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Lack of access to capital continues to be a barrier for women-owned businesses.

On average, women start their business with half as much capital as men ($75,000 vs. $135,000). Women-owned and men-owned high growth potential firms experience larger disparities in capital at the time of founding ($150,000 vs. $320,000).

Corporations use supplier diversity programs to strengthen their supply chains by cultivating the marketplace of women-owned, minority-owned, veteran-owned and LGBT-owned vendors.

These programs originated as government initiatives to foster the use of underutilized historically disenfranchised businesses.

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.

On November 14, the National Women’s Business Council released a new infographic demonstrating the impact of the Women-Owned Small Business Federal Contract Program (WOSB FCP) and the increasing importance of WOSBs in government contracting.

In 2000, the Equity for Contracting for Women Act reiterated an existing goal of giving five percent of federal contracts and award dollars to women-owned small businesses; this act served as the backbone for the WOSB FCP. The WOSB FCP was implemented in the beginning of fiscal year 2011, although the analysis covers data from 2000 through the first half of 2013.  The program aims to reduce the inequity in contract and award distribution of prime federal contracts to WOSBs through the use of set-asides, and has designated 83 NAICS codes (i.e., 83 industries) in which WOSBs are underrepresented. This infographic examines the impact of the program, as well as general trends in WOSBs and federal procurement.

Please see the footnote below for important information on methodology, as the practices used in this analysis may differ substantially from those of other government entities.

Important highlights from the infographic include:

  • In 2012, WOSBs were awarded 182,791 contracts worth $11.5 billion. That amounts to 11.5% of all contracts and 5.3% of all award dollars.
  • Since 2000, WOSBs have received an increasing share of contracts and awards, not only within the 83 designated industries but in other industries as well. But although WOSBs are generally meeting the contract threshold within the 83 underrepresented industries, they remain underrepresented in terms of awards share.
  • Since 2000, the number of federal agencies meeting the 5% goal has generally increased,although there are more agencies meeting the contracting goal than the award goal. The top five agencies in terms of number of contracts awarded are the Department of Defense, Department of Justice, Department of Veterans Affairs, Department of the Interior, and the General Services Administration. These agencies have all met the 5% goal for contracts awarded since fiscal year 2000—and represent 88% of total WOSB contracts.

Although it is clear that WOSBs have made substantial progress in the federal marketplace, there are still areas for improvement. Some findings from the report may be useful for WOSBs in the procurement arena, most notably that:

  • There is a high rate of turnover among WOSB vendors. Almost half of all WOSB vendors received contracts only in a single fiscal year. Consistent with general procurement trends for WOSBs, 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 WOSB and EDWOSB (economically disadvantaged WOSB) set-asides. Thus, it is important for women business owners to stay involved in procurement.
  • The most frequent type of contract action for WOSBs from FY2007 to FY2012 was purchase orders, followed closely by delivery orders. One reason for potential disparities in award levels between WOSBs and non-WOSBs is that the average award for a purchase order contract was only worth 12 percent of the average award for a delivery order contract. Interestingly, the majority of dollars awarded to WOSBs come from delivery orders. This suggests that the type of contract may be just as important as the number of contracts.

Finally, there was another interesting trend:

  • Award dollars are concentrated among a small number of WOSB vendors. For example, in 2012, 20% of awards (amounting to $2.3 billion) went to 44 WOSB vendors. The other 80% of awards ($9.2 billion) went to 17,648 vendors.

Overall, it appears that the outlook for WOSBs in government contracting is good. Shares of contracts and awards going to WOSBs have been steadily increasing over the last decade, and our infographic includes tips for owners of WOSBs who are interested or already involved in federal procurement. You can view the full text report here.

Note on methodology:

This analysis covers the period from the federal government’s fiscal year 2000 through the first half of fiscal year 2013 (March 2013).  Data was procured directly from; contact Erin Kelley at for the complete data book. This research evaluated WOSB procurement in terms of contracts, as opposed to actions. This is an important distinction, as numerous government organizations rely on actions when reporting small business data.  However, multiple actions can, and do, occur on the same contract for a particular vendor.  We focused on the total contract value for a specific contract by employing a contract “roll-up” process that consolidated multiple actions into a single contract database record.

The Women-Owned Small Business Federal Contract Program (WOSB FCP) aims to reduce the inequity in award and distribution of prime Federal contracts to Women-Owned Small Businesses (WOSBs). The WOSB FCP includes policies designed to promote WOSB Federal procurement activity, such that WOSBs procure at least 5 percent of total prime Federal contracts in a given year. The principal mechanisms available to increase WOSB participation in Federal procurement are “set-asides,” in which contracting agencies set aside certain Federal contracts specifically for WOSBs in an effort to reach the 5 percent contracting objective.

