New Firm Formation Picking Up in the US, Led by Women

One of lingering negative aftereffects of the 2007-2009 recession has been sluggish business start-up rates – except, of course, among women-owned businesses. (See our 2015 and 2016 State of Women-Owned Businesses reports, underwritten by American Express OPEN.) Now, a recent analysis from the Kauffman Foundation has found that start-up rates are picking up again, and are continuing to be led by women-owned firms.
The 2016 Kauffman Index of Startup Activity, published last month, finds that:

  • The Startup Activity Index, a key annual indicator of new business creation, rose to 0.38 in 2015 – going up for the second year in a row – a mere two years after plunging to its lowest level (0.28) in two decades. (An index of 0.38 means that 380 out of 100,000 every adults started a business each month during 2015.)
  • A growing share of new firms are being started by people of color: with 40 percent of new entrepreneurs being comprised of African American, Latino, Asian, or other non-white entrepreneurs in the 2016 Index.
  • Of greatest note to womenablers, the rate of women entrepreneurs saw the biggest increase in almost twenty years—increasing from 0.22 percent to 0.26 percent (meaning 260 out of every 100,000 females become an entrepreneur each month). Approximately four in 10 (41%) new entrepreneurs, according to the Index, are now female.

kauffman-index-2016-startup-activity-entrepreneurial-demographics-profiles

Download the report and learn more at the link highlighted above. A new microsite also provides the ability to look at startup activity on a state-by-state and metro area-level basis.

In other positive women’s entrepreneurship news, the Census Bureau’s inaugural Annual Survey of Entrepreneurs, which will publish insights on employer firms over the next three years thanks to support from the Kauffman Foundation, was just released. Look for highlights from that survey in our next post.

New York City Tops New Womenabling Cities Index

A new accounting of the most supportive cities for growth-oriented women entrepreneurs was recently released at the Global Entrepreneurship Summit, just ahead of the Dell Women’s Entrepreneur Network conference in Johannesburg, South Africa. The WE Cities Index lists the 25 cities globally that provide the most supportive capital, technology, talent, culture and markets for growth-oriented women, a population they refer to as “high potential women entrepreneurs.” Those cities are:DellWECitieschart

  1. New York City
  2. the San Francisco Bay Area
  3. London
  4. Stockholm
  5. Singapore
  6. Toronto
  7. Washington, DC
  8. Sydney
  9. Paris
  10. Seattle
  11. Munich
  12. Austin
  13. Beijing
  14. Hong Kong
  15. Taipei
  16. Shanghai
  17. Tokyo
  18. Mexico City
  19. São Paulo
  20. Seoul
  21. Milan
  22. Delhi
  23. Johannesburg
  24. Jakarta
  25. Istanbul

For an interactive look at how each of these cities ranks in the five major index areas, visit this web page.

The WE Cities Index follows on the heels of the Global Women Entrepreneurs Scorecard, which was released the prior year. That effort analyzed 21 variables in a five-element framework, and ranked 31 countries around the globe for their supportive policies and programs to help women scale their enterprises. The findings of the country-focused effort (which was supported in part from Womenable) were highlighted in this Womenable blogpost from 2015.

Tops on that list were the United States, Canada, Australia, Sweden, and the United Kingdom — home to nine of the 25 top-ranked global cities for women entrepreneurs who are shooting for the stars. Godspeed on your journey, ladies!

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Economic Impact of Women-Owned Firms Growing Across the U.S.

As noted in the recent 2016 State of Women-Owned Businesses Report – and in our previous blogpost – women-owned firms are continuing to grow in number and economic clout at rates well above the national average. But where, geographically speaking, are women-owned firms growing? The short answer is: everywhere!

When looking at the growth in the number of women-owned firms as well as growth in revenue and employment (which we call, collectively, growth in economic clout), the 10 fastest-growing states for women-owned firms between 2007 and 2016 are:

  • North Dakota, South Dakota, Texas (all three tied for first)
  • Iowa
  • Indiana, Wyoming (tied for 5th)
  • Georgia, Tennessee (tied for 7th)
  • Utah
  • Maine

These are states in the Northeast, Midwest, South and West.

A look at the top-ranked metropolitan areas for growth in the economic clout of women-owned between 2007 and 2016 paints a slightly different picture. All of the top ten metro areas (listed below) are found east of the Mississippi River – or in Texas! However, most of the 50 most populous metropolitan areas in the country are either east of or on the banks of the Mississippi River.

