"The 'silly' question is the first intimation of some totally new development."

-- British mathematician and philosopher Alfred North Whitehead on innovation

What Gender Gap?

For years we -- along with many others -- have scratched our heads over the perplexing discrepancy between the relatively large percentage of businesses owned by women (37%) and the relatively small percentage of sales those businesses accounted for (16% to 18%). Oceans of ink and forests of paper have gone into speculating about the reasons. Were women keeping their companies small on purpose? Did they have different business goals from men? Did they run their companies differently? Were they rejecting the male model of business growth?

Turns out there's probably a simpler explanation. Woman-owned businesses were smaller because a disproportionately large percentage of them were young and needed time to grow.

Such is the unmistakable message of a new study sponsored by the National Foundation for Women Business Owners (NFWBO), which confirms that the number of woman-owned businesses grew an impressive 78% from 1987 to 1996 (nearly twice the rate of the economy at large). More striking, however, is the jump in the number of people employed by woman business owners -- an increase of 183% over the same period. Total sales, meanwhile, grew a whopping 236%.

At the same time, women were dramatically reducing their concentration in the service and retail sectors, moving into fields they had seldom touched before. The construction industry showed the greatest increase in the number of woman-owned businesses (171%), while mining saw the biggest leap in sales generated by them (463%). Services and retailing ranked at the bottom of both growth categories. And the average age of woman-owned businesses is close to catching up with the overall average.

"The profile of woman-owned businesses is starting to look a lot more like the profile of the general economy," says Sharon Hadary, NFWBO's executive director. All of which suggests that the main difference between men and women who own businesses is their sex.

Published on: Jun 1, 1996