Federal Contracts Requiring Larger Investment for Small Businesses

A new survey conducted among small business owners who are active federal government contractors finds that their investment of time and money seeking contracting opportunities has increased by 21% over the past year, as federal contract spending has declined 12%.

This and other facts come from Trends in Federal Contracting for Small Businesses, a new report authored by Womenable from a survey conducted by us for American Express OPEN’s Victory in Procurement for Small Business program.

The survey was conducted online in October 2011 among small business owners who are registered on the Central Contractor Registry (CCR) and are either currently performing on a federal contract (prime or subcontractor) or who have done so within the past five years.

Other findings from this first of four reports drawn from the survey include:

  • On average, active contractors invested $103,827 in time and money last year seeking federal contracts, up from $86,124 in 2009;
  • Larger firms invest more seeking contracting opportunities, but so do firms owned by persons of color. Women invest somewhat less time and money seeking federal contracting opportunities than do their male counterparts;
  • On average, small firms submitted an average of 4.4 bids before they won their very first federal contract – the lesson being, if at first you don’t succeed, try, try, and try again;
  • Over the long term, experience pays off. Average bidding success rates – 38% overall – are significantly higher among firms with 10+ years of contracting experience compared to those firms with three years or less contracting experience.

The other three reports will focus on special trends among women and minority business owners, how strategies and outcomes change with level of procurement experience, and what lessons can be learned from firms that focus on subcontracting as a procurement strategy.

To learn more and download a copy of the report, read this Womenable-authored blogpost on openforum.com. Look for the next report from this survey in about a month; it will focus on the key findings among women and minority business owners.

Ruby – a Gem of a Women’s Entrepreneurship Program

I’m just back from Oz, where I joined the board of a wonderful organization – the Global Banking Alliance for Women. Their annual summit, which brought together nearly 100 executives from financial institutions and financial inclusion NGOs from (by my count) 18 countries, was hosted this year in Sydney, Australia by one of the four founding members of the GBA, Westpac Bank. More about the GBA in another blog post, but I’d like to focus in this post on what I feel is the leading corporate program for women entrepreneurs anywhere in the world: Westpac’s Ruby Connection.
Logo for the Ruby Connection
As those of us in the world of women’s enterprise development know, many corporations enter into the “women’s market” by “painting their program pink,” meaning that they dress up an existing market-focused program and slap a “we understand women” label on it. Those programs either fail – because women business owners can see through them pretty easily – or swiftly morph into something more. If they are lucky, they will take on aspects of the Ruby Connection model. Though I’ve been aware of this effort for some time (it was launched back in 2008), it was only after hearing the story of the program’s founding and growth do I now feel certain that this effort is truly a global best practice for any corporation in any industry sector to benchmark against.

The Ruby team, led by the indomitable Larke Riemer, explained the evolution of the program in a day-long series of presentations, which were fascinating. After listening to and thinking about their efforts, I would posit that the program’s success (and it has been very successful to the bottom line of the bank) can be attributed to these five key elements:

