When I started my first business 30 years ago, it was a challenge to find other women-business owners. Occasionally you would hear about a widow who was now running her husband’s company or a family-owned business with true co-leadership, but that was it. Today, the National Foundation for Women-Business Owners estimates that 9.1 million women-owned businesses in the U.S. generate over $3.6 trillion in sales and employ 27.5 million people. As of 1999, women owned firms accounted for a full 38% of all businesses in the United States.
Simple arithmetic tells us that the average women-owned business has a gross annual revenue of about $400,000/yr and employs 3 people. Despite the highly publicized women who run larger corporations (e.g. Working Woman magazine’s annual list of the Top 500 Women Business Owners), most women-owned businesses are fairly small. These numbers mirror the entire population because over 90% of all businesses are micro businesses with fewer than five employees according to the US Small Business Administration and the US Chamber of Commerce.
Why the Future Will Bring an Increase in the Average Size of Women-Owned Businesses
Some women started their businesses in response to the “glass ceiling” in corporations. If she couldn’t become a director or vice-president in her current place of employment, why not bypass the problem and become the president of her own company? However, the growth of their former employers is being stunted by low unemployment and those women business owners are already being recruited back into the corporations.
Other women started their businesses for lifestyle reasons. Working from one’s home has shifted from an embarrassment to a badge of honor. Corporations are fast learning how to manage multiple locations, remote employees and telecommuters. Video or phone teleconferencing is now a standard medium for meetings. Therefore, another large group of women will not have to own their own business to have the flexibility they need/desire.
Another group of women went into business when they were laid off. Corporate downsizing and the obsession with “head count” changed large numbers of “employees” into “subcontractors/freelancers.” It is intriguing to see how many freelance professionals have their former employers as their primary customers. In some cases, these people are essentially still employees. They just don’t get benefits (health insurance and pension) any more. When/if there is some resolution to the rising cost of health care and stability for social security, corporations will have far less incentive to continue the current head count charade. Some “freelancers” will be able to return to employee status.
I often tell audiences when I speak about accelerated growth with sustained profitability® that the “enemy of entrepreneurship is isolation.” Despite the incredible value of new technologies, operating a home-based business can be lonely and isolating. Some women business owners will seek expanded networks and find new ways to be with people as they work. This will also drive the increased size of women-owned businesses.
The trend toward mergers, acquisitions, strategic alliances, joint ventures, and public offerings is not lost on women. As women in the baby boomer generation look for exit strategies, many will discover the value of roll ups in which similar companies combine to “go public” together. This, too, will increase the average size of women-owned businesses.
Women being smarter and having more experience will also impact the numbers. It seems to me that younger women who are starting their businesses today have a much better understanding of the need to build value and move beyond the “incorporated career” level to be able to sell their businesses. Through experience, mentoring, formal education, books and seminars, women are learning how to grow their businesses. In our state, the New Jersey Association of Women Business Owners sponsors excellent programs to help women keep growing.
In the past, many women business owners just worked harder and harder on their businesses, got tired, and then “closed shop.” It is estimated that women dissolve their businesses five times more than men do. This statistic will change during the next few decades as women learn how to build value. In the future, when a woman gets bored with her business, she’ll be able to sell it to someone who thinks it’s wonderful and then she can move on to another venture.
As women learn to value themselves and their businesses more, options will expand. Not only will the future bring larger women-owned businesses; more women will own multiple businesses.
Over the past 30 years, Aldonna R. Ambler, CMC, CSP, The Growth Strategist®, has helped over 800 companies achieve accelerated growth with sustained profitability®. Aldonna has won a total of 12 prestigious awards for entrepreneurship and leadership in economic development. Aldonna is the author of over 85 published articles and two books (Bound to Make Sense and Celebrate Selling – The Consultative Relationship Way). She was only the 10th person in the world to earn professional certifications for BOTH management consulting (CMC) AND professional speaking (CSP). She can be reached by e-mail at Aldonna@AMBLER.com or toll free at 1-888-Aldonna (1-888-253-6662). For further information, please visit www.ambler.com.