A recent study shows the number of women-owned firms continues to grow at rates exceeding that of all businesses, and their revenue and employment growth tops that of all other privately held firms over the past 15 years.
But despite those positive trends, women-owned firms still employ just 6 percent of the nation’s workforce and account for 4 percent of total private sector business revenues. And while the number of women-owned firms with high levels of business achievement has grown significantly in the last 15 years (women-owned businesses with $1 million or more in revenues has increased 54 percent since 1997, and those with 10 or more employees has increased 11 percent since 1997), these firms still represent just 2 percent of women-owned businesses.
These findings beg the question: What more can be done to spur growth in the economic contributions of women-owned firms? Having worked in the field for many years, I’ve thought a lot about this question, and I believe there are a number of concrete steps that can be taken.
First, in the realm of public policy, there are 110 Women Business Centers (WBCs) in nearly every state, which counsel, train and mentor approximately 200,000 clients annually. However, federal support for this program (which comprises just under 40 percent of total funding for the program) requires that the WBCs focus on start-up training for socially and economically disadvantaged women.
Yet nearly all of them support their clients well beyond the start-up phase and offer services to a wide range of women (and men). This requirement is a golden handcuff of sorts, which draws some program resources and growth-focused support away from mid-stage women-owned firms.
Second, as the report indicates, women-owned (and indeed men-owned) firms tend to stumble at two distinct points in their growth journey — when they grow to the points at which they employ between five to nine employees or reach the $250,000 revenue mark. Firm growth over time at these two specific points are significantly lower than is the growth of firms that are larger — or, indeed, smaller.
This underscores a need for a greater focus on support at those two points in the growth journey. Mentor-protégée relationships and the educational support offered by business groups (such as the National Association of Women Business Owners) would be particularly useful.
Third, and importantly, the lack of growth in the share of women-owned firms at higher levels of business accomplishment may well be an artifact of the definition of a woman-owned businesses — which is a firm that is at least 51 percent owned, controlled and operated by a woman or women. As many businesses grow, they share ownership — either with senior managers in the firm or with outside investors — to the extent that the company’s chief executive may no longer own a majority stake in her firm.
We need to be able to quantify the economic contributions of plurality women-owned (women-led) as well as majority women-owned firms, and gain greater understanding about when and how that occurs. Shining a light on that path to growth can lead the way for other women business owners to follow.
Julie R. Weeks is president and CEO of Womenable, a consultancy whose mission is to improve the environment for women-owned enterprises worldwide. She also is an American Express OPEN research adviser who wrote the report on the state of women-owned businesses.