Women Entrepreneurs

Related Terms: 8(a) Program; Minority-Owned Businesses; National Association of Women Business Owners

As of 2002, there were 6.5 million majority women-owned businesses in the United States, employing 7.1 million people according to the U.S. Bureau of the Census. The number of privately held women-owned businesses in U.S. exceeds 10 million if one counts partially women-owned businesses as well. According to a Business Week Online article, "between 1997 and 2004 the number of women-owned companies grew 28.1 percent—nearly three times the rate of all privately held businesses." These statistics reflect a sea change in American conceptions of gender roles and abilities over the past half-century.

Women have owned and operated businesses for decades, but they were not always recognized or given credit for their efforts. Often women entrepreneurs were "invisible" as they worked side by side with their husbands, and many only stepped into visible leadership positions when their husbands died. But a variety of factors have combined in recent years to contribute to the visibility and number of women who start their own businesses. According to U.S. Department of Labor statistics, female participation in the workforce was less than 40 percent in 1960 but is predicted to reach 62 percent by the year 2015. As women enter the workforce in ever-greater numbers, they gain professional experience, and managerial skills, both necessary to be successful entrepreneurs. Flexibility is also a factor in many women's decision to start a business. Entrepreneurship is often seen as an ideal way to juggle the competing demands of career and family. Finally, the disparity in the salaries and wages that women earn as compared to men on average has been a factor in motivating some women to decide to establish their own businesses.

Although the small businesses owned by women have traditionally been in the service sector, in recent years women entrepreneurs have been moving rapidly into manufacturing, construction, and other industrial fields. Women business owners still face greater difficulties in gaining access to commercial credit and bidding on government contracts than do their male colleagues, and pockets of resistance to women entrepreneurs remain strong in some industries and geographic regions. But millions of successful businesses launched and managed by women now dot America's business landscape, each a testament to the legitimacy of the aspirations and talents of the woman entrepreneur.

REASONS WOMEN BECOME ENTREPRENEURS

Many studies indicate that women start businesses for fundamentally different reasons than their male counterparts. While men start businesses primarily for growth opportunities and profit potential, women most often found businesses in order to meet personal goals, such as gaining feelings of achievement and accomplishment. In many instances, women consider financial success as an external confirmation of their ability rather than as a primary goal or motivation to start a business, although millions of women entrepreneurs will grant that financial profitability is important in its own right.

Women also tend to start businesses about ten years later then men, on average. Motherhood, lack of management experience, and traditional socialization have all been cited as reasons for delayed entry into entrepreneurial careers. Many women start a business due to some traumatic event, such as divorce, discrimination due to pregnancy or the corporate glass ceiling, the health of a family member, or economic reasons such as a layoff. But a new talent pool of women entrepreneurs is forming today, as more women opt to leave corporate America to chart their own destinies. These women have developed financial expertise and bring experience in manufacturing or nontraditional fields. As a result, the concentration of women business owners in the retail and service sectors—and in traditional industries such as cosmetics, food, fashion, and personal care—is slowly changing.

PROBLEMS FACED BY WOMEN ENTREPRENEURS

One of the main problems facing women entrepreneurs is obtaining financing. In the early 1990s, study after study confirmed that women business owners did not receive equal treatment at financial institutions. Over one half of women business owners believed that they faced gender discrimination when dealing with a loan officer. And for women, venture capital firms appear to show the same favoritism towards men that banks do. According to Sona Wang, quoted in a Crain's Chicago Business article and general partner of Inroads Capital Partners, an Evanston venture capital firm that specializes in backing women and minorities, the venture capital business "clearly relies heavily on the old-boy network." Only 5 percent of the companies that received venture capital funding in 2004 had a female CEO, according to the Crain's Chicago Business article, a trend that has not changed since researchers started tracking these numbers in 1997.

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