There's never been a better time to be a female entrepreneur in the United States. That's the conclusion from a recent study conducted by the Center for an Urban Future with funding from Capital One's Future Edge Initiative.
The study found that the number of women-owned businesses in the country's 25 largest cities skyrocketed between 2002 and 2012 (the most recent year for which data is available). The 52 percent increase amounts to 928 new businesses opening every day, to the tune of well over a million jobs and over $90 billion added to the nation's economy. Women are starting businesses in every industry, from education to construction, retail, warehousing, health care, and so on. In the process, they're not only paving the way for other women (see: the fitness industry); they're also transforming the industries themselves (see: women pioneers in the food and tech industries).
Even though women-owned businesses are cropping up all over the country, some cities have proved significantly friendlier to women's entrepreneurship. The study looked at a number of different factors to determine the top cities for women looking to start their own business. Here's how it all breaks down.
New York City Has--By Far--The Most Women Entrepreneurs
When looking strictly at the number of women entrepreneurs in a given city, the top award goes overwhelmingly to New York. In 2012, the Big Apple boasted 413,899 women-owned businesses, or over 40 percent of private companies. Their contribution to the city's economy is immense: Women-owned businesses in NYC created 56,000 jobs and generated billions of dollars in the span of 2002 to 2012.
Los Angeles takes second place for the highest number of women-owned businesses but still has significantly fewer than NYC at 192,358. Rounding out the top five are Chicago (123,632), Houston (102,813), and Dallas (52,798). Here's the full list:
Memphis Has the Fastest Growth Rate for Women-Owned Businesses
Relative to the nation's other most populous cities, Memphis experienced the fastest growth in women-owned businesses between 2007 and 2012 with a rate of 116 percent. Next up is Fort Worth with a 78 percent five-year growth rate. Atlanta (64 percent), Houston (62 percent), and Dallas (58 percent) round out the top five.
Growth has been slower in other large U.S. cities, but it has remained consistent. Cities experiencing the slowest five-year growth in women-owned businesses still put on an impressive showing with Seattle and San Jose tied at 32 percent, Boston at 31 percent, San Francisco at 27 percent, and San Diego at 20 percent.
Dallas' Women-Owned Businesses Rank First in Revenue
Women-owned businesses in Dallas generate a higher average revenue--$198,599--than in any of the country's other largest cities. San Antonio is a close second with $191,223 in average sales. Next up is Fort Worth ($186,435) followed by Houston ($181,122) and San Francisco ($175,766). Perhaps surprisingly, New York doesn't even rank in the top ten. After San Francisco, the top ten includes Indianapolis, Boston, San Diego, Phoenix, Seattle, Washington, D.C., and Austin.
What's all this mean in practical terms? Women entrepreneurs are on the rise, and they're transforming cities' economic landscapes in the process. These days, small businesses are driving urban growth, and an increasing number of these businesses are led by women. If cities are looking for an economic boost, they'd do well to invest in women entrepreneurs.
But as it stands, women face significant obstacles when attempting to start and grow their businesses. Around 90 percent of women-owned companies have no paid employees, which means they're likely to remain small--and that means they aren't eligible for large bank loans that could take their businesses to the next level.
Women are also substantially less likely to receive VC funding than men. For example, in NYC in 2015, women-founded businesses received $122 million in VC funding, while male-founded businesses received a whopping $1.26 billion.
If women-owned businesses received the capital necessary to expand, the study maintains, then they could be even bigger drivers of economic growth across the U.S. The report concluded that if just one quarter of the 8,842,742 women-owned businesses with zero paid employees added one employee in the next three years, it would create more than 2.2 million jobs.
So if you're a woman entrepreneur, you might do well to start your business in one of the cities mentioned above. And if you're a city planner or government official, you'd do well to invest in women business owners.