Just the facts, ma’am
It was the best of times, it was the worst of times. It was the age of opportunity, it was the age of necessity. It was the epoch of unicorns (start-up companies valued at a billion dollars or more), it was the epoch of struggling sole proprietors. That is the story revealed by 2012 U.S. Census Bureau’s Survey of Small Business Owners for women.
Photo credit: Anton Petukhov, Business woman
It was the spring of hope. For 2012:
- There are more women-owned businesses than ever before, 9.9 million women-owned businesses, up from 7.8 million in 2007 — a 28% jump. “Women’s entrepreneurial appetites are at an all-time high,” said Carla Harris, chair of the National Women’s Business Council, a nonpartisan federal advisory council.
- Women-owned businesses now represent an incredible 36% of all businesses, up from 30% in 2007.
- African American women’s rate of starting businesses was nearly seven times as high as their white counterparts and Hispanic women nearly nine times as high. African American women business owners outnumber their male counterparts.
- Revenues for women-owned business are $1.6 trillion, up from $1.2 in 2007. Revenues increased at a faster rate than the number of women owned businesses: 35% versus 28%.
- More women-owned businesses surpassed the $1 million mark in revenue. These businesses grew in terms of revenue at a faster pace than women-owned business in general.
- Women-owned business employed 8.9 million people, a rise of 1.5 million jobs from 2007. Women-owned business increased their number of employees 20% while men-owned businesses increased their number of employees by only 12%.
It was the winter of despair.
- While women-owned businesses grew in numbers at a rate of four times that of male-owned businesses, many of their businesses are struggling and this is cause for concern. “We speculate that there may have been a bigger necessity among women of color to start their own businesses,” said Harris. “There was an increased necessity for women of color to supplement either their existing income (as they are often paid substantially less than the national average) or creating a primary source of income.” Necessity entrepreneurs are far less likely to be successful than entrepreneurs who start businesses to pursue an opportunity.
- While overall women-owned businesses made gains in revenue and employees at a faster pace than their male counterparts, their businesses are still dramatically smaller. Women continue to face challenges accessing capital and markets, as well as other obstacles to growth, said Harris.
- Economies that prosper have steady streams of firms that are starting and growing. These companies are especially vital because they create nearly all net new jobs, according to the Kauffman Foundation, which researches and advocates on behalf of entrepreneurs. While there are more employer women-owned businesses, their percent of all women-owned businesses decreased and the decline was steepest among African-American and Hispanic women-business owners. Employer firms represent 10.6% of all women-owned firms and 2.6% of African American women-owned firms and 4.6% of Hispanic women-owned firms.
- While there are more $1 million-plus women-owned businesses, so many more are smaller that the percentage of women-owned business surpassing $1 million in revenues is slightly lower in 2012 than 2007.
Entrepreneurship is the path to happiness for women
Now, you might think that growing your company and having employees is stressful. Quite the contrary. Women entrepreneurs who have employees and are growth-oriented are among the happiest people in the world, according to the 2013 Global Entrepreneurship Monitor (GEM) U.S. Report, issued by Babson College and Baruch College. American women entrepreneurs ranked their well-being higher than other women in the U.S., higher than women entrepreneurs in other countries, and higher than men.
“It is no surprise to me that growth-oriented women entrepreneurs are so happy,” said Marsha Firestone, founder and president of the Women Presidents’ Organization (WPO), a peer advisory organization for women who own multi-million dollar businesses. “Entrepreneurship is the great equalizer for women.” Women entrepreneurs have control of what they pay themselves, how much influence and power they have, and their time. “They thrive on entrepreneurial endorphins that are produced when they are 'creating the box' rather than operating inside or outside the box," said Amy Millman, president of Springboard Enterprises, an accelerator for women-led businesses in technology, media, and life sciences.
What's good for women is good for the economy. “If women were as economically engaged as gentlemen in the economy, our GDP would be 7 to 9 point larger,” said Sallie Krawcheck, a former investment analyst and chair of Ellevate, a global professional women’s network, on Bloomberg TV.
What’s a girl to do?
Progress in women’s entrepreneurship sometimes feels like Sisyphus pushing that rock uphill. It’s frustrating. Whether your mountain peak is a company with a few employees or many, you have a better chance of getting to the top if you join forces with others.
There is a misconception that entrepreneurship is a lonely journey. If I learned one thing from the the interviews I’ve done as a contributor to Forbes and author of Forget the Glass Ceiling: Build Your Business Without One, a free book, it is that most successful women don’t do it alone. These women reach out and ask for help when they need it. They turn to co-founders, professional advisors, and their employees. They also turn to their peers.
Force multipliers: 3 adaptations to help women entrepreneurs scale big, research by Babson College Center for Women’s Entrepreneurial Leadership on EY’s Entrepreneurial Winning Women program, confirms the importance of finding like-minded peers. Women may form an informal posse or join a formal group. Groups like WPO and Young Presidents’ Organization shortcut and facilitate the process by bringing together a group of entrepreneurs on a monthly basis to problem solve. They also hold you accountable for the goals you set.
Your company may not be of the size that would qualify you to join these organizations, but not to worry, there are alternatives. As luck would have it, I reconnected with a networking buddy last week, Tanya Alvarez, who started an organization that does peer advisory groups, OwnersUP, for companies as small as $30,000 and as big as $500,000. What I love about her model is that she does it online using Google Hangouts. This allows anyone in the U.S. or the world to join a group and they have. OwnersUP groups are smaller (five business owners), meetings are shorter (one hour and 15 minutes), and meetings are more frequent (weekly) compared to other mastermind groups. The members I met at a recent in-person event reported dramatic increases in revenue in pretty short order.
Another option is to assemble a board of advisers to provide advice, inform you of current and future marketplace trends, facilitate funding, recruit talent or suggest alliances. Here are eight tips to create an effective advisory board.
Only you can control the future
The Census was taken in 2012 and it doesn’t reflect the promising signs of growth that I’ve seen over the last three years. In 2014, 28% of all companies receiving angel funding were women-run, a substantial 44% increase over the previous year. I’m also excited by the venture community efforts that I wrote about here and the additional steps that were announced at the White House Demo Day. Initiatives aren’t just national. New York City, where I’m based, has recently formed WE NYC for underserved communities.
But of course not all recent trends are encouraging. Equity crowdfunding, which was suppose to level the playing field for women, is not living up to its potential. Women entrepreneurs are sitting on the sidelines. While 38% of all companies seeking angel investment offline are women-led, only 18% are in the online world, according to the Center for Venture Research and Crowdnetic, respectively. Last spring I completed research aimed at providing insight to fix the problem for both sides of the equation -- women entrepreneurs and investors: Stand Out In the Crowd: How Women (and Men) Benefit From Equity Crowdfunding.
Improvement has happened and will continue to happen because men and women are making a conscious decision to make it happen.
*The Census defines a woman-owned business as one where a woman owns 51% or more of the business equity or stock.
