Staff Reporter

In the world of women-owned businesses, things are not always as they appear.

Topping the Business Journal's list of 100 largest women-owned businesses in L.A. County this year is Don Kott Auto Center. "I run the company on a daily basis and have invested a lot of my own money in the company," said Margaret Kott, wife of Don Kott (now retired), who owns 51 percent of the well-known auto dealership that motorists see traveling through Carson on the San Diego (405) Freeway.

In the No. 72 position is Joe Cerrell's political consulting firm, which is actually 51 percent owned by his wife, Lee Cerrell. "We started the company on a 50/50 basis," Joe Cerrell said. "But a few years back, I decided to give 1 percent of my share to Lee because she's actually the brains behind the organization."

On the Business Journal's list of the 100 largest women-owned companies in L.A. County, 22 of the firms are either 50 percent or 51 percent owned by women.

Determining what is or isn't women-owned is more than an academic exercise. Even in California's post-affirmative action era, businesses that are owned and operated by women (or minorities) can get a leg up on hundreds of millions of dollars in federally funded contracts and untold millions more in private-sector work.

In a few cases, companies cheat. That has led to skepticism about the entire system of preferences for "disadvantaged" businesses owned by women or minorities.

"Whenever you have a system like this, it brings into play those who would take advantage of it for less-than-noble reasons," said Al Osborne, director of the Harold Price Center for Entrepreneurial Studies at UCLA.

The stakes are considerable. At the Metropolitan Transportation Authority, which doles out more than $1.5 billion a year in federal funds to contractors, officials set a 1998 goal of having 23 percent of those dollars or $350 million go to minority- and women-owned businesses. About 21 percent of the total dollars or $315 million actually went to such firms last year, according to Carey Peck, the MTA's manager of vendor services and outreach.

Peck said the MTA typically rejects 5 percent to 10 percent of the firms that apply to be certified as "disadvantaged," but that percentage spiked in 1997, just after the passage of Proposition 209, which banned set-asides in state contracts.

"People thought that the old rules no longer applied and that we really weren't checking who was qualified," Peck said. "But that's not true. The rules have changed very little for federal contracts."

Public officials aren't the only ones concerned about unqualified companies claiming woman-owned status.

"It has always been a concern," said Patty DeDominic, chief executive and 100-percent owner of Los Angeles-based PDQ Personnel Services. "That's one of the reasons why when I was national president (of the National Association of Women Business Owners in 1995), we set up a national registration and clearinghouse, to ensure that businesses who say they are women-owned and operated actually are."

It's sometimes hard to keep track, especially since the fastest-growing sector of women-owned businesses in the Los Angeles area is "non-traditional goods production," which has historically been male-dominated and includes such industries as construction, manufacturing and agribusiness.

There were 314,400 women-owned businesses in the L.A. area as of 1996 (the most recent figure available), a 77.9 percent increase from 1987. But women-owned businesses in the "non-traditional goods production" sector grew at more than twice that rate during the same period, increasing 156 percent.

"As women-owned businesses first enter these fields, there is a lot of skepticism, like 'You really can't run a construction company,' " said Vivian Shimoyama, chair of the L.A. chapter of the National Association of Women Business Owners. "But as the number of women-owned businesses in construction and manufacturing grows, this will become less and less of an issue."

It's essentially the same phenomenon that women encountered in the general workforce a few years back, Shimoyama said.

"A lot of women-owned businesses were not taken seriously five or six years ago, but they are now," she said. "That's because more and more people are recognizing that women-owned businesses employ one out of every four people and are the fastest-growing business ownership group in the nation."

That explosion of women business owners is having a profound influence on the workplace because women tend to have different management styles, said Sharon Hadary, executive director of the National Foundation for Women-Owned Businesses.

"They talk about flexibility and concern that employees fulfill their personal as well as their professional goals," she said, a style well suited to future jobs that emphasize ideas and content as opposed to production.

Another dimension of the women-owned business phenomenon is that many such businesses are actually being launched by husband-and-wife teams. And that can present an entirely different set of challenges.

"They must understand that the work role is different from the role at home," Hadary said. "Both parties need to be sure they understand the other person's goals, and goals for the business."

Political consultant Joe Cerrell seems to have clarified business issues with his co-owner wife, Lee.

"She's the one who takes care of the finances and is in charge of our 33 employees," Cerrell said. "She comes in every morning at 8, while I come in at 9."

Staff reporter Jennifer Netherby contributed to this article.

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