  • Long-term, high-level support: Not only has Larke spearheaded the program’s growth since its inception, she has managed to get high-level support from within the bank during that time – two elements that are very hard to maintain in corporate environments, where CEOs and other senior managers move around within, as well as in and out of, a company fairly regularly. Having a long-term “buy and hold” investment view is very important, and hard to maintain. Perhaps it doesn’t hurt that Westpac Bank’s CEO is Gail Kelly, listed by Forbes and others as one of the most powerful businesswomen in the world;
  • Measurement and continuous improvement: It’s often said that what you can’t measure you don’t manage, and tracking ROI has been the bane of the existence of many a target market effort. Westpac measures: hits and stickiness of their website; views of videos; social media followers; net promoter scores among customers; and number of financial products held by customers. Their measurement also consists of sponsoring externally-conducted research, such as a recent study that uncovered the fact that women are far less prepared financially for retirement – which is leading to a first-ever national advertising campaign in the country about “superannuation for women”;
  • Built from the inside out as well as the outside in: The Ruby Connection effort is driven far into the Westpac corporate structure, with ambassadors and champions in nearly every branch. This is another area where many corporations fail – support for a market effort resides in headquarters but not out in the field. Westpac’s branches are empowered to launch “Ruby of the Year” awards locally on an annual basis, which not only drives the Ruby brand into local communities, but gives an otherwise national program a local flavor;
  • Customer-, not product-centric: According to Riemer, Ruby focuses on women writ large, not just Westpac customers. Any woman can become a member of the online Ruby community; she need not be a Westpac account holder. And rather than describe women internally as a market segment, Westpac uses the phrase “the female economy” to describe their focus. A visit to the site will reveal the broad focus of the community, and the affirming atmosphere it creates. One recent example of the cheerleader role that Ruby plays is a recently published book, “The Power of 100,” which profiles 100 women who have shaped Australia, past and present. It was published this past March for the 100th anniversary of International Women’s Day; and
  • Establishing a unique, separate brand: Rather than naming Westpac’s efforts in the women’s market the “Westpac Women’s Initiative” or some such, as so many companies do, the Ruby brand is an entirely separate entity by design. While it plays on the red of Westpac’s logo (and is cleverly composed of many Westpac “W’s” shaped into a gemstone), Ruby has a separate website from the women in business page on the Westpac corporate site, and a unique brand identity. This was done on purpose, to make the community friendlier than the “Big Red W” image of Westpac (which is Australia’s oldest and largest corporation). It’s worked extremely well, and is unique in my 20+ year observation of trends in corporate engagement in the women’s enterprise development community.

Kudos to the Ruby Connection – truly a gem of a women’s entrepreneurship support program that it would behoove other corporations interested in the “women’s market” – regardless of their industry – to investigate and emulate.

Growth of Women-Owned Firms Continues, But Keeps Pace Only Until 100 Employee and $1M Revenue Marks

A new analysis of recently-released Census data on women-owned enterprises in the United States finds that the growth in the number of women-owned firms continues at rates exceeding the national average, and that growth in revenue and employment keeps up the pace with all firms, but only until women-owned firms reach the 100-employee level or the $1 million revenue marks.
State of WOBs 2011 report cover
Women-owned firms are now estimated to number just over 8.1 million, generating nearly $1.3 trillion in revenues and employing 7.7 million workers. The new report, The American Express OPEN State of Women-Owned Businesses Report: A Summary of Important Trends, 1997-2011, also provides estimates of the number and economic contributions of women-owned firms by industry, by state, and by revenue and employment class of firm.

Womenable conducted the analysis, basing the 2011 estimates on an analysis of the 1997, 2002, and 2007 Census data, the latter having just been released in December 2010. Learn more about and download the 53-page report free at OPENforum.com.women and read the full study news release here.

Rich Industry and State Data

The report offers rich insights at the industry and state level. For example, the analysis shows that:Share of WOBs within Industries

  • Women-owned firms continue to diversify into all industries, rendering the term “non-traditional industries” virtually meaningless today. While there remain some predominately female industries (52% of all health care and social assistance firms are women-owned, for example) and while just 8% of construction firms are women-owned, most other industries come close to the overall 29% share of women-owned firms in the economy;
  •   Between 2002 and 2011, the fastest growth in the number of women-owned firms has been in education services (up 54%), administrative and waste services (+47%) and construction (+41%);
  •  The states with the fastest growth in the number of women-owned firms between 1997 and 2011 are Georgia, Nevada, Mississippi, Florida, and North Carolina; while the states with the lowest rate of increase in the number of women-owned firms are Alaska, West Virginia, Iowa, Indiana, and Vermont. 

