Women-owned firms established within the past decade are making substantial contributions to the economy and are poised for continued growth in the future. They have reached the same level of business achievement as women-owned firms started in the past, and are more likely to be oriented toward future growth than their predecessors, according to a new analysis from the Center for Women’s Business Research (founded as the National Foundation for Women Business Owners), which was underwritten by First Union Corporation.
Thirty-eight percent (38%) of women business owners who have started their firms within the past decade have already achieved at least $500,000 in annual revenues. Furthermore, 42% of the new generation women business owners indicated that they are striving for continued growth over the next five years as they expand their businesses. This compares to 25% of women owners of firms that have been in business two decades or more. In this respect, the new generation female business owners are similar to their male counterparts (49% of new generation men business owners have growth-related future goals.)
Women who founded their businesses in the nineties are more like their male cohorts than previous generations of women business owners in several other ways. “The new generation of women entrepreneurs appears to be narrowing the business revenue gap,” said Nina McLemore, Chair of the Center for Women’s Business Research and President of Regent Capital. “It appears that among businesses started within the past decade, there is no significant gender difference in the share of firms with $500,000 or more in revenues.”
Women-owned businesses established in the last decade are making significant economic contributions, at the same overall level as their predecessors. “The study found that one-quarter (24%) of women-owned firms started less than 10 years ago now have at least 20 employees. That compares with 23% of firms aged 10 to 19 years, and 29% of firms aged 20 years or older,” added McLemore.
“Similarly, 38% of these new generation businesses have revenues of $500,000 or more, compared to 39% of firms started 10 to 19 years ago, and 34% of those in business for 20 or more years. While this analysis cannot directly compare businesses at a similar period in their growth cycle, the fact that the new generation of women business owners has reached this sales level at an early stage in their business development along with their outlook on growth and their appetite for capital may indicate that the new generation of women-owned firms is poised to make an even greater economic contribution in coming years.”
Many women entrepreneurs in the new generation are actively seeking capital for their businesses (41% of women who started their businesses in the past 10 years compared to 25% of women with businesses 20 or more years old have sought capital during the past year), and are more likely to be concerned about access to capital than their more established counterparts.
“At First Union, we know that concerns about access to capital remain a key issue, and that women continue to use smaller amounts of capital to start their businesses than men. Among those who have started or acquired their firms within the past decade, 43% of the women used less than $10,000, compared with 29% of the men,” said John Guy, Senior Vice President and Small Business Segment Executive Director for First Union. “To combat this, organizations such as First Union have implemented financial and educational programs that specifically reach out to women business owners, providing education and strategies for easier access to capital. First Union also has made a corporate commitment to loan a minimum of $5 billion to women-owned businesses through 2005.”
The new generation of women entrepreneurs appears to be better equipped for success than their predecessors of two decades earlier. Women who started or acquired their firms within the past ten years are more highly educated than women who have owned their firms for 20 or more years, and have higher levels of pre-entrepreneurial management experience. Fully 45% of women who have become business owners in the past decade have at least a bachelor’s degree, compared to just 26% of those who have been in business for 20 years or more. Thirty-eight percent (38%) of the new generation of women business owners held an executive, senior or middle management position in their pre-entrepreneurial career, compared to just 20% of women who have owned their firms for 20 years or more.
“The great news here is that the new generation of women entrepreneurs is more likely to have started a business that is related to their previous career. Over half (51%) of those who started their firms within the past 10 years indicate their business is closely related to their previous career, compared to 33% of those who started their firms 20 or more years ago,” said Myra Hart, Center for Women’s Business Research Vice Chair and Harvard Business School Professor. “This is positive because we know that the more closely related the business is to the owner’s previous work experience, the greater the likelihood of success.”
The executive report, The New Generation of Women Business Owners, is available at no charge . For further information, contact: Center for Women’s Business Research, 1411 K Street, NW, Suite 1350, Washington, DC 20005-3407, phone 202-638-3060, fax 202-638-3064, e-mail [email protected].
Mary Schnack is with the Center for Women’s Business Research (founded as the National Foundation for Women Business Owners), a nonprofit research institute focusing on women business owners and their enterprises worldwide. The Center is recognized as the premier source of knowledge on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. For more information, contact the author directly at 1-800-529-7599.
