Women-Owned Businesses – American Business Magazine

While the number of women-owned businesses—defined as privately held companies that are at least 51 percent owned and controlled by one or more women—is increasing, and the economic contribution of this group is significant, the percentage of women-owned businesses in America is still relatively small.

According to the latest published statistics from the Survey of Business Owners (U.S. Census Bureau, 2002), approximately 6.5 million firms were female owned, or 28.2 percent of all U.S. firms. A mere 14.1 percent of the women-owned firms had paid employees and only 7,231 of firms employed 100 people or more. Furthermore, of the approximate 1.2 million firms that had sales/receipts of at least $1 million, only 116,985 of those were women owned. It should be noted that these statistics exclude firms equally owned by a male and female, which encompass approximately 11.7 percent of all firms.

Based on these statistics, one cannot help but wonder why there are so few women-owned businesses. Certainly, one of the advantages of owning a business is the flexibility of running your own show. While more and more employers are making efforts to accommodate women (and men) with child raising responsibilities, some women must put their own careers on hold to fulfill parenthood obligations. After being away from the working world, especially “corporate America” for a period of time, it can be difficult to reenter the workforce. In fact, the Center for Women’s Business Research posits that the growth in the women-owned, nonemployer segment of small businesses “reflects the lack of opportunities and flexibility in major corporations and large businesses for women.”

In essence, starting a business can be a very appealing option. There is no question that the demands of starting and owning a business can be enormous; however, a business can be started at home on a small scale, and it can be grown and expanded as the responsibilities at home lessen and as time permits. Small business owners are typically responsible for everything and answer only to themselves, which may allow for more flexibility compared to a normal job. Though, there is no doubt the amount of time, energy and effort put into the business will usually reflect on the success of it, too. The kind of business becomes an important factor as well, and women are broadening ownership to include a wide range of business types.

Based on information obtained from Financial-Inspiration.com, some of the famous women entrepreneurs had very humble beginnings. For example, Mary Kay Ash, founder of Mary Kay Inc. cosmetics, used $5,000 in life savings to start her first store with her son; she was known for having effective sales incentives such as pink Cadillacs. Oprah Winfrey, the entertainment mogul who built an empire that includes her own show, a production facility, magazine and more, started as a news reporter and anchor. Anita Roddick, founder of The Body Shop International PLC, opened her first store while her husband was on a trek across the Americas—she used their small hotel as collateral for financing. Debbi Fields, founder of Mrs. Fields’ Original Cookies, Inc., was a very young housewife with no business experience. Despite being only 20 years old, she somehow convinced a bank to finance a chocolate chip cookie bakeshop and store. J. K. Rowling, author of the Harry Potter novels, was on welfare caring for her young daughter when her first book was published. Her initial publisher advised her to keep teaching as children’s books did not pay well.

Avon Products, Inc., has done a great job of appealing to the entrepreneurial spirit of women (and some men) while, at the same time, recognizing the different degrees of their commitment to working. The company has independent sales representatives all over the world who work anywhere from their kitchens to business offices on a part-time or full-time basis. In fact, Avon’s CEO, Andrea Jung, is one of only 15 women at the helm of a Fortune 500 company, and she also has the longest tenure of that group. Some other wellknown female CEOs of Fortune 500 companies include: Carol Bartz, Yahoo! Inc.; Carol Meyrowitz, The TJX Companies, Inc.; Ursula Burns, Xerox Corporation (took over after Anne Mulcahy retired); Patricia Woertz, Archer Daniels Midland Company; and Brenda Barnes, Sara Lee Corporation. One thing is for certain: All of the aforementioned women, who have risen to the top, are exceptional. Per Carol Meyrowitz, CEO of TJX Companies (from USA Today, “Female CEOs see good year,” December 30, 2009), “Good leadership is about the person and has little to do with the gender. Good leadership and good performance (are) not about any one thing, but a host of factors and circumstances.”

So what does it take to be a woman business owner? First, a willingness to take risks is an essential quality of any entrepreneur. Since women are generally known to be more risk averse than men, this may somewhat explain the lower number of women-owned businesses and certainly the fewer sizable firms and those with employees. Among other things, entrepreneurs/ business owners tend to be self-starters, they are driven, they think outside the box and they are willing to work very hard to achieve a dream. The SBA Office of Advocacy performed a study entitled “Human Capital and Women’s Business Ownership,” published in April 2008. They found that “self-employed men and women differ little in education, experience and preparedness.” They also found that more women have become business owners because of “changes in women’s human capital.” As such, women have become better prepared to be self-employed due to higher-quality education and occupational development; this also allows them to develop entrepreneurial skills, especially when they have held managerial positions.

What advantages do women-owned businesses have? The realization that women-owned businesses play a vital role in the U.S. economy has led to the creation of numerous programs tailored to give these companies an “edge.” These programs tend to focus on supplier/vendor diversity policies and programs. In other words, businesses of all types and sizes, government agencies, education institutions and so forth, have requirements and methods when it comes to purchasing diversity. The fact that these entities must purchase all or some portion from a woman-owned business gives the business a competitive advantage and provides more opportunities.

Though, it is important to note that some form of certification is generally required to receive these benefits. Many small businesses apply for Women’s Business Enterprise (WBE) status or something similar. Certifications are offered by private organizations, local governments, states and the federal government. There is typically an application process requiring proof that the firm is truly “woman owned,” and a site visit and financial statements may also be required. Some of the private certifications may also have fees. Keep in mind that the certification process is time consuming and needs to be maintained. Janet W. Christy wrote extensively on this topic in her book “Capitalizing on Being Woman Owned: Expert Advice for Women Who Have or Are Starting Their Own Business.” She states that because there are so many resources, programs and certifications available to women-owned businesses, it can be overwhelming and bewildering.

Because supplier/vendor diversity has become so important, there are programs, guides, classes, certifications, workshops and Web sites presented by state governments, municipalities, economic development organizations, colleges, chambers of commerce and nonprofit organizations. She recommends that to be effective with all the help available, “you must clarify your business and know your customers/ clients (existing and potential).”

Of course, there are some pitfalls associated with women-owned businesses. The biggest challenges are those faced by both male and female entrepreneurs/ small business owners. According to the Center for Women’s Business Research, their research “highlights the lack of knowledge currently available on how to grow a business from point A to point B, becoming an employer firm, and moving from being the technical expert to the business leader.” In short, business owners hit the proverbial wall and find it difficult to take their small, “mom and pop” company, or even home-based business, to the next level. It may require additional capital and assuredly higher levels of knowledge and sophistication in terms of the overall management of the business

For women interested in starting a business, or those who want to take their business to the next level, it is always wise to seek professional expertise. There are also numerous U.S.-based women’s business organizations. The following is a partial list from the National Women’s Business Council.