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.

Back to Basics for Many New Women Business Owners?

The recent publication of the 2016 State of Women-Owned Businesses report is chock-full of interesting trends and statistics, some of which we’ve covered here in recent blogposts. This time, the focus is industry diversity – and, while women-owned businesses are found in every industry and the longer-term trend is increasing diversification, over the most recent post-recessionary time period (2007-2016) the greatest growth we’re seeing is in some of the most traditional, foundational sectors for women.
Shopkeepers-with-open-sign-900x550
To wit, between 2007 and 2016, when the number of all women-owned businesses increased by 45%, the following four industries grew much more substantially:

  • Women-owned firms in the Other Services sector (hair and nail salons, pet sitting services) nearly doubled in number (up 98%);
  • Administrative, Support and Waste Management Services (including janitorial and landscaping services and travel agencies) are up 64%;
  • Accommodation and Food Services businesses increased by 62%; and
  • Women-owned Construction firms increased in number by 56%.

Two of these sectors are – and have been – among the most popular sectors for women in business:

  • There are currently 2.5 million women-owned firms in Other Services, accounting for 22% of all women-owned firms;
  • Health Care and Social Assistance (including child day care and home health care services) women-owned firms number 1.7 million and comprise 15% of the women-owned firm population;
  • Women-owned Professional/Scientific/Technical Services firms (including lawyers, accountants, architects, public relations firms and management consultants)number 1.4 million, comprise 13%; and
  • The Administrative, Support and Waste Management Services (including janitorial and landscaping services as well as office administrative support and travel agencies) sector is home to 1.3 million women-owned firms, comprising 11% of the women-owned firm population.

It is worth noting that a significant share of the growth in these sectors is accounted for by women of color. Overall, the report notes that 44% of women-owned firms are now minority-owned, and that nearly eight out of 10 (79%) of net new women-owned firms launched since 2007 was started by a woman of color. A significant number of these women are starting firms in traditionally female sectors. For example, while 22% of all women-owned firms are in Other Services (a large share of which are hair or nail salons), fully 36% of African American women-owned firms and 33% of Asian American women-owned firms are in this sector. In addition, while 11% of all women-owned firms are found in Administrative Services (janitorial and landscaping), 21% of Latina-owned firms are found in this sector.

So, despite more and more women launching a growing variety of businesses, certain types of traditional lines of business remain very popular – more so for many women of color.

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.)

State of Women-Owned Businesses Report Published

Hey, fellow womenablers, your long wait is over! The 2014 State of Women-Owned Businesses report has now been published. You can view the American Express OPEN web summary HERE, or click HERE to simply download the full report.women_racing

We now have the most up-to-date accounting of the number and growth trends among women-owned businesses in the United States. As of 2014, we (Womenable authored the report, American Express OPEN underwrote and published it) estimate that there are 9,087,200 majority-owned and privately-held women-owned firms, employing 7,854,200 employees in addition to the owner, and generating over $1.4 trillion ($1,410,940,800,000) in revenues. What are some of the other key trends uncovered in this year’s report? Among them:

  • Between 1997 and 2014, when the number of businesses in the United States increased by 47%, the number of women-owned firms increased by 68% – a rate 1-1/2 times the national average. Indeed, the growth in the number (up 68%), employment (up 11%) and revenues (up 72%) of women-owned firms over the past 17 years exceeds the growth rates of all but the largest, publicly-traded firms – topping growth rates among all other privately-held businesses over this period.
  • Nationally, the number of women-owned firms has increased by 68% since 1997. The states with the fastest growth in the number of women-owned firms over the past 17 years are: Georgia (up 118%), Texas (98%), North Carolina (91%), Nevada (91%) and Mississippi (81%). In terms of growth in combined economic clout, however – meaning averaging together the rankings in growth in the number, revenues and employment of women-owned firms – the states in which all of these measures combined place women-owned firms in a much better than average position over the 1997 to 2014 period are: North Dakota, the District of Columbia, Nevada, Arizona and Georgia.
  • In 1997, there were just under 1 million (929,445) firms owned by women of color, accounting for one in six (17%) women-owned firms. That number has skyrocketed to an estimated 2,934,500 as of 2014, now comprising one in three (32%) women-owned firms. Firms owned by African American women number an estimated 1,237,900 as of 2014. These 1.2 million firms employ 287,100 workers in addition to the owner and generate an estimated $49.5 billion in revenue. Firms owned by Latinas number an estimated 1,033,100 as of 2014. These firms employ 433,600 workers in addition to the owner and generate an estimated $71.1 billion in revenue. Firms owned by Asian American women number an estimated 675,900 as of 2014. These firms employ 699,200 workers in addition to the owner and generate an estimated $115 billion in revenue.
  • While firms owned by women of color are smaller than non-minority women-owned businesses both in terms of average employment and revenues, their growth in number and economic clout is generally far outpacing that of all women-owned firms. Indeed, the growth in the number of African American (up 296% from 1997 to 2014), Asian American (+179%), Latina (+206%), Native American/ Alaska Native (124%), and Native Hawaiian/Pacific Islander (+247%) women-owned firms all top the growth in the number of non-minority women-owned firms (+37%) over the past 17 years.