The primary focus of our analysis was to evaluate the impact of the WOSB FCP on the participation of and awards granted to women-owned small businesses. Of principal interest was whether WOSBs are meeting procurement thresholds of 5 percent (in both contract number and dollar amount) of total Federal prime contracting awards since the implementation of the WOSB FCP rules in 2011.

New Research Shows that Women-Owned Firms Exceed Growth Expectations, but Still Lack Access to Capital


In our 2012 annual report, the NWBC stated that getting more money into the hands of women entrepreneurs continues to be a top priority in order to help women start and grow their businesses. Research on this issue is a crucial first step in facilitating this change.  Some researchers attribute women’s lower levels of participation in growth-oriented entrepreneurship to gender differences in key resource inputs, including financial capital. Recent studies indicate that women entrepreneurs raise lower amounts of capital to finance their firms, and are more reliant on personal rather than external sources of financing, than their male counterparts. The report summarized here seeks to explore differences between men and women business owners regarding firm growth, amount and sources of financial capital, and the relationship between the two.  By understanding these issues, we can help promote policies that enable women to fund the start and growth of their businesses.

Key Terms:

  • Firms with high-growth potential are defined as those that have at least five employees by 2011, when the survey ended. While this may seem relatively small, only 6 million out of 25 million businesses have any employees other than the owners themselves. A very small percentage of privately-owned firms have more than five employees.
  • The authors also examined the “Top 25,” i.e. the largest 25 firms for each gender, as measured by employment. The paper examined both the Top 25 women-owned firms as well as the Top 25 men-owned firms, and found interesting differences between them.

Key Findings on Growth:

Women-owned firms exceed their own expectations regarding growth. Women were less likely than men to expect rapid firm growth—defined by number of employees—but were more likely to actually see rapid growth. In general, both women- and men-owned firms were more likely to experience rapid growth from 2008-2011 than their owners expected.

Women-owned firms with high-growth potential exhibited certain features. These firms are more likely to be owned by teams, more likely to be in high-tech industries, more likely to be incorporated, and less likely to be home-based. Additionally, they tend to have owners with higher credit scores and more education. Furthermore, the highest ranked firms in terms of employment were much more likely to have owners with previous startup experience and more years of industry experience.

Gender differences persist even among firms with high-growth potential. Women business owners of high-growth firms were much less likely to have previous startup experience and tended to have fewer years of industry experience than their male counterparts. Despite their high-growth potential, these women-owned firms had fewer employees and were less likely to have intellectual property or be in high-tech fields.

Even among the Top 25 firms, differences exist between men and women. Top-ranked men-owned firms were more likely to have team ownership than their women-owned counterparts. In 2011, 40 percent of Top 25 women-owned firms had only one owner, compared to 15 percent of their men-owned counterparts. And even among this “elite” group, men-owned firms tended to employ more people. The threshold to being a Top 25 firm for women-owned firms was 9 employees, compared to 40 employees for men-owned firms.

Key Findings on Access to Capital:

On average, men start their businesses with nearly twice as much capital as women ($135,000 vs. $75,000). This disparity is slightly larger among firms with high-growth potential ($320,000 vs. $150,000), and much larger in the Top 25 firms ($1.3 million vs. $210,000).

High-growth potential firms started with about twice as much capital as other firms, and were more likely to rely on outsider financing, both debt and equity. However, controlling for other variables including growth potential, men still used significantly higher levels of capital than women from 2005 to 2007.

Other factors that had a positive impact on total financial capital (in some years) include previous startup experience, high credit score, incorporation, team ownership, and number of employees. Being home-based had a negative relationship with total financial capital.

The biggest difference in amount of capital between men and women was with regard to outside equity, even controlling for other factors. Women received only 2 percent of total funding from outside equity, compared to 18 percent for men. This gap also occurred in both the high-growth potential firms and the Top 25 firms. As growth potential increases, so does the dollar amount of external equity used—this is true for both men and women, although the rates of increase differ.

Female ownership was negatively related to the proportion of capital coming from outside debt. Firms that were home-based or had intellectual property used less outside debt proportionately. NWBC posits that being home-based could suggest a lack of collateral.

High credit scores, owner age, incorporation status, number of employees, and high-growth potential were associated with an increase in the proportion of capital coming from outside debt. The high credit score factor is unsurprising; NWBC believes that owner age could reflect a stronger credit history and/or industry experience, and that being incorporated could represent a more organized firm.

