The continuous growth in the number, size and revenues of women-owned businesses is one of the defining economic trends of the past 20 years. But, even today, when female-led firms are outpacing national averages, large corporations, financial institutions and investors fail to grasp the full significance of this segment of the economy.
Today, women in the United States have an ownership stake of 50 percent or more in nearly half of all privately held businesses. Between 1997 and 2004, the number of businesses owned by women increased 17 percent, gross sales grew 39 percent (compared to 34 percent for all firms) and their rate of employment was twice that of all businesses (24 percent versus 12 percent). Today, one in 11 American women is an entrepreneur, and one in seven workers is employed by a woman-owned firm.
The Center for Women’s Business Research has tracked these numbers for 16 years, examining the characteristics, accomplishments and challenges of women-owned businesses. Over the past 12 months, the center has focused its studies on business growth to find out what distinguishes the women with enterprises that have achieved revenue levels of $1 million or more and/or are rapidly expanding. Most of these women tend to be company founders and first-time business owners. Although a majority of both women and men who own businesses worth more than $1 million started their firms, women owners are still more likely to have started (rather than having purchased, inherited or acquired them in some other way) their companies than the men.
The long, steady growth of women’s entrepreneurship is driven by expanding access to capital, markets and networks. Wells Fargo, for example, launched a $1 billion initiative targeted at women in 1995, and increased it to $10 billion just one year later. Having met that objective, the bank recently announced a new goal of $20 billion over the next 10 years. Women-owned businesses are also moving into the equity markets. However, as of 2003, only 5 percent of companies receiving venture capital had a woman CEO. Organizations such as Springboard Enterprises, a nonprofit group in Washington, D.C., are working to increase equity opportunities. Since 2000, Springboard has educated more than 3,000 women on how to gain access to venture capital sources. Their portfolio companies have received over $2.5 billion in equity investments, and three of their firms went public last year.
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