  • Charlotte NC/SC
  • San Antonio TX
  • Dallas TX
  • Memphis TN/MS/AR
  • Austin TX
  • Indianapolis IN
  • Miami FL
  • Detroit MI
  • Richmond VA
  • Houston TX

Comparing heat maps of the top states and top metro areas for growth in economic clout since 2007 finds that some of the fastest-growing states are those without large cities (such as North and South Dakota, Iowa and Wyoming) and some of the fastest-growing cities (Charlotte, Miami, Detroit) are growing faster than the rest of their states.

This geographic analysis also tells us that things are definitely hopping in Texas – the top-ranked state home to four of the top 10 metro areas. Perhaps everything really is bigger in Texas!

Women of Color Driving Growth in Women’s Entrepreneurship

For the sixth year running, Womenable and American Express OPEN have taken a look at the state of women-owned businesses across the U.S., this year focusing on trends that have taken place between 2007 and 2016. The latest numbers – which can be found in The 2016 State of Women-Owned Businesses Report and the companion Summary Tables document – are remarkable in a number of ways.

First, here are the latest back-of-the-envelope numbers for you to write down and keep handy for speeches and cocktail conversation:

  • There are now 11.3 million women-owned businesses in the U.S., employing nearly 9 million people and generating over $1.6 trillion in revenues;
  • Women-owned businesses now comprise 38% of the business population, employ 8% of the country’s private sector workforce and contribute 4% of the nation’s business revenues; and
  • Since 2007, there have been 1,072 net new women-owned firms launched each and every day.

What are the most remarkable positive trends we’re seeing in this report? Here are three:

  1. Between 2007 and 2016, while the total number of firms increased by 9%, the number of women-owned firms increased by 45% – meaning that over this period the number of women-owned firms grew at a rate fully five times the national average;Women of Color Soar
  2. Who are entering the ranks of women business owners at a fast clip? Women of color; their numbers have more than doubled since 2007, to nearly 5 million. They comprise fully 44% of all women-owned firms; and
  3. The 10 fastest-growing states for women-owned firms since 2007 in terms of economic clout (a combination of growth in number, employment and revenue) are found in every region. They are:
    • North Dakota, South Dakota, Texas (all tied for first);
    • Iowa;Top States and Cities for Growth in Women-Owned Firms
    • Indiana and Wyoming (tied for 5th);
    • Georgia and Tennessee (tied for 7th);
    • Utah; and
    • Maine.

And, on the flip side, what findings bear further scrutiny, as they may indicate a lack of advancement? Again, we’ll highlight a trio:

  1. While the share of women-owned firms keeps climbing – from 28% in 2002 to 38% today – their share of employment (8%) and revenues (4%) remains essentially unchanged;
  2. Although the number of minority women-owned businesses has increased at a rate nearly three times that of all women-owned firms since 2006 (127% versus 45%), their average annual revenues are less than half that of the average women-owned firm (just under $69,000 per annum compared to $143,000); and
  3. Despite broadening industry diversity over the past two decades, since the recession the industries with the greatest share of new women-owned firms are in some of the most historically traditional sectors for women: other services (which includes hair and nail salons, up 98% compared to 45% overall); administrative, support and waste management services (home to janitorial and landscaping businesses, +64%); and accommodation and food services (+62%).

This is just a taste of the information now available in the 2016 State of Women-Owned Businesses Report. To learn more about the current state of women-owned businesses, download, read, and share the executive report, the news release, or the full set of statistical tables by clicking on these links.

And follow this blog for additional posts on trends uncovered in the report in the coming weeks and months.

Three Hidden Gems From the 2012 SBO

Happy International Women’s Day, fellow womenablers. Yesterday, at the National Women’s Business Council’s public meeting, Council member Teresa Nelson and I discussed the Council’s just-released analysis of the 2012 women’s business census, The Growth and Development of Women-Owned Enterprises in the United States, 2002-2012.

By now, many of you will know the overarching facts and trends, including:

  • Women now own nearly four in ten (36%) businesses in the U.S. These firms number nearly 10 million, employ over 8 million workers, and generate $1.4 trillion in revenues.
  • Women-owned firms are growing in number at 2-1/2 times the national average over the 2002-2012 period, and business starts among women have picked up significantly since the recession, even as overall firm formation has stagnated.
  • The number of firms owned by women of color is nothing short of phenomenal. In 2002, there were just under 1 million firms owned by women of color; that number stands at nearly 3.8 million just one decade later.

