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by Stephen Parezo

Smart Brief

The number of women-owned businesses grew twice the national rate for all private companies from 1997 to 2002. One out of every 11 women in the country is a business owner. Today’s female entrepreneurs are starting businesses much younger, are more diverse and hitting higher revenue points much more rapidly. Women business owners are trending towards “non-traditional” industries such as construction, manufacturing, agriculture and transportation. More women are active in franchising ownership at both the franchisor and the franchisee levels than in previous decades. Getting greater access to contracts in both the public and private sectors remains the biggest challenge for women-owned businesses.

February 2, 2006—The U.S. Census Bureau reported last week that the number of women-owned businesses grew at twice the national rate for all private companies from 1997 to 2002. While steady progress has been made by women in the marketplace, industry experts maintain that there’s a lot more ground still to be covered.

The report is based on the Census Bureau’s 2002 national survey of 1.9 million business owners and defines women-owned firms as those in which women own a majority of the interest or stock.

Erin Fuller, executive director of the McLean, VA-based National Association of Women Business Owners, told Fiducial.com that attitudes about women in the workplace haven’t changed as much as they’ve hoped.

“The two main issues are access to capital and access to markets,” said Fuller. “Women are still seeing challenges they need to grow and expand their business.”

Though the Federal Acquisition Streamlining Act of 1994 (FASA) established a 5% government-wide procurement goal for women-owned small businesses Fuller says just 3% of Federal contract dollars went to women-owned firms in FY2003.

“Five percent is still a fairly paltry number,” she said. “We have a lot of educating to do with contract officers in seeking out women and other historically underutilized companies. It’s always a two-way street.”

Putting things into perspective, Fuller noted that 30 years ago women only had 10% ownership of businesses and it wasn’t until 1988 when laws went on the books allowing women to obtain a business loan without having a co-signer.

“Now we have 47% of the businesses and one of every 11 women in the country is a business owner,” she said. “Now it’s more the norm. Women businesses employ over 19 million people in this country which is good news for everyone.”

According to Fuller, the average profile of a woman business owner used to be they were probably white, in their 50s or early 60s who began a third career that concentrated in healthcare or business services. Today’s up and comers are starting businesses much younger, are more diverse and hitting higher revenue points in much more rapid succession.

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“They’re the fire right now,” she added.

New SBA website offers assistance

One factor that has spurred the growth of women-owned businesses is the integration of technology and equipment allowing more workplace integration for home-based operations.

The U.S. Small Business Administration recently announced the launch of a new website, MY BIZ for Women (http://www.SBA.gov/women), that’s designed to provide comprehensive business information and assistance to women entrepreneurs. The portal includes information on starting and growing a small business, gaining access to capital and contracting opportunities, SBA resource partners and other resource information.

Wilma Goldstein, an associate administrator in the SBA’s Office of Women’s Business Ownership, commented that changes in the way loans are processed have helped level the playing field.

“Now banks have to comply,” she said. “Loans for women are pretty much based on whether they’re credit worthy. The difficulty in getting loans for start-up businesses is that it usually ends up using savings and borrowing from family and friends so it’s not considered a risk.”

Women entrepreneurs are seen as trending away from operating service-related businesses that require less collateral for those requiring more collateral like the construction industry. They are also expanding into other “non-traditional” industries such as manufacturing, agriculture and transportation.

The construction industry saw a 57% increase in the number of privately-held majority women-owned firms between 1997 and 2004 while agricultural services (44%) and transportation, communications and public utilities (38%) also posted gains, according to data from The Center for Women’s Business Research in Washington, D.C.

Drawing distinctions between male and female-owned businesses, Goldstein noted that women “tend to do more of the business themselves” than their male counterparts. “They are able to weather the economic ups and downs better because they are more fiscally conservative,” she said.

Getting greater access to contracts in both the public and private sectors remains the biggest challenge for women-owned businesses.

“We’ve tried everything we possibly can to improve this,” she said. “We spend time on how to get a federal contract but we also encourage women business owners that they should not build a total business on these types of contracts.”