New Insights on When Growth Falters 

We’ve all heard the finding that “the number of women-owned firms is growing at twice the national average.” This new analysis shows that the rate of increase in the number of women-owned firms still tops the national average, but the ratio is now 1.5:1 – a 50% increase in the number of women-owned firms between 1997 and 2011 compared to 34% among all U.S. firms.
Revenue Growth of WOBs by Firm Size
We also know that growth in revenue and employment in women-owned firms has always lagged the national average overall, but a more in-depth analysis of growth by business size shows that – in actuality – women-owned firms keep up the pace with the revenue and employment growth of all U.S. firms, but only until a certain point. With respect to revenue growth, women-owned firms match the revenue growth of all firms on a percentage basis all along the business size spectrum – until the million-dollar revenue mark.  With respect to employment, again women-owned firms match percent growth along most of the business size spectrum – but falter after the 100-employee threshold is crossed.

This new analysis should dispel the notion that women-owned firms start small and stay that way. In point of fact, they are progressing along the growth spectrum at a pace matching all firms – and even exceeding that of men-owned firms – and start to lag only as they approach the upper echelons of business achievement.

More work needs to be done to better understand what barriers are standing in their way, and how they may be overcome. This new report provides a much deeper understanding of growth and invaluable signposts to help guide the way.

Trends Among Women-Owned Enterprises in the US: Insights from New Census Data

Back in July, the US Census Bureau published preliminary estimates of the number and overall growth of women-owned enterprises as of 2007 at a national level. At that time, we learned that:

  • There are 7.8 million majority women-owned firms in the US, accounting for 29% of all businesses in the country,
  • These enterprises employ 7.6 million workers, contributing 6% of the jobs in the country, and
  • These firms generate $1.2 trillion in revenues, accounting for 4% of all business receipts nationally.

Just yesterday, however, the Census Bureau released the final numbers, along with more detailed figures at the state and local level, as well as by industry and size level of the firm. What does this new information show? While there is still a lot of data for Womenable and other womenablers to sift through (and sift we shall), we thought that all of you would be interested in our key first impressions and take-aways from this recent announcement. We have three initial impressions to share with you.

FIRST, women-owned firms are still growing – but that growth lies in partnership. As of 2007, as noted above, the number of majority women-owned firms stands at 7.8 million, accounting for 29% of all businesses. That number represents a 20% increase since the 2002 census, about equal to the 18% seen among all firms. However, lest you think that is a retreat from the “women-owned firms are growing at twice the national average” mantra of the past decade, the Census has improved the way it is tallying equally-owned firms. Those firms grew in number from 2.7 million to 4.6 million, a 71% increase. So, if one were to look at “women- and equally-owned” firm growth over the past five years (which I personally do not like to do, as it becomes synonymous with “women-owned firms” and thus confuses the statistical picture and international comparisons), growth among that population stands at 35%, which is nearly twice the 18% national rate. There is also hidden women-led firm growth in the “unclassifiable by gender” category – which grew in number by 63% over the past five years. While these firms represent only 3% of US firms, they account for 64% of revenues and 52% of all employment. It is in this area that we need more research and dissection – to parse out and tally the impact of plurality women-owned firms (which we like to think of as women-led – and which would include women-founded firms with equity partners or venture capital investments) and women-led social enterprises (which are of increasing interest but have not yet been looked at separately in Census data).

SECOND, we now can see where women-owned firms are faring best in terms of industry and geography. From a geographic perspective, taking a look at what states are host to the greatest share of women-owned firms, we can see that the share of women-owned firms by state ranges from a low of 22.1% in South Dakota to a high of 34.5% in the District of Columbia. There are three states in which the share of women-owned firms is 31% or greater: Maryland (32.6%), New Mexico (31.7%), and Hawaii (31%). It seems that it pays to be close to the Nation’s Capital – confirmation, perhaps, of the importance of the implementation of the Women-Owned Small Business Procurement Program by the US Small Business Administration, which will be unveiled next February.

