The number of female entrepreneurs has noticeably improved in recent years. The Atlantic reports that women-owned businesses have grown 68 percent since 2007, noticeably higher than the 47 percent increase in the number of all small businesses.
In 2015, there were just over 9 million U.S. businesses owned and operated by women. But while female business ownership is on the rise, women account for just 22 percent of prospective business buyers, according to a recent survey from BizBuySell.
Why aren't more women pursuing small business acquisitions? The answer to that question is complicated.
Female Business Buyers Face Several Challenges
The Small Business Jobs Act of 2010 and the Women's Equity in Contracting Act of 2000 were enacted to help spur female business ownership. To be fair, the legislation contributed to the growth of female business ownership. But it hasn't completely resolved many of the issues faced by women who want to buy and operate businesses.
For starters, women are far less likely to obtain SBA loans. The BizBuySell survey showed that only 34 percent of women pursue SBA loans, as opposed to 45 percent of men. When female business owners secure SBA funding, the amount is roughly 50 percent less than that of male entrepreneurs.
Another reason women struggle to break into business ownership is that they have trouble obtaining loans with favorable terms, which could be partially attributable to the fact that women-owned businesses earn less than male-owned companies. Approval rates for women-owned businesses were 33% lower than for male-owned businesses, according to a Biz2Credit.com report.
Finally, nearly half of women who own businesses cite a lack of mentorship and advisement resources as a disadvantage, according to a study conducted by the Kauffman Foundation. Women are far more likely than men to seek out the advice of experienced mentors. However, a lack of accessibility to leaders who can advise women on their business options often makes women hesitant to jump into entrepreneurship.
Tools to Help Female Business Owners Achieve Success
More resources are becoming available for aspiring female business owners who struggle to secure funding or develop a network of contacts to help them get started. The SBA provides several tools to female entrepreneurs with a desire to launch and grow their businesses, and can connect female business owners with experienced "business mentors" whom they can consult for advice.
SCORE, a nonprofit resource partner with the U.S. Small Business Administration (SBA), offers free business mentoring and low- or no-cost workshops at its 300 offices across the country. Mentors are experienced local business executives and entrepreneurs who volunteer their time to help others start and grow their businesses.
Similarly, the National Association of Women Business Owners (NAWBO) has local chapters throughout the country that provide leadership, education and networking opportunities. Joining a local chapter of the NAWBO or a local meetup of women business owners is an easy way to connect with others facing similar challenges.
Additionally, more funding options for female entrepreneurs and business owners are emerging. Possible financing opportunities include:
- Kabbage - Kabbage looks at more than just credit scores when considering loan applications and approving lines of credit. They also look at accounting, banking and e-Commerce data. Loans range from $2,000 to $100,000.
- Dealstruck - A 2015 report from American Express named retail as one of the most popular business options for women-owned businesses. Dealstruck offers an inventory-specific line of credit of up to $500,000.
- StreetShares - Great for new business owners, StreetShares provides loans to women with at least one year of business experience and businesses with a minimum of $25,000 in annual revenue.
As more loan and mentorship resources become available for current and aspiring female business owners, it's likely that the number of female buyers will continue to rise, narrowing the gap between male and female business buyers.