and sustainability for women-owned businesses which result in significant economic gains for women business owners and national economic growth. Policy makers must continue to focus on ways to level the playing field for access to diverse sources of capital and to support ideas, such as: urging credit unions and community banks to increase lending efforts to women owned businesses, addressing creditworthiness through exploration of new ways of credit scoring, and promoting newer ways of securing capital through crowdfunding.
As it relates to access to markets, challenges persist in increasing women’s impact in the federal marketplace. More women supplying products and services in the federal marketplace and in corporate supply chains will result in more competition, choice, and quality. Although women-owned small businesses have made substantial progress in the federal marketplace, there are still areas for improvement. Findings from the National Women’s Business Council’s Trends in Performance infographic demonstrate that there is a high rate of turnover among women-owned small business vendors. Almost half of all women-owned small business vendors received contracts only in a single fiscal year. Consistent with general procurement trends for small businesses, women-owned vendors with more longevity and stability (i.e., receiving contracts in multiple fiscal years) were able to secure a larger portion of contracts through the use of the women-owned small business and economically disadvantaged women-owned small business set-asides. It is important that federal agencies continue to illuminate the opportunities that are available for women business owners and endeavor to make the competitive process easily accessible to women business owners. Consistent and repetitive contract wins can be an important contributor to scaling women-owned businesses and job creation. Women business owners employ 7.9 million people nationwide today and we believe that this number could experience double digit growth in 3-5 years, as women-owned businesses scale in size with the aid of the federal procurement opportunities.
Women’s economic impact is growing, but we cannot measure what we do not count. An expansion of data collection on women-owned businesses is essential to tracking the economic progress of women entrepreneurs and creating policy initiatives that will be impactful and effective. We need recent and reliable data that will enable the women’s business community to identify key factors to advance economic gains for women business owners. When it comes to broadening the pathway to success for women business owners; access to capital, access to markets, job creation, and data collection are important contributors and are at the forefront of the women’s entrepreneurship agenda.