In terms of industry, the publication of the 2007 census now allows, for the first time, a multi-year analysis of growth by gender and industry using the new North American Industry Classification System (NAICS codes). Implemented for the first time in the 2002 Census (preventing us, unfortunately, from taking a longer view of growth by industry), we can now see what the “hot industries” for women-owned firms are, and they are:

  • Administrative services (think personnel/temp agencies, travel agencies, investigative services, janitorial or landscaping services, and trade show organizers): this sector represents 10% of women-owned firms and has grown (in number of firms) by 38% over the past five years,
  • Educational services (including business/secretarial and computer training providers, language schools, and exam preparation/tutoring), which is home to 4% of all women-owned firms, growing in number by 44% since 2002,
  • Arts/Entertainment/Recreation Services (including performing arts agents, companies and artists, golf courses, marinas and ski facilities, and amusement parks): 5% of women-owned firms, up 30% over the past five years, and
  • Construction firms, representing 3% of all women-owned businesses, an increase of 33% since 2002.

THIRD, and perhaps most importantly, women-owned firms have not gained ANY significant economic ground over the past five years. (It should be noted that these data do not include our most recent recessionary period.) In 2002, 2% of all women-owned firms employed 50 or more workers. That share is unchanged today. And, while the total number of million-dollar women-owned firms has grown by 21% over the past five years (from 117,069 to 141,893), compared to a 9% increase among men-owned firms – these firms still only comprise a 2% share of women-owned firms, unchanged from the share seen in the 2002 Census. Perhaps most importantly, when compared to men-owned firms, women-owned firms still lag behind: 4% of men-owned firms employ 50 or more workers, and 6% generate $1 million or more in revenue. While we take exception to the gloom-and-doom interpretation of the US Women’s Chamber of Commerce report, Women’s Businesses Struggle for Market Share (we have not lost “market share” but neither have we gained any), we strongly feel that what is needed – by public policy makers, women’s business organizations, educators and other stakeholders – is a concerted and better coordinated effort to get women business owners to set their growth goals higher. In the US (unlike in many other countries), getting women to start businesses is not the challenge; it is getting women business owners to “think bigger” and to grow their firms to the next level. These new data confirm what Womenable has known for quite some time – that the “sweet spot” for women’s enterprise development in the next decade or more will be the “missing middle.” That is why organizations like WEConnect International, Count Me In’s Make Mine a Million $ Business initiative, and WIPP’s Give Me 5% program are so critically important.

If you’re curious to learn more about the new Census data, you might want to visit these links:

  • The Census Bureau’s news release highlighting key statistics, in English and in Spanish,
  • The web page containing links to key tables and charts pertaining to women-owned businesses, and
  • The American Fact Finder summary page of key web-based data tables from the Survey of Business Owners (SBO).

Finally, mark your womenabling calendars for June 2011 – that’s when the Census Bureau will release their summary SBO data, which will contain information on the number and economic contributions of firms owned by women of color. We’ll be waiting for that important news, and will share the results when they are available.

Celebrating the Power of Numbers

Where would we be without numbers? We womenablers know well that women business owners would still be all but invisible if not for statistics that show:

  • women are starting businesses at a faster rate than their male counterparts,
  • despite that fact, women-owned firms lag all firms with respect to number of employees and revenues, and
  • while gender gaps are closing in education and health indicators, and there is growing gender parity in terms of political participation, it is in the area of economic participation and entrepreneurship where the largest gaps remain.

It is often said that what does not get measured does not get managed, so what better way to improve the situation of humankind than to measure – and to celebrate measurement.
That’s the thought behind the first-ever World Statistics Day, being celebrated around the globe on October 20: 2010-20.10. The UN Statistics Office website lists a number of activities being held (pun intended) to celebrate statistics. Among them:

  • In Canada, Statistics Canada is throwing a party for their staff, and celebrating the role that Canada plays in supporting information-gathering domestically and internationally,
  • In Germany, the German Federal Statistics Office is hosting a conference entitled “What drives politics – How relevant is statistics?” at the Social Science Research Centre in Berlin, and
  • in Qatar, the Qatar Statistical Authority will be releasing their 2010 Census of Population, Households, and Establishments – and announcing a plan for public use of the results.

There’s even a Facebook page for the initiative, which you can “like.” (We have, of course.) So, join us in a hearty cheer: “All hail the number-crunchers of the world”!