Last week, the National Women's Business Council released an analysis of preliminary Census data, which showed a 27.5% increase in women-owned small businesses in the U.S. from 2007 to 2012. That's 2.1 million more women-owned businesses in 2012 than 2007 and almost 1.5 million more jobs.
This places the growth rate of women-owned businesses at almost four times the rate of businesses owned by men. A woman-owned business can be defined as one where a woman owns 51% or more of the business equity or stock.
The report also highlighted the fact that there were major increases in small business ownership among women of color, particularly African-American and Hispanic women. The number of businesses owned by Hispanic women rose 87%, while the number of businesses owned by African-American women increased 68%.
Some people attribute the increase in women-owned businesses among women of color to necessity, after losing jobs during the financial crisis. The growth may also be attributed to women seeking ways to simply supplement their income or find a new primary source of income.
Additionally, women seem to have a bigger appetite for a better work-life balance, with hopes that owning their own business can provide them more flexibility for raising families and pursing other interests.
On the flip side, the report shows a worrisome decline in business formation generally. New businesses and small businesses have struggled to recover since the financial crisis, rising only 2%, as compared to the increase in women-owned business at a rate of 27.5%.
Despite the momentum and growth in women-owned businesses, women continue to lack access to some of the most important things they need to launch and scale their businesses, specifically in the area of raising venture capital, the National Women's Business Council report said.
According to the report, women start their businesses with half as much money as men do and are also more likely to use personal savings to ramp up. They are also less likely to access bank loans than their male counterparts, partly because their approval rates are 15-20 percent lower than men’s, according to the online lending marketplace, Biz2Credit.
"Women bank loan approval rates are 15-20 percent lower than men"
The lack of adequate capital dilemma may be attributable to the fact that only 4% of women work in the upper levels of venture capital firms, according to a study out of Stanford. The presumption is fairly straightforward, the more women in leadership positions at venture capital firms, the more likely investments will be made in women-owned businesses.
Another obstacle women-owned businesses experience is with regards to competing for government contracts, under the Small Business Administration program (SBA). Government contracting provides a huge opportunity for small businesses in general, since the federal government has a goal to sell 23 percent of its contracts to small businesses.
However, the SBA has been falling short of its goal of increasing opportunities for women who own small businesses. The government has a goal of awarding 5 percent of its contracts, of the total 23 percent, to women-owned small businesses.
In an effort to remedy this, last week, in New Hampshire, ChallengeHER Campaign hosted a training and networking event for women who own small business. ChallenegeHER is a national initiative designed specifically to promote the Women-Owned Small Business Federal Contract Program. The goal of the event was to help educate the women-owned small businesses on the certification process for government contracting, which can be confusing.
So while women-owned business growth is soaring, they must face and learn to overcome some major obstacles. If you are a small business in need of fair and responsible financing, we are here to help simply the search process. Please see our Small Business page for more information on our network of lenders.