Launching Women-Owned Businesses on to a High Growth Trajectory
This paper provides a foundation for the National Women’s Business Council (NWBC) to develop and launch a major initiative targeted to helping women achieve high levels of business growth. NWBC is the single government organization that focuses exclusively on ensuring that this nation’s economy realizes the full potential of one of its fastest growing segments – women-owned businesses. Integral to achieving this mission is to be a catalyst for women-owned businesses creating jobs and generating revenue.
This paper reviews the growth-trends of women-owned businesses, reports on what differentiates the women who own the largest, fastest growing businesses from those with smaller businesses, and concludes with a proposed strategic platform for action.
The phenomenal growth of women-owned businesses has been making headlines for 25 years. Women consistently have been launching businesses at nearly twice the rate of men. As important, their growth in employment and revenues has continued to outpace the economy.
Even as the nation’s economic growth slowed, employment in women-owned firms continued to expand while men-owned firms were contracting.1 Furthermore, projections indicate that the trend in employment growth among women-owned firms will continue. The Guardian Small Business Research Institute projects that women-owned businesses will create 5 to 5.5 million new jobs by 2018 – more than half the 9.7 million new small business jobs expected to be created and about one-third of the 15.3 million total new jobs anticipated by the Bureau of Labor Statistics by 2018.2
Women-owned businesses already are serious players in this nation’s economy. An economic impact study conducted by the Center for Women’s Business Research and the National Women’s Business Council documented that majority women-owned firms today are driving more than 23 million jobs – both directly and indirectly.
However, although the gap has been narrowing, women-owned businesses continue to lag men-owned businesses, and are under-represented in the top revenue categories. Only 3% of majority women-owned firms have revenues over $1 million compared to 6% of majority men-owned businesses. As of 2008 – the latest year for which data are available – the average revenue of majority women-owned businesses is 27% of the average revenue of majority men-owned businesses.
Looking at the trends from a more positive perspective, a substantial number of women now own and lead businesses over a million dollars, and many of these businesses are multi-million dollar enterprises. The number of women-owned businesses with $1 million or more in revenue grew 2,000% between 1977 and 2002. While the proportion of women-owned businesses over $1 million (3%) may seem small, this translates into more than a quarter of a million women-owned enterprises. Further, 20% of all businesses over $1 million are owned by women, and women-owned businesses are found at all levels of revenue. In fact, of the women-owned businesses over $1 million, 35% are over $5 million, 2% are over $50 million, and a fair number have revenues over $1 billion. A recent Kauffman Foundation publication reporting on a survey of high tech firms concluded that women and men entrepreneurs are equally likely to succeed given similar conditions. Clearly, the data substantiate that women have the vision, capacity, and perseverance to build thriving companies.
This is a group of business owners that already is having a measureable impact on the nation’s economic health. However, there is tremendous untapped and unrealized potential for these businesses to make an even greater contribution to the nation’s economic health, particularly in the critical area of job creation.