More Companies are Owned by Women, Especially Minority Founders

Women’s History Month might be over after March 31, but female business owners have a year-round impact. In the spirit of International Women’s Day and this year’s motto, Break the Bias, we can envision a world that is more diverse, equitable, inclusive, and where differences are valued and celebrated.

Let’s take a look at some facts about what makes female business owners unique, along with practical ways to offer support.

This is a multi-part series that covers the characteristics of female business owners, challenges particular to women owners, financial facts about women-owned businesses, and how female owners can plan for the future.

Part 1 | Part 2 | Part 3 | Part 4

Check out a summary of the 25 challenges & opportunities: Facts About Women-Owned Businesses

Businesses that are owned by women are structured and managed differently than those owned by men. Here are facts about the rise in female business ownership, how much impact minority owners have, and which strengths and weaknesses are common in women owners.

1. Significant Increase in Female Business Ownership

In the United States, 12 million businesses are women-owned. This number has increased dramatically over the past 50 years. While 4.6% of US companies were owned by a female in 1972, 42% of businesses are owned by women in 2019. In just 2 years (2017 to 2019), female-owned companies grew from 38% to 42% of all US companies.

(sources: Gender, Age, and Small Business Financial Outcomes jpmorganchase.com, National Women’s Business Council 2021 Annual Report nwbc.gov)

Women are instrumental not only as owners, but also as employees. The World Development Report (2012) shows that female participation in the workforce had increased from 50.2% in 1980 to 51.8% in 2008, compared to a decrease of working males from 82.0% to 77.7%.

(source: World Development Report 2012 by World Bank Group Publications page 199)

2. The Strong Impact of Female-Owned Businesses

Economies are stronger in countries where women own businesses. In the US, female-owned companies employ a total of 9.4 million workers (11% of the total workforce) and generate $1.9 trillion in annual revenue, which is 4.8% of the total US annual revenue from private sector companies.

(source: American Express 2019-state-of-women-owned-businesses-report q4cdn.com)

Healthy businesses depend on consistent, strategic growth. Nearly half of women owners are planning to grow their business in the coming year. Another third will maintain growth, 9% intend to sell, and 8% plan to open a second location.

(source: 2021 Women in Business Trends – Guidant (guidantfinancial.com)

Check out which industries are growing despite the (or because of) the COVID pandemic.

3. Female-Owned Companies Launch Faster Than Average

Compared to an overall growth rate of 9%, US businesses that are owned by women grew at a rate of 21.3% between 2014-2019.

(source: American Express 2019-state-of-women-owned-businesses-report q4cdn.com)

4. Women of Color are Launching More Companies

New businesses are increasingly launched by women of color: 89% of net new firms. Of 1,817 new women-owned firms launched in 2019, 1,625 of founders were Black, Hispanic, and Asian women.

(source: American Express 2019-state-of-women-owned-businesses-report q4cdn.com)

5. Half of All Female-Owned Businesses are Founded by Women of Color

Women of Color—including African-American/Black, Latina/Hispanic, Asian/Pacific Islander, and American Indian/Alaska Native women—represent 39% of all US females, yet they account for 49% of female-owned businesses.

In terms of race and ethnicity, women-owned companies are composed as follows:

• 21% of all women-owned business owners are African-American/Black women
• 18% of women-owned business are owned by Latina/Hispanic women
• 8% of women-owned business owners are Asian-American women
• 1.4% of women-owned business owners are Native American/Alaska Native women
• 0.3% of women-owned business owners are Native Hawaiian/Pacific Islander women
• The remaining 51% of women-owned businesses are non-minority women-owned.

(source: American Express 2019-state-of-women-owned-businesses-report q4cdn.com)

6. Majority of Female Owners are Gen X and Boomers

A survey of female business owners showed that the vast majority are in their 40s or older:

• 51% are Gen X (born between 1965 and 1980)
• 31% are Baby Boomers (born 1946 – 1964).
• 17% are Millennials (born 1981 – 1996), but that number is increasing rapidly as Boomers sell or retire.
• 1% are Gen Z (born after 1997).

(source: 2021 Women in Business Trends – Guidant guidantfinancial.com)

7. Women Excel at Multitasking and Creativity, Struggle with Confidence and Risk-Taking

In a study of gender roles, female owners rate themselves highly in:

• Multitasking
• Creativity
• Empathy, and
• Interpersonal relationships.

They rate themselves lower in

• Confidence
• Risk-taking, and
• Tenacity (especially to apply for loans and venture capital).

(source: The Dangers of Gendered Jobs – businessnewsdaily.com)

While male owners may take more risks and feel comfortable requesting financing, females can step into those uncomfortable topics. They can also use risk intelligence in decision-making.

Here are some additional characteristics of female business owners:

• Women owners work fewer hours a week (an average of 48.1 hours) compared to male owners (52.8 hours on average)
• Women also travel less frequently (26% of female owners travel once a month, compared to 34% of male owners)
• They are concerned that they don’t spend enough time with their family (42% compared to 38% of male owners)
• They have trouble keeping up with demands on their time (41% compared to 35% of male owners)
• Women owners say they feel daily stress (38% compared to 30% of male owners)

(source: SMB Insights The Business Journals “Do Women Business Owners Have It All?” 2015 bizj.us)

In Part 2 of this series, we will dive into the challenges that come with owning a business as a female.

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