More women active in franchising

Most of the growth in the women’s entrepreneurial ranks is not just coming from young people but those 50 and over who are living longer, healthier lives. When they retire from one job they are staying in the workforce because they are either not challenged enough or need extra money. All the while, their dream of operating their own business sits on the back burner.

“I would encourage anybody to try and figure out if owning a business is right for them,” Goldstein said. “The rewards of having your own business are terrific and the sky’s the limit.”

These days, there’s been more effort on million dollar businesses being owned by women and that’s no secret.

“They spend a lot of time figuring out how to do things and becoming an expert at running their own businesses,” she said.

On the franchise front, more women are active in franchising ownership at both the franchisor and franchisee levels than in previous decades, according to Darrell Johnson, president of FRANdata, the nation’s leading source of information and analysis for the U.S. franchise industry.

“While franchising in general has been growing at a rapid pace, the number of women owners has also increased,” he said.

Among industry sectors where it’s more likely that women will be owners of both franchisors and franchisee operations, Johnson says it’s primarily in the service sectors such as healthcare, crafts and education. However, there also is a general trend toward women more often being in all sectors.

Opening doors to opportunities

In Sheridan, WY, Cheri Wilson has operated a one-woman show for her Fiducial franchise since 1991. Having earned a degree in broadcast journalism, Wilson also had a couple years of accounting classes. While working in radio her bosses found she had an ability to sell and was good with people. As she progressed through the radio business she eventually became a station manager.

When she started her own advertising agency Wilson realized that being a woman helped her gain some opportunity that otherwise would have been closed.

“I was the first female salesperson in radio in the area and that got me into a lot of doors that guys had trouble getting into,” she said.

When it came time for her to run a franchise business, Wilson was well-prepared thanks to the background she acquired in operating the ad agency. For other aspiring female business owners Sheridan (population 14,000) doesn’t offer many options.

“In our little community it’s tough,” she said. “They still try to keep you in the secretarial mindset. We don’t have a lot of job opportunities.”

Wilson’s advice to prospective female entrepreneurs is to know who your customers are. She suggested doing a feasibility study of your market to make sure that your business can survive.

“I think so many people whether they are male or female think everybody is going to love it,” she said. “But they’re usually undercapitalized and haven’t done a feasibility study so it doesn’t take long to find out it’s not worth it.”

One of her female clients operates a store that sells upscale kitchen appliances and has been successful because she found that prior to opening her doors that most customers would usually go into a used hardware store for kitchen items that they needed.

“This was a real step up,” Wilson said. “She started in a fairly small store but now her store is four times as large.”

More support networks in place

Renee Fellows owns a public relations agency called ClearPoint Marketing Communications in Derry , NH , and does freelance projects for Fiducial. She launched her business four and a half years ago after working on the advertising side for many years.

When she took the plunge, she had a pretty good understanding of what both sides of the game were like thanks to input she received from other women in the industry who were writers and graphic designers. Fellows wanted to have a job that offered the flexibility to juggle family responsibilities along with running a company.

In her own business, Fellows now has that flexibility and more creative ability which gave her the chance to do something she was good at and enjoyed.

“It allowed you to be the person you were trained to be so this kind of gave us the best of both worlds,” she said.

Fellows opened her agency one month before 9/11 and found that the advertising world changed after the terrorist attacks but being a freelancer afforded her the chance to change along with it.

“It’s still a man’s world—you still have a lot of golf outings and cigar bar conversations we’re not privy to but it’s becoming easier,” she said.

What’s changed for women business owners, she says, is there are increased opportunities and grants available with more support networks in place.

“The SBA is pushing for women and really reaching out,” Fellows said. “It’s a huge up-and-coming market.”

Stephen Parezo is the Media Manager for Fiducial.

Whatever your small business needs, your Fiducial tax and financial professional can analyze your situation and recommend an appropriate action plan. To locate a Fiducial office nearest you on fiducial.com, see the Zip Code Locator located in the upper right hand corner of the page. Do you have a particular topic that we should be writing about that can help your business? Please send your suggestions to: stephen.parezo@fiducial.com.

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