Women Entrepreneurs Breaking Through the Small Business Revenue Glass Ceiling

By Rhonda Campbell

In emerging markets, women often start businesses as a way to create enough money to take care of their children. On the other hand, in developed countries like the United States, women entrepreneurs not only launch companies to care for their families, but also to increase the amount of control they have over their careers, products and business ideas.

Annual Business Revenue Challenge for Women Owned Companies

The challenge for women, regardless of where they launch their businesses, is around annual revenues. For example, Emily Maltby reports in the March 31, 2011 Wall Street Journal  “Women Owners Hit $1 Million Glass Ceiling” article that, “Between 1997 and 2011, the number of women-owned firms in the U.S. increased by 50% — that’s a rate of 1.5 times the national average.” She continued, “However, such growth is not reflected in the size of their businesses. In 1997, 1.8% of women-owned firms had $1 million or more in revenues and that figure remains unchanged today.”

Of the top 500 countries mentioned in the 2011 CNN Money ranking Nestle, Gazprom, Exxon Mobile, Industrial and Commercial Bank of China, Royal Dutch Shell, China Construction Bank, AT&T, Petrobas, Chevron and Microsoft, each generating $18 million or more in annual business revenues, none were owned by women. The variance in annual business revenues generated by women owned companies versus companies owned by men might rest in the way the genders fund their start-ups.

Report on Women Owned Businesses in the 21^st Century

The October 2010 “Women-Owned Businesses in the 21^st Century” report produced by the United States Department of Commerce Economics and Statistics Administration shows that, “There are substantial differences in the financing utilized by women-owned versus men-owned businesses. Women start with less capital than men and are less likely to take on additional debt to expand their businesses.” The report continued, “The annual earnings ratio between self-employed women and men is 55 percent, well below the ratio between non-self-employed women and men.”

Access to capital or the ability to get loans approved by banks and other financial services institutions might be a reason that women entrepreneurs start and manage their businesses with less capital than their male counterparts do. Further studies are needed to determine the cause of lower amounts of capital being funneled into women owned businesses versus men owned businesses.

What the Commerce report did reveal was that as of 2007, total sales/receipts recorded at women owned companies in the United States equaled $1.19 trillion. Total sales/receipts recorded at companies owned by men in the United States equaled $8.51 trillion. These totals do not include sales recorded at publicly owned companies. Construction, agriculture (e.g. fishing, farming) and transportation and warehousing were industries that showed the lowest revenues for women owned businesses. Women entrepreneurs who owned businesses in education, healthcare and social assistance and retail industries reported the largest annual revenues.

Clearly, women owned large and small businesses contribute greatly to the health of the overall economy. However, focus must remain on efforts that will increase the amount of total annual revenues women owned businesses generate. Increasing these numbers will not only place women entrepreneurs on more even playing field with their male counterparts, it will also strengthen national and international economies. Encouraging women to go into business at earlier ages and giving girls increased opportunities to see how creative small business leaders communicate, negotiate and manage profitable enterprises are steps that can be taken to bridge the divide.

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Sources:

http://blogs.wsj.com/in-charge/2011/03/31/women-owners-hit-1-million-glass-ceiling (Wall Street Journal: Women Owners Hit $1 Million Glass Ceiling)

http://www.nwbc.gov/sites/default/files/economicimpactstu.pdf (Center for Women’s Business Research)

http://money.cnn.com/magazines/fortune/global500/2011/womenceos/ (CNN Money: Women CEOs)

http://www.dol.gov/wb/media/Women-Owned_Businesses_in_The_21st_Century.pdf (United States Department of Commerce: Women-Owned Businesses in the 21^st Century)