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Entrepreneurs have always played a leading role in the American society and economy. Historically men have comprised a larger portion of the entrepreneurial pie, but today we are seeing more and more women entrepreneurs. Between 1997 and 2012 the number of female owned businesses grew an astounding 54 percent, and during the economic downturn, women-owned businesses performed at the same level and standards as men-owned businesses.
In the last 6 years the percentage of women-owned businesses has grown significantly in comparison to the previous five years, at a rate of 21.8 percent. Also, 89 percent of businesses owned only by women have only one owner, while the equivalent for men- owned is merely 69 percent. A majority of women-owned businesses are considered microbusinesses, meaning they have five or fewer employees, and in 90 percent of cases these companies are self-employed individuals.
If women-owned businesses are doing just as well as men-owned, and women-owned business continue to be the fastest growing sector in the small business community, why are they struggling to gain access to capital?
As entrepreneurs and their start-up companies continue to rebuild the American job market and essentially the economy, it is important there are policies guaranteeing pay equality. Currently women rely on personal savings, accrued through previous positions, to start up their businesses, while men have easier access to other forms of capital.
The National Women’s Business Council outlines four pillars designed to advance the entrepreneurial woman’s independence.
#1 Access to Capital:
Numerous studies indicate women rely heavily on personal savings to start a business, a tendency that is associated with lower amounts of start-up capital. Access to capital trends could explain why male-owned businesses generally turn around higher revenues than female-owned businesses. Women’s economic impact is important; getting more capital in the hands of women entrepreneurs will allow the economy to grow, thus increasing economic gains for women business owners.
The NWBC recommends 3 solutions to increasing women’s access to capital:
1.) Increase lending efforts by credit unions and community banks to women-owned businesses
2.) Increase resources available to women business owners on capital/financing strategies
3.) Address creditworthiness and capital challenges for startups through exploration of new ways of credit scoring and promotion of crowdfunding
As access to capital remains a critical focus for the women’s business community, NWBC will focus its research efforts on the issues of undercapitalization as an impediment to starting and growing a business.
#2 Access to Markets:
As more women supply products and services in the federal marketplace and corporate supply chains, the competition, choices, and quality within the market will increase, creating a more productive market. The NWBC has identified two ways to promote increased access to markets for women entrepreneurs:
1.) Identify and promote concrete best practices in government procurement
2.) Identify industries and links in supply chains that are ripe for entry of women-owned businesses
#3 Job Creation & Growth:
Women are bringing great ideas to the market and show potential to impact and innovate. Increasing the participation of women entrepreneurs in programs designed to support the successful development of start-ups and established companies is key to promoting women-owned businesses. The NWBC encourages:
1.) Increasing participation of women-owned businesses in incubators and accelerators
2.) Developing a targeted strategy for participation of women-owned businesses in all government program areas.
#4 Data Collection:
The economic impact of women continues to grow and must be measured to understand its full impacts. The NWBC seeks to expand the amount of government data available on women-owned businesses. As the government’s only independent voice for women entrepreneurs, the NWBC’s extensive research provides key recommendations to advance women business owners. Data collection is crucial to identifying and rectifying issues that prohibit women entrepreneurs from thriving. The NWBC recommends:
1.) The Consumer Financial Protection Bureau (CFPB) begin collection of gender data on demand for credit
2.) The Census Bureau to implement an annual Survey of Business Owners to track progress on an annual basis