But what you might not know are three other trends that are included in this report. For the first time, the analysis includes a look at female veteran-owned firms, trends in the top 50 most populous metro areas, and a look at trends in some detailed industry categories. We found that:

  • There’s been a quadrupling in the number of female veteran-owned businesses just in the past five years, from under 100,000 to nearly 400,000.
  • Despite growing industry diversity, nearly one-third of women-owned firms can be found in these four sectors:
    • Personal care services (mostly beauty and nail salons): 987,375 women-owned firms
    • Other personal services (including pet care/pet sitting/dog walking): 732,352
    • Child day care services: 661,630
    • Services to buildings and dwellings (mostly janitorial, housecleaning and landscaping/lawn services): 655,943
  • Between 2002 and 2012, the number of women-owned firms in Memphis skyrocketed by 160%, compared to national growth of 52%, making the Bluff City the fastest-growing metro area among the 50 most populous cities in the U.S.

These trends and more can be found in the new NWBC report, The Growth and Development of Women-Owned Enterprises in the United States, 2002-2012.

New Data Show Increasing Growth Among Women-Owned Firms, and Yet…

The first wave of information from the 2012 Survey of Business Owners has just been released from the U.S. Census Bureau, and the news is largely positive – for women-owned businesses at least.SBO_infographic1

While the final numbers will not be out until the end of the year, preliminary figures indicate that:

  • there are now 9.9 million women-owned firms,
  • employing nearly 9 million workers, and
  • generating $1.6 trillion in revenues.

These numbers reveal that women-owned firms now comprise 36% of all privately-held firms (a full accounting of U.S. firms, including large publicly-traded firms, won’t be published until December) – up from a 29% share in 2002.

Where’s this growth coming from? By and large, from women of color. Back in 2002, one in seven (14%) of women-owned firms was led by a woman of color; that share has risen to nearly four in 10 (38%) as of 2012. The growth in the number of women-owned firms over that decade – 53% overall – is strongly outpaced among African American (+179%), Latina (+173%), Native Hawaiian (+138%) and Asian American (+122%) women-owned firms, and also surpassed by Native American/Alaska Native (+68%) women-owned firms.

Looking at trends by industry sector finds the strongest growth in the number of women-owned firms to be in administrative support and waste management services (think office administrative services, landscaping and janitorial services, +101%), educational services (including private schools, computer and language instruction, +92%) and other services (including auto repair, pet sitting and beauty salons, +86%). At the other end of the spectrum, there’s been just an 11% increase in women-owned retail trade businesses.

When looking at the growth in women-owned firms compared to all privately-held firms, the news is quite positive overall: women are now starting businesses at a higher rate post-recession compared to the five years leading up to the recession, while start-ups have plummeted overall.

That said, however, while women now represent over one-third of all privately-owned firms, their share of employment and revenues among this population has declined between 2002 and 2012.

This represents the grey lining in an otherwise silver cloud – but the full picture won’t be revealed until more detailed tabulations by employment and revenue size of firm and more detailed geography are available late in the year.

 

(Click on the infographic at the right to view the interactive version on Womenable’s infogr.am page.)

What Do Women Entrepreneurs Need to Grow? A New Initiative Keeps Score

It’s one thing to encourage more women to start their own entrepreneurial ventures, but what are the elements that can ensure their future growth and success? And what countries are doing a good (and not so good) job of providing a “womenabling” environment for growth-oriented women entrepreneurs? These are the questions asked – and answered – in the new Global Women Entrepreneur Leaders Scorecard, a data-powered diagnostic tool developed by ACG Inc. with support from Dell.

The research team (of which Womenable is a member) considered the elements necessary for supporting growth-oriented, high-impact women entrepreneurs – AND what data are currently available on a regular basis – gathering and combining 21 data variables into an analytical framework comprised of five main elements:

  • Business environment;
  • Gendered access to resources;
  • Women’s leadership and legal rights;
  • A gendered entrepreneurial pipeline; and
  • Potential female entrepreneurial leaders.

DWEN_Global-Scorecard-ResultsThe resulting analysis, conducted among 31 economies that collectively account for 76% of global GDP, finds that the following countries provide the environment most conducive to supporting high-impact women’s entrepreneurship:

  1. United States
  2. Canada
  3. Australia
  4. Sweden
  5. United Kingdom

At the other end of the list are countries that are not so supportive:

  1. Bangladesh
  2. Pakistan
  3. India
  4. Egypt
  5. Tunisia

One important conclusion of the analysis is that even among highly-ranked countries there is much room for improvement, as the scores – calculated on a 0-100 scale – only reach 71 even in the top-ranked U.S.

And what can all of us do to help the cause? Several recommendations for action offered include:

  • Narrow the gender data gap by measuring progress of women entrepreneur-focused initiatives;
  • Prioritize female-owned businesses in public and private supply chains;
  • Promote and empower women in the workplace;
  • Raise the visibility of female role models in business; and
  • Build entrepreneurship skills for girls by investing in STEM education.

Learn more and download the GWEL Scorecard executive report and methodology at THIS WEB PAGE.