Recently, think tank JPMorgan Chase Institute released a lengthy report on gender, age, and small business financial outcomes. Small businesses, defined as businesses with fewer than 500 employees, make up 99% of all businesses in the United States. The Institute studied some 1.3 million small businesses to see how gender and age relate to how businesses succeed. The researchers also looked at how some of these businesses have changed since 2013. There’s Less Funded Growth for Young and Female Business Owners The first finding the JPMorgan Chase Institute noted was that younger and female small businesses owners had businesses that experienced organic growth, meaning they sustained their growth through operating profits instead of external sources. Almost 30% of female-owned businesses and 33% of businesses owned by people younger than 35 grew organically. Those ratios drop significantly for businesses that receive external financing (like venture capital) aimed at growing the company. Many of the businesses are predicated on the ability to scale rapidly through large outside investments in a technology concept or brand, for example. Only 18% of women-owned businesses and 24% of businesses owned by younger people saw financed growth. “Relative to their share in the cohort, female-owned firms were underrepresented in the financed growth and stable small employer segments,” the report noted. Women and people under the age of 35 were also underrepresented in a category deemed “stable small employers.” This segment is defined by slow growth largely based on the ability to employ others beyond the business owners. Firms with Older Founders Most Likely to Survive The researchers looked at how businesses close down to determine if there was a correlation with who owned those businesses. Interestingly, they noted that businesses founded by people who were 55 years or older were the most likely to survive. In general, older business owners were between 1 and 3 percentage points higher than all other ages when it came to the probability that a business would survive. This number was true for businesses that were 1, 2, or 3 years old. The researchers postulated that age may provide these older business owners with several advantages, including a large reserve of personal money that can be pulled from when cash flows become irregular. “We found that older founders in our sample have the highest survival rates,” the report noted. “This may be because older founders could have a longer history of prior work experience, and such experience can help them survive the critical early years. Moreover, older founders may also have a network of potential clients or personal assets that could provide initial funding or cash buffers.” Older business owners were less likely to have any employees, though, even if the businesses had been around for 3 years. Women Small Business Owners Start with Less Revenue Perhaps the most startling, if not completely unsurprising, finding of the report was that female-owned businesses start with notably less revenue than male-owned businesses, but the survival rate for both was roughly the same. Firms owned by women typically start with 34% less revenue than men-owned businesses, and this gap continues over the years. “The typical small business founded by a woman is smaller than one founded by a man, and that difference persists over time,” the researchers said, adding that “this differential persists even as firms exit and surviving firms grow.” The median revenue was about $50,000 for the first year of a small business owned by a woman, while it was over $75,000 for businesses owned by men. In the 4th year, women-owned businesses showed a median revenue of $68,000, compared to $104,000 for those owned by men. Revenue Disparities Change with Location While the Institute found that women and younger people faced revenue and growth disadvantages in general when it comes to keeping a small business alive, the researchers also noticed that these disparities are different based on location. In San Antonio, Texas, new woman-owned businesses reported 46% of revenues compared to male owners of new small businesses. In Miami, though, women-led businesses had 83% of the revenue compared to male owners, a difference of about $10,000 in that first year. “While these findings apply to small businesses nationwide, small business policies are often designed and implemented locally,” the researchers said. “Moreover, local policy makers may want to compare outcomes in their city to others, and to the nation as a whole. In prior research, we reported life expectancies of new businesses as well as the concentrations of organic growth and financed growth firms by metropolitan area. First-year revenues by owner gender and age also vary by metropolitan area.” Major US metropolitan areas such as San Francisco, Seattle, Chicago, and New York City reported a below-median disparity between male- and female-owned businesses. The cities with the least amount of disparity between businesses owned by men and women were Miami, Orlando, and Las Vegas.