Regarding demand for credit (i.e. outside debt), women were more likely to be discouraged from applying for loans due to fear of denial, particularly during the financial crisis of 2008-2010. This fear was somewhat justified: in 2008, women-owned firms were much more likely to have their loan applications denied than their men-owned counterparts.

NWBC’s Key Policy Implications Based on This Research


  • Consider founding your business with other people.  Many investors are reluctant to fund a single business owner because of the difficulty for one person to scale a business.
  • Do a cost-benefit analysis of what equity financing can do for you. Carefully weigh the upside (e.g. financial, social, and human capital) of external equity with the downside, such as less control of the company’s financial and strategic future.


  • Do more outreach to find women entrepreneurs with investment-ready firms.
  • Increase the number of women on the financing and investment side, as angel investors, members of a venture capital pitch committee, and in other roles.

Entrepreneurship Ecosystem:

  • Encourage women’s participation in STEM fields prior to entrepreneurship. Although women are on par with men regarding educational attainment, previous research indicates that women are less likely to have degrees in STEM fields—and these fields are more likely to offer opportunities for growth-oriented entrepreneurship.
  • Establish business programs focused on women and women-led and –owned businesses.
    • Accelerator and incubator programs, equity financing programs, and business mentorship and training programs that target women-owned firms with high-growth potential can help these firms maximize their opportunities for growth.
    • Given the positive relationships between industry experience, startup experience, and total financial capital, programs that allow encourage women to get experience in a particular industry and/or as a business owner could be beneficial.


  • Research why women fear denial of loan applications.
  • Research the reasons why women are denied loans, if there is disproportionate denial relative to men, and the factors contributing to the denial rates if there is a differential. Banks may need to educate women entrepreneurs about the consequences of application denial and how to reapply.

Note on possible survival bias: Due to the fact that firms that closed are not included in data for subsequent years, it is impossible to control for potential survival bias and the possibility that samples from later years contain firms that have specific attributes that allowed them to stay in business. However, it is important to note that the data used for this research, from the Kauffman Firm Survey (KFS), is well-regarded among academics and researchers. This issue is in no way unique to the KFS, and the potential for survival bias exists within most firm-level data, as data is not collected on firms that do not exist. 

Women-owned businesses (WOBs) with business-to-business (B2B) sales tend to have higher revenue and better access to capital. This infographic examines descriptive statistics on women-owned businesses in the B2B market, and offers a look at the story of one woman–Stacy Madison of Stacy’s Pita Chips–who grew her company’s revenue into the millions by starting with sales to regional and gourmet food stores.

The Council completed two projects on access to capital for high-growth women-owned businesses this year. While this research is essential to inform key policy decisions, it may not be directly useful to women business owners themselves. This infographic addresses that gap: it’s a guide to help business owners navigate various paths to capital. It includes essential tips from the three successful women business owners interviewed for the project, as well as examples of different financing situations that business owners might face, and explanations of different types of capital – such as crowdfunding, angel investing, and purchase order financing.

One of the Council’s key areas of research is on women’s access to capital, a continual challenge for women entrepreneures. Two of the NWBC’s FY2013 research projects demonstrate that accessing sufficient capital is a problem even for high-growth women-owned businesses. We have learned that women-owned firms face unique challenges because there are significant differences in undercapitalization that exist between men-owned and women-owned firms. First, Robb and Coleman concluded that startup capital is a key indicator of business success. This research confirmed that women start their business with nearly half the amount of capital as men, and further that women entrepreneurs raise substantially less equity and debt throughout the business lifecycle. In a second study, conducted by PQC Consulting, Inc, we learned, that all else equal, undercapitalization negatively impacts business survival.

Undercapitalization limits enterprise growth by constraining business investments in key assets such as equipment, employees, or inventory necessary for growth; the business does not have the funds it needs to meet market demands.[1] Since startup and expansion capital are critical for firm growth and success, one factor that will improve women-owned firm performance is to reduce the number of women-owned firms that experience undercapitalization. As the number of women-owned and women-led firms continues to grow in the United States, it is essential that the NWBC explore business failure as a result of undercapitalization as it likely costs the economy billions in receipts. For example, Babson College concluded the lack of sufficient capital funding for women entrepreneurs will cost the economy nearly six million jobs over the next five years.[2] Thus addressing the access to capital gender gap has significant implications for the economy as a whole.

We commissioned this study in an effort to develop a more nuanced understanding of the impact that undercapitalization and capital structure have on the business outcomes of women-owned firms.

Read the full Executive Summary here and download the report.

[1] Undercapitalization.

[2] Geri Stengel.