Women Entrepreneurs

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Women Entrepreneurs

As of 2002, there were 6.5 million majority women-owned businesses in the United States, employing 7.1 million people according to the U.S. Bureau of the Census. The number of privately held women-owned businesses in U.S. exceeds 10 million if one counts partially women-owned businesses as well. According to a Business Week Online article, "between 1997 and 2004 the number of women-owned companies grew 28.1 percentnearly three times the rate of all privately held businesses." These statistics reflect a sea change in American conceptions of gender roles and abilities over the past half-century.

Women have owned and operated businesses for decades, but they were not always recognized or given credit for their efforts. Often women entrepreneurs were "invisible" as they worked side by side with their husbands, and many only stepped into visible leadership positions when their husbands died. But a variety of factors have combined in recent years to contribute to the visibility and number of women who start their own businesses. According to U.S. Department of Labor statistics, female participation in the workforce was less than 40 percent in 1960 but is predicted to reach 62 percent by the year 2015. As women enter the workforce in ever-greater numbers, they gain professional experience, and managerial skills, both necessary to be successful entrepreneurs. Flexibility is also a factor in many women's decision to start a business. Entrepreneurship is often seen as an ideal way to juggle the competing demands of career and family. Finally, the disparity in the salaries and wages that women earn as compared to men on average has been a factor in motivating some women to decide to establish their own businesses.

Although the small businesses owned by women have traditionally been in the service sector, in recent years women entrepreneurs have been moving rapidly into manufacturing, construction, and other industrial fields. Women business owners still face greater difficulties in gaining access to commercial credit and bidding on government contracts than do their male colleagues, and pockets of resistance to women entrepreneurs remain strong in some industries and geographic regions. But millions of successful businesses launched and managed by women now dot America's business landscape, each a testament to the legitimacy of the aspirations and talents of the woman entrepreneur.


Many studies indicate that women start businesses for fundamentally different reasons than their male counterparts. While men start businesses primarily for growth opportunities and profit potential, women most often found businesses in order to meet personal goals, such as gaining feelings of achievement and accomplishment. In many instances, women consider financial success as an external confirmation of their ability rather than as a primary goal or motivation to start a business, although millions of women entrepreneurs will grant that financial profitability is important in its own right.

Women also tend to start businesses about ten years later then men, on average. Motherhood, lack of management experience, and traditional socialization have all been cited as reasons for delayed entry into entrepreneurial careers. Many women start a business due to some traumatic event, such as divorce, discrimination due to pregnancy or the corporate glass ceiling, the health of a family member, or economic reasons such as a layoff. But a new talent pool of women entrepreneurs is forming today, as more women opt to leave corporate America to chart their own destinies. These women have developed financial expertise and bring experience in manufacturing or nontraditional fields. As a result, the concentration of women business owners in the retail and service sectorsand in traditional industries such as cosmetics, food, fashion, and personal careis slowly changing.


One of the main problems facing women entrepreneurs is obtaining financing. In the early 1990s, study after study confirmed that women business owners did not receive equal treatment at financial institutions. Over one half of women business owners believed that they faced gender discrimination when dealing with a loan officer. And for women, venture capital firms appear to show the same favoritism towards men that banks do. According to Sona Wang, quoted in a Crain's Chicago Business article and general partner of Inroads Capital Partners, an Evanston venture capital firm that specializes in backing women and minorities, the venture capital business "clearly relies heavily on the old-boy network." Only 5 percent of the companies that received venture capital funding in 2004 had a female CEO, according to the Crain's Chicago Business article, a trend that has not changed since researchers started tracking these numbers in 1997.

In an effort to bring more equity into the capital acquisitions area, the Small Business Administration's Women's Prequalification Pilot Loan Program was developed. Introduced in 1994 and expanded nationwide in 1997, the program helps women seeking loans of under $250,000 to complete their loan applications, and also provides an SBA guarantee for repayment of their loans. Women are prequalified based on their character, credit rating, and ability to repay the loan from future business earnings, rather than on collateral. The prequalification statement from the SBA enables the women to obtain funding much more readily.

Another area in which women business owners have been historically shortchanged is procurement, or the selling of their goods and services to city, state, and federal governments. In the past, fewer than 5 percent of the women-owned firms in the United States were certified to do business with their state government and only 1.5 percent of the billions of dollars in federal contracts went to women-owned firms. Some efforts have been undertaken to rectify this situation. If a company is 51 percent owned and controlled by a woman, it can obtain certification and bid on government contracts. In addition, many government agencies at the state and federal levels have created set-aside programs that specifically help women-owned businesses in the bidding process. Nonetheless, the percentage of government contracts going to women-owned firms remained a meager 3 percent as recently as 2002.


A number of resources now exist to support women entrepreneurs. In 1988, Congress authorized the Small Business Administration Office of Women's Business Ownership, which created a "Low-Doc" loan program which makes it easier for women entrepreneurs to obtain SBA financing. The SBA also has established a Women's Network for Entrepreneurial Training (WNET) which links women mentors with protegees. Small Business Development Centers (SBDC) are also co-sponsored by the SBA and operate in every state. They offer free and confidential counseling to anyone interested in starting a small business. In addition, many states now have a Women's Business Advocate to promote women entrepreneurs within the state. These advocates are represented by an organization, the National Association of Women Business Advocates.

A number of trade associations also represent women entrepreneurs. The National Association of Women Business Owners is the largest group throughout the country. There are also some smaller regional groups, which can be located through the Yellow Pages or local chambers of commerce. The American Business Women's Association provides leadership, networking, and educational support. The National Association of Female Executives makes women aware of the need to plan for career and financial success. As women-owned businesses continue to create jobs and become an increasingly important factor in the American economy, the resources to support them will continue to grow as well.

see also 8(a) Program; Minority-Owned Businesses; National Association of Women Business Owners


"About NAWBO." National Association of Women Business Owners. Available from http://www.nawbo.org/about/index.php. Retrieved on 17 April 2006.

Fisher, Anne. "Which Women Get Big? When it comes to building large businesses, women lag far behind menbut that's changing fast." Fortune Small Business. 1 April 2006.

Gee, Sharon. "NAWBO Getting Serious About Women's Business." Birmingham Business Journal. 11 August 2000.

La Beau, Christina. "Growing in Size But Not in Equity: Women Businesses Still Lag in Venture Capital." Crain's Chicago Business. 13 December 2004.

"Taking the Pulse of Women Entrepreneurs; The manager of Wells Fargo's lending program targeted at women-owned businesses talks about the latest trends." Business Week Online. 1 May 2006.

U. S. Bureau of the Census. Survey of Business OwnersWomen-Owned Firms: 2002. Available from http://www.census.gov/csd/sbo/. 26 January 2006.

U.S. Department of Labor. Fullerton Jr., Howard N. "Labor Force Participation: 75 Years of Change, 195098 and 19982025." Monthly Labor Review. December 1999.

Vestil, Donna. "Businesses Owned by Women Fuel National Growth." Kansas City Star. 28 June 2005.

                                Hillstrom, Northern Lights

                                  updated by Magee, ECDI

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Women Entrepreneurs

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Women Entrepreneurs