Each year American Express OPEN conducts a summary of trends for women-owned businesses. According to the report, there are over 11.3 million women-owned businesses (WOBs) in the United States employing nearly 9 million people and generating over $1.6 trillion in revenues annually. Since 2007, the number of women-owned firms grew at a rate five times greater than the national average for all businesses. In fact, over 1,000 new women-owned firms are started each day. However, even with this growth, women are underrepresented as entrepreneurs. Women-owned businesses account for just 38% of all U.S. businesses, 8% of employment, and 4% of revenue.
The map below illustrates the growth in the number of women-owned firms by state. The darker states indicate the highest percentage of growth while the lighter states indicate slower growth.
Percent Change in Number of Women-Owned Firms by State, 2007-2016
What is the data telling us?
As you scroll across the map it becomes apparent that growth in women-owned firms varies across the United States. Southern states are experiencing the most growth of new women-owned firms with Florida, Georgia and Texas leading growth at rates of 67%, 64% and 63% respectively. Florida grew tremendously from 581,000 women-owned firms in 2007 to 971,000 as of 2016. Florida ranks 3rd in the nation for number of women-owned firms, behind California with 1,464,000 firms and Texas with 991,000. Georgia ranks 5th with 457,000.
Conversely, the states with the slowest growth rates are in the Northeast including Maine and New Hampshire with 14% growth. Despite Maine’s slow growth in WOBs, the state ranks #1 in revenue growth. Maine WOB revenue grew 214% from $3.5 million in 2007 to $11.1 million in 2016. Unfortunately, the trend was not similar for New Hampshire revenues which grew by a mere 8% from 2007 to 2016.
Why is it important?
Addressing the startup business gender gap begins with acknowledging the financial gap. We all know that one of the biggest hurdles entrepreneurs and small business owners face when trying to grow their business is access to capital. But, did you know that female entrepreneurs face a disproportionally greater burden than their male counterparts? On average, men start with six times more capital than women.1 Studies show that the amount of capital women are able to raise is not only smaller, but they are more reliant on personal sources rather than external financial solutions. Usually business growth requires large amount of external capital thus the ability to seek, and eventually obtain, external funding is essential.
Women-owned business growth in southern states can be attributed to lower cost of living and lower start-up costs. Additionally, these trends can be attributed to programs and organizations put in place to help female entrepreneurs succeed. Examples include Atlanta’s Women Employment Opportunity Project (WEOP), Greater Women’s Business Council, and Small Business Innovation Research (SBIR). Atlanta’s WEOP provides resources for low to middle income minority women to support to expansion of women owned small business. Greater Women’s Business Council aims to empower women businesses through certification, education, and access to companies ready to do business with women business. SBIR funding encourages research and development within small businesses to increase technical innovation. In 2016, over $76.3 million was awarded to 151 women-owned businesses to aid in further development. This represents a small portion (12%) of total SBIR funding and can be attributed to low participation of women-owned businesses in in SBIR funding opportunities.
Increased awareness of funding opportunities is needed to facilitate further growth of women owned businesses. For a list of funding resources for female entrepreneurs, please visit: https://www.inc.com/bill-carmody/25-companies-that-are-determined-to-help-women-succeed.html
For more information regarding women-owned firms, check out the full report: The State of Women-Owned Businesses, 2016