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It’s a great time to be an entrepreneur, and now there’s data to prove it: women have been starting businesses at 1.5 times the national rate and now account for 29 per cent of all company owners in the U.S.But this data, presented in the recent American Express OPEN Report, also revealed a new glass ceiling. While most women-owned businesses exceed their peers in key success measurements — revenue growth and number of employees — this trend stumbles at the highest levels of business size and achievement.
The report, the first to analyse the latest U.S. Census data and provide a view of business ownership over the last 14 years, found that at the 100-employee and $1 million revenue levels, the number of women-owned firms dives below that of men-owned and public ally-owned companies. Even more strikingly, women-owned firms only employ six per cent of the total U.S. workforce.
What’s going on? And what needs to be done to help female entrepreneurs succeed beyond the small-business level? We sat down with the report’s author, Julie Weeks, to learn more about her findings and what they mean for the future of women-owned businesses.
Why have women-owned firms grown faster than the national average?
Entrepreneurship is the next professional frontier. Women are increasingly more likely to hold senior-level positions in the workplace, and that gives them excellent skills with which to start a business. Women also have higher levels of education than ever before, and are more likely to have the kinds of degrees that can lead to greater success in business ownership, such as business or law.
Also, many women want the flexibility that comes with business ownership. Even though, as an entrepreneur, you will work much harder than you would otherwise, you are in charge of your own destiny. That’s very appealing to a lot of women.
What was surprising to you about the study’s findings?
Though women-owned firms are growing, they are not accounting for a very large share in the nation’s overall employment and revenue. So we took a look beyond those statistics to see what’s going on, and found that women-owned firms are really keeping up the pace in terms of revenue and employment growth fairly far along the business growth spectrum. Overall women are doing as well as the average firm, all the way to the $1 million in revenue and 100 employee mark.
That’s when they falter off the pace. Some might think that women-owned firms are starting small and staying small, and that’s not really true. They are growing…up until a certain point.
Why then are they faltering at this threshold?
Certainly, the population of women-owned firms is younger than the population of men-owned firms. But it is more than that. I believe it has to do with the lack of role models, peers, and mentors, and that there are fewer women at that rarefied atmosphere. The informal networks that help business owners get doors opened for them are less available to women. The kind of capital that is required at that level is very much a referral-based system, and there are fewer women engaged in that system on both sides of the table.
What needs to happen on a systemic level to improve this?
From a public policy and a business support point of view, there has been far more attention paid to getting people into business than to supporting their growth once they’ve started. Widening the lens of business support beyond the startup is very important. We need to put attention on the “missing middle.”
There is a lot of attention paid to startups, and then everyone salivates at the other end of the spectrum at the IPO-bound, fast-growth businesses. More attention paid to the middle would boost growth rates of the foundational businesses that are employing people, that do a lot for the economic vitality of local communities.
And particularly for the women’s business sector, paying more attention to growth-oriented support, making women’s business networks more available and mentoring programs more visible and active, and having a broader dialogue about what growth and success means would all help.
Do women and men tend to have different definitions of success?
Traditional success only looks at financial goals: go public or get bigger and bigger. But a lot of women are put off by that discussion and want to grow their business a little more organically. Women are more likely to look at the “triple bottom line” (that is, taking into account a firm’s ecological and social impact rather than solely profit). Our dialogue and lexicon about success and what we want to achieve as business owners is minimized and taken less seriously since it’s not as testosterone-charged, and that does women a disservice.
But, there’s an increasing discussion that “profit above everything” isn’t good in the long run for communities and for the planet. Taking into account the impact of a business on the community and environment is a very important discussion to have. There are many communities that are hollowed out when one large company moves to another area, and without strong small businesses present, that community is left in a lurch. Big isn’t always best, growth for growth’s sake is not always the ultimate goal, and recognising that there are different ways to lead a business is very important.
What would your advice be for young women considering entrepreneurship as a career path?
What better time to jump into charting your own future? If you get tied into a career path working for other people, you may be shutting off potential options for your future. And there’s a lot of support out there for young women interested in business ownership, and I think those resources are going to continue to increase.
Young professionals now have a much broader view and bigger sense that the sky’s the limit if you start a business, because you’re seeing all of the Mark Zuckerbergs out there. Not everyone will get that far that fast, but the more we show examples of younger people who have been successful very early in their careers, all the better.
Now we just need a female Mark Zuckerberg!
I think perhaps they’re out there, but we’re not looking close enough. I hope they’re out there! Or that they will be.
View the full report: American Express OPEN State of Women-Owned Business Report.
Julie R. Weeks is President and CEO of Womenable, a for-profit social enterprise that works to enable women’s entrepreneurship worldwide. She has over 30 years’ experience in the fields of research design and analysis, public policy, and women’s enterprise development. Prior to launching Womenable in 2005, Weeks was Executive Director of the National Women’s Business Council and Managing Director and Director of Research for the centre for Women’s Business Research.