The corporate world should be taking note of women entrepreneurs as female business owners are now a significant part of the business landscape. A new report from American Express OPEN, a service which helps business owners expand their companies, and Womenable, a social enterprise company that encourages the growth of female entrepreneurship, shows that the number of women getting into business is at a rate 1.5 times that of the national average.
Based on the “2014 State of Women-Owned Business” report, the number of overall businesses increased by 47 percent from 1997-2014, while the number of women-owned businesses increased by 68 percent during those years. While women were responsible for starting an average of 591 new businesses or so a day from 1997-2014, the latest numbers show even more growth, with an estimated 1,288 new women-owned firms a day in the last year.
The report also indicated that minority women, especially African-American women, are leading the way among female entrepreneurs. Women of color have grown from owning 1 in 6 female-owned firms in 1997 to 1 in 3 in 2014.
“I think the growth has to do with rising levels of education, more experience and some women of color thinking, ‘I don’t think I’m not going to get farther in this company so I’m going to start my own business,’” said Womenable CEO Julie Weeks.
Women in a Man’s World
While it’s encouraging that female-owned businesses are growing at the rate they are, the report shows that female-owned firms are still lagging behind big businesses when it comes to economic power and the number of employees. As a whole, female-owned businesses tend to be much smaller, generate fewer jobs and bring in a lower total income compared with male-owned businesses.
Catherine Popowits, president of Diversity Training & Consulting Inc., said she was a little disappointed to see the number of female business owners in traditionally male-led industries is still so low.
“Women are doing well in traditionally female-dominated industries. They are continuing to successfully open businesses in administrative support, health care and social assistance,” she said, but explained she’s still seeing low percentages of female business owners in technology, construction and transportation.
However, Popowits said she did notice some growth in a completely unexpected area: “It was fascinating to me that the percentage of women business owners in waste management was so high, like 37 percent. That’s not what you would expect,” she said.
The report shows that even in industries where there are overall low percentages of participation from female business owners, growth has occurred. Further, it’s important to note that there is certainly a jobs spectrum with traditional men’s and women’s sectors at either side but there are only a few industries, for example construction and education, which are really skewed one way or the other.
In construction and in transportation, there are just as high a percentage of women’s businesses making at least $500,000 in annual revenues as there are men’s, Womenable’s Weeks said. Although there is a lower number of women-owned businesses in those fields, the women in those industries are standing toe-to-toe with their male counterparts.
North Dakota Takes the Lead
The “State of Women-Owned Business” report, which is the fourth in the series, also identified the best state for female-owned businesses, and North Dakota rang in at the top spot. Why North Dakota? Weeks has a few ideas.
“Workers from the big fracking and gas industries in North Dakota need places to live, they need restaurants to eat in, they need all sorts of services, and so the business community rises to the occasion,” Weeks said. She believes areas with growing populations, such as Arizona, Georgia, Texas and Utah, also play a huge factor since it’s difficult for businesses to grow without a significant number of workers.
Further, Weeks also said significant participation and support from state governments and existing female-owned businesses seem to be the biggest factors in helping female entrepreneurs grow their businesses in those areas. Popowits and Weeks cite the importance of diversity policies in encouraging businesses to conduct at least 10 to 15 percent of their business with female entrepreneurs or with business owners of color. Further, certain centers offer a place where women can go to get training and technical assistance to start a business.
Weeks said she believes the importance of women role models in the community can’t be overstated. “You need to have a visible presence of women going into business. If you meet a woman business owner or read about her in a local journal, you think it’s possible, you think, ‘Hey, she’s not so different from me.’”