Uphill Battle: Report Shows Women-Owned Businesses Lag
BY Kathleen Kim
New research shows that companies led by women are still behind their male counterparts.
In recent years, the number of women-owned businesses has grown. Women now own 30% of all U.S. businesses, according to the U.S. Census Bureau's November report.
While those businesses generate $1.2 trillion sales a year, many still struggle with financial problems, said the National Women's Business Council's new report. The annual report compiled Census data on women-owned businesses between 2007 and 2009.
"These numbers are significant because they will help give us more insight into women-owned businesses, which are a critical piece of growing our economy," said NWBC Executive Director Anie Borja.
Here's what the study found:
Women-owned businesses make less money than their male counterparts.
A whopping 68% women-owned businesses earned less than $25,000 and only 1.8% made $1 million or more, compared to 48% and 6.3% of male-owned businesses, respectively, NWBC's report said. Census data showed average sales in 2007 for women-owned businesses totaled $153,000, while sales for men-owned firms averaged $612,000. A separate study found that the average woman-owned business made 25% less revenue than its male counterpart in the same industry.
They raise low working capital.
The NWBC report said women-owned businesses "have traditionally been underrepresented in deal sourcing for venture and private equity investment." They raise just 5% in capital each year, the Huffington Post reported. And an earlier report by the Kauffman Foundation found that in 2007, women-owned businesses received 80% less capital than their male counterparts during the first year in operation.
They receive insufficient government loans.
In the last four years, the SBA granted more than 35,500 loans amounting to about $12.4 million to women-owned businesses, NWBC's report said. But the federal government failed to reach its 5% contracting goal for women-owned small businesses, awarding them only $16.8 billion (3.98%)--that means businesses missed out on $4.3 billion in potential contracts.