New this year is a look at business start-up activity, which shows that there are an increasing number of women business owners at the starting gate. On average over the past 17 years, there has been a net increase* of 591 women-owned businesses each and every day. The number of net new women-owned firms has fallen in the wake of the recession – there was a net increase of 714 women-owned firms per day from 2002 to 2007, and a lesser 506 per day between 2007 and 2014 – but start-up activity is increasing. Just in the past year, there have been an estimated 1,288 net new women-owned firms launched each and every day.

What’s the bottom line? Women business owners are not only here to stay, they are moving into entrepreneurship in equal numbers. The challenge that remains is moving women-owned firms up the growth continuum, and gaining a greater understanding of impediments to growth and how best to follow a woman’s path from a start-up with promise to a successful business that moves beyond the “majority-owned, privately-held” category to being woman-led and perhaps publicly-traded.

* “Net increase” takes into account all of the new women-owned firms minus the number of women-owned firms that either ceased operations or ceased to be majority women-owned.

NWBC Publishes 2013 Annual Report

The National Women’s Business Council, a bipartisan women’s enterprise advisory body in the US established by the Women’s Business Ownership Act of 1988, has published their 2013 annual report to the President, US Congress, and the US Small Business Administration.
NWBC-2013AnnualReport-cover
The colorful 40-page report contains nine policy/program recommendations grouped within four pillars (Guess which one is our favorite!):

  1. Access to Capital
  2. Access to Markets
  3. Job Creation and Growth
  4. Data

Among the recommendations are two, in our view, worth calling out and commenting upon:

  • Implement an annual Survey of Business Owners model-based program.” The SBO is the Census Bureau’s quinquennial business census, which provides we womenablers with a mother-lode of invaluable statistics on the number and growth of women-owned firms. However, being quinquennial means that the data are only published every five years, and business moves much faster than that. Of course, Womenable and American Express OPEN have published an annual State of Women-Owned Businesses reports that provide estimates in between SBO reports (see a listing of these reports HERE), but more frequent government-published data would be extraordinarily useful. However, such an expansion of SBO is also very unlikely, given the expense required and the current state of the US budget. And yet, to paraphrase Robert Browning,

    “Ah, but a woman’s reach should exceed her grasp,
    Or what’s a heaven for?”

  • Increase the number of women-owned or -led firms participating in incubators and accelerators and consider establishing an accelerator and incubator program focused on women-owned or -led firms.” Womenable has long pointed out the need for paying much more attention to issues of growth and development of existing women-owned enterprises. This is another timely recommendation, but the NWBC missed an important opportunity to call out a key partnership in this endeavor: the Nation’s 100+ women’s business centers. Rather than trying to make existing incubators and business accelerators more female-friendly (good luck with that), we should expand the remit of and financial support for WBCs to offer growth-focused programming. Indeed, most of them already do – but they are doing so outside the “marching orders” provided to them by the SBA and Congress, which essentially puts WBCs in velvet handcuffs and says that all government funds can only go toward serving nascent firms and socially and economically disadvantaged populations.

The Council has done a good job of keeping the momentum going over a period – over the past three or more years, really – of staff and leadership turnover. There’s a new Chair in place, but no Executive Director at the moment. Despite that, they’ve published a report that’s well worth reading, and using for womenabling advocacy efforts in the United States and beyond. Keep up the good work, NWBC!