Over the past five years most observers would agree there has been little to cheer about in the broader economy. The recession of 2008-09 negatively impacted many economic metrics; from gross domestic product to income to employment to investment spending.
But “The State of Women-Owned Businesses Report,” commissioned by American Express OPEN and completed by the consulting firm, Womenable, projects the longer term growth trend in women-owned businesses marched on. This trend – dating back to the late 90’s – indicates the number of women-owned businesses grew at 1½ times the national average. This translates to more than a half-million firms in the United States; up more than 7 percent from 2007. Good growth!
By contrast, men-owned firms are projected to have increased only about 4 percent over this same period. One should note the absolute number of firms is still skewed heavily toward male ownership with more than 50 percent of U.S. enterprises owned by men. Also, men-owned firms tend to have larger revenues and more employees.
But the numbers are only part of the story. Traditional sectors of strength for women; health care, social assistance and education services continue to have the highest proportion of women owned businesses. Imagine the contribution the two million women-owned firms in these sectors make to the quality of life across our nation. One could argue the need for support in these sectors hasn’t been this great since the Great Depression. Growth for good!
The report further analyzes industry trends confirming that women-owned businesses are moving into sectors previously dominated by male ownership. While still below average in construction and finance & insurance, women-owned firms have been growing more quickly than all firms in those sectors.
This growth in women-owned businesses has paralleled increased contributions by women across the economy. Over the past 40 years women went from holding 37 percent of all jobs to nearly 50 percent. That’s nearly 40 million women who have contributed to workforce expansion and now account for 25 percent of all GDP. And while 76 percent of all American women are in the workforce there are other countries (e.g. Sweden with 87 percent) with higher percentages indicating there is still room for growth.
In addition, there has been a growing acknowledgement that women leaders contribute to improved financial performance. An oft-cited study by Catalyst, the nonprofit group focused on expanding opportunities for women in business, found a 26 percent positive difference with return on invested capital for firms with a higher female board representation. Likewise, a 2007 study by McKinsey (Women Matter) identified improved financial performance for firms with greater gender diversity in management ranks.
But there are challenges. Historically, females were less likely to have attended college, but that has changed with women outnumbering men in college enrollment for several decades. In business, the number of degrees granted to women over the past decade has remained nearly equal to male graduates at about 50 percent. And while there are still fewer female graduates with an MBA degree, the number has more than doubled since the mid-90’s.
In addition, enterprises owned by women tend to be small. Ninety percent of women-owned firms are sole proprietorships compared to 82 percent of all firms. Nearly nine of out ten women-owned firms generated less than $100,000 in revenues compared with 75 percent for all firms.
So what can we do? We can support educational programs encouraging both women and men to pursue business as well as science, technology, engineering and mathematics at both the college and high school level. This includes giving of time and contributions to local organizations promoting development of STEM careers like STEM Forward and Girl Scouts as well as long established programs like Junior Achievement and DECA. Programs like these, focused on leadership and entrepreneurial pursuits, lay the foundation for longer-term career choices that ultimately lead to economic growth.
We also can support community programs that encourage entrepreneurship. Programs like BizStarts Milwaukee and MiKE are aimed at connecting entrepreneurs with the right resources to fuel start-ups. If you aren’t familiar with these initiatives, check out their websites or contact their leadership to learn more.
Finally, we can support programs targeted to directly promote economic development. A great example is the Wisconsin Women’s Business Initiative Corporation (WWBIC). WWBIC is celebrating 25 years of service to Wisconsin. The organization has promoted economic development through microenterprise by providing access to capital, one-on-one individualized business assistance, business education and financial education programming. WWBIC has offices in Milwaukee, Madison and the Kenosha/Racine area targeting efforts to help women, people of color, and people of lower wealth and incomes realize their goals.
If we can join together in this support we will hopefully achieve both good growth and growth for good in the years to come.
Dan Horton has been the dean of the School of Business at Alverno College since August 2011. Prior to this he held a variety of business leadership positions in finance, marketing, information technology, manufacturing and global shared services at S.C. Johnson & Son Inc. To learn more about entrepreneurship and especially the vital role women play in growing new businesses, join us for “The Vital Role of Women Entrepreneurs” hosted by the Alverno College School of Business and the BizTimes on Tuesday evening, Oct. 30, beginning at 6 p.m. in the Sister Joel Read Center on the Alverno campus. Panelists will include: Wendy Baumann, president of WWBIC; Mary Beth Berkes, Alverno Board chairwoman and private equity investor; Ann Hanna, managing director, Schenk M&A Solutions; and Mary Isbister, president, GenMet Corp. The Forum is free and open to the public. To register. visit http://www.alverno.edu/forum.
