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Home Running A Business Woman-Owned Business Statistics
For decades now, it’s been a game of catch-up for women in business—and they’ve gained a lot of ground. Since 2007, the number of women-owned firms has grown five times faster than the national average, according to the 2016 State of Women-Owned Business Report. In fact, women are now three times as likely to start their own businesses as men, and that number is on the rise. But the struggle is far from over. The statistics on women-owned businesses below highlight just how far women have come and the disparities we’ve yet to overcome.
Female-owned businesses generally have lower revenues, grow slower, and receive less external financing but are still able to keep the lights on just as well as companies owned by men.
Perhaps some of the data about the revenue issues faced by female-owned businesses is skewed by the types of industries dominated by female-led firms. Women make up 90% or more of the companies in industries like child day care services, domestic services, and beauty salons, according to data from the National Women’s Business Council (NWBC). While these businesses can definitely be long-lasting and profitable, the profit margins can be very thin depending on the area. NWBC says that 44% of women entrepreneurs operate in low-growth industries.
Even still, American women-owned businesses employ over 9 million people and generate $1.9 trillion in annual revenue, according to the SBA. These businesses are essential to the economy. And while the daycare industry might not be a headline-grabbing field with major profits, any working parent will tell you how essential that industry is to their day-to-day lives.
Childcare, home healthcare, retail – these types of businesses are necessary for the American economy to function and for the American lifestyle to continue. It should be noted that women entrepreneurs are moving into many different industries, though. Behind healthcare and social assistance, the largest sector for female-owned businesses is professional, scientific, and technical services, the NWBC explains.
A report by the US Chamber of Commerce reveals how the pandemic has disproportionately impacted women who own small businesses.
Before the pandemic, 67% of men and 60% of women ranked the health of their businesses as “good.” However, by July 2020, this stat only dropped 5 points among men (62% still rated their businesses as healthy), whereas there was a 15-point drop among responses from women (47% still rated their businesses as healthy).
In fact, businesses owned by men were also more likely than women to report that they actually increased staff during the pandemic. The number grew from 17% in the first quarter of 2020 to 25% in July. On the other hand, from the 18% of women-owned businesses that reported an increase in staffing in the first quarter of 2020, only 15% had increased staff by July
Regarding their plans to increase staffing, 36% of businesses owned by men said they plan to increase staff size in the coming year, compared to 24% of women. Compared to the first quarter of 2020, this represents a 5% increase among men and a 7% decrease among women.
The report also reveals stark differences in investments and revenue expectations. From the first quarter of 2020 through July, 32% of women-owned businesses had future investment plans, which represents no change from before and during the pandemic. However, 28% of men planned on increasing investments in the first quarter of 2020, but by July, this number jumped 11 points to 39%.
Still, the stats shouldn’t discourage women business owners from applying for loans or other financing. The American business landscape has made progress for women entrepreneurs. Before federal legislation was passed in 1988 (if you’re counting, that’s just 33 years ago), women business owners needed a male co-signer to apply for a loan. While lenders need to understand that women-owned businesses are as safe an investment as male-owned businesses, female entrepreneurs should also take the steps to apply for capital, particularly when that capital can be used to help grow the business.
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