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Women-Owned Businesses Help Fuel Economy

Women business owners

The entrepreneurial spirit of women has been a driving force in the U.S. economy. Women-owned businesses have multiplied in the last few years, adding revenue and jobs to the economy.

The Small Business Authority is dedicated to helping women achieve their goals by making financing more accessible.

Before we address that, let’s begin with the basics.

The U.S. Census Bureau, in its “2007 Survey of Business Owners,” defines women-owned businesses as “firms in which women own 51 percent or more of the stock or equity of the business.”

According to the “Jobs and Economic Security for America’s Women” report, released by the National Economic Council in October 2010, women—whether employees or business owners—comprise 47 percent of the U.S. workforce.

The NEC report also showed that women own 30 percent of all privately held U.S. small businesses, and that female business ownership grew by 44 percent from 1997 to 2007.

Additionally, businesses owned by women are generally smaller than businesses owned by men.

“Although women own 30 percent of privately held businesses, these businesses account for only 11 percent of sales and 13 percent among privately held companies,” according to the report.

One of several factors that may contribute to those figures is that “women-owned businesses are concentrated in industry sectors that are dominated by firms that are smaller in size and in sales.”

Women-owned businesses dominated the health care and education-services industry at 61 percent. Female business ownership lagged behind male business ownership in other industry categories, such as construction, transportation and warehousing, and manufacturing. Women-owned businesses comprised 49 percent of businesses in the “other services” industry.

Self-employed women (not necessarily business owners) also tend to earn 55 percent of what self-employed men earn, according to the report. The reasons for the disparity are varied and remain to be studied before a conclusion can be reached.

Still, there are many reasons for women to go into business for themselves.

The NEC report cited a 1992 study by the U.S. Census Bureau that determined the “Characteristics of Business Owners.”

The CBO survey results showed that 27.7 percent of female respondents started their own businesses “to have a secondary source of income,” 18.5 percent did so to “be my own boss,” and 17 percent did so “to have a primary source of income.” Out of the survey respondents, 11.4 percent started their own businesses “to have more freedom to meet family responsibilities.”

One of the difficulties that women entrepreneurs may face is that of obtaining financing for their businesses.

According to the NEC study, women-owned businesses that started between 2004 and 2007 did so with 36 percent less capital than men-owned businesses that started in that time period. The study also showed that women are less likely to use “outsider equity” to fund their businesses.

Women business owners were shown, however, to take greater advantage of U.S. Small Business Administration loans. The NEC “Jobs and Economic Security for America’s Women” report, mentioned at the beginning of this article, addressed the point.

“[U.S. Small Business Administration] loans are three to five times more likely to go to women and minorities than traditional, conventional, small-business loans,” according to the report. “More than 12,000 [American Recovery and Reinvestment Act] loans have gone to women-owned small businesses, driving $3 billion in lending support into their hands to help them grow their businesses and create jobs.”

In October 2010, the U.S. Department of Commerce Economics and Statistics Administration released its report, “Women-Owned Businesses in the 21st Century.” The report was prepared for the White House Council on Women and Girls.

“Making sure that women are aware of the availability of startup financing and have full access to it on a nondiscriminatory basis is critical,” according to the report. “Furthermore, women-owned businesses are more likely to rely on government financing than are men-owned businesses, suggesting that women-owned firms may benefit from improved knowledge of and access to financing that is provided by or guaranteed by the government.”

The Small Business Jobs and Credit Act, signed into law Sept. 27, 2010, released more funds into the U.S. Small Business Administration loan stream. That is good news for America’s women entrepreneurs.

The Small Business Authority happens to be a full-service, nonbank lender that offers U.S. Small Business Administration loans.

Since 1998, The Small Business Authority has been in the business of helping small businesses thrive. Even with today’s tough economy, we’re funding small businesses with millions of dollars in financing, and helping them reinvest, pay expenses, and, most importantly, succeed.

We are committed to helping women entrepreneurs achieve their goals. Tell us how we can help you.

For more information, visit our Business Lending page, call 866-820-8999, or email info@thesba.com.

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