The ecosystem for women entrepreneurs in the United States is vibrant and growing, with room for room for improvement. More...
The ecosystem for women entrepreneurs in the United States is vibrant and growing, with room for room for improvement. In 2013, one U.S. woman in 10 was either starting or running a business. In 2014, the United States stood first among 30 countries surveyed for “high-potential female entrepreneurship” in the Gender-Global Entrepreneurship and Development Index (Gender-GEDI). U.S.-based entrepreneurs, at all stages of business growth, have access to an array of networks, private-sector initiatives, and government programs. Many of these networks, initiatives, and programs are specifically oriented toward bolstering the participation of women ages 15-64 in the economy, whose overall labor force participation has been falling steadily from a peak of 70 percent in 1999 To 66 percent in 2013.
A study commissioned by American Express found that women owned 9.1 million enterprises in the United States as of 2014, or approximately 30 percent of all U.S. businesses. These enterprises employed an estimated 7.9 million people and generated an estimated $1.4 trillion in revenues. The number of women-owned businesses grew 67.8 percent between 1997 and 2014—faster than all other firms. Over the same period, women-owned firms increased their employment rolls by 11 percent, while men-owned firms saw a reduction of 6.5 percent during the same period. Still, women-owned businesses in the United States are typically smaller than those launched by men. Despite these gains and the favorable climate for entrepreneurship, women-owned firms employed just 6 percent of the U.S. workforce and earned just 4 percent of business revenues in 2014.
Women-owned businesses have historically been concentrated in fields considered “traditional” for women, including health care and social assistance, educational services, and administrative services. More and more women are entering other sectors, however, with significant increases documented in finance and insurance, transportation and warehousing, and construction. U.S. women have proven especially innovative, with 36 percent of U.S. women entrepreneurs reporting that their product or service is new to their customers, a higher rate than for men (33 percent). Women-owned businesses in the United States overwhelmingly serve the domestic market, with just 7 percent exporting their products or services.
Most entrepreneurship training programs for women focus on the start-up phase. The Women’s Business Centers (WBCs), supported by the U.S. Small Business Administration, reached 134,000 clients and helped start 630 businesses in fiscal year 2013. WBCs provide comprehensive training, access to credit, marketing opportunities, and counseling in 38 languages on a wide range of entrepreneurship topics.
At the same time, research shows that few support services target the growth phase—beyond start-up but below $1 million in revenue—the threshold for financing from venture capitalists and angel investors. Just 2 percent of majority women-owned firms in the U.S. have reached the million-dollar mark.
Women in the U.S. do not face legal discrimination when trying to access finance for their start-up or growing business. However, women are less likely to receive small-business loans than men: just $1 of every $23 in conventional small-business lending went to a woman-owned business. Also, U.S. venture capitalists and investors support relatively few women entrepreneurs: Pitchbook found that only 13 percent of firms that received venture capital had at least one female co-founder in 2013. Moreover, women in the U.S. are twice as likely as men to cite problems accessing finance as the reason for closing their business. Women whose businesses have revenues of $1 million or more are more likely than small women-owned businesses to access credit, but they still lag behind their male counterparts in using commercial credit (56 percent of women versus 72 percent of men).
While the United States has a strong culture and support for entrepreneurship, certain domestic policies are widely perceived as inhospitable to women, especially working mothers (including both single mothers and mothers with spouses or partners). Unlike most other high-income countries, the United States has no government programs that significantly support working parents. They receive no federally mandated paid sick time or parental leave; nor are there significantly accessible programs providing free or low-cost child care or school before age six. Evidence from state-level programs in California and New Jersey indicates that paid leave programs result in a greater likelihood that women who take time off will come back to work after childbirth. Women who receive paid parental leave report higher wages than those who have no paid leave. Women who stay in their jobs continue to gain the skills they need to become entrepreneurs later in life, rather than dropping out of the workforce altogether. This absence of policies that support working families may be lowering the rate at which women take part in the labor force: In 2013, the United States ranked 17th of 34 OECD countries for women’s labor force participation.
Business networks, private-sector initiatives, and government services offer a number of innovative ideas for supporting and developing female entrepreneurs in the United States. The United States has many associations advocating for policies that benefit women business owners. Private-sector initiatives and widespread government programs support female entrepreneurship, but there is more room to support women’s businesses.
The United States has a strong history of entrepreneurs organizing to share information and engage in advocacy through independent business or trade associations or business networks. The American Society for Association Executives estimates there are over 86,000 trade associations in the United States, according to the definition set by the U.S. Internal Revenue Service. Although women belong to these associations, the number of women serving them in leadership positions is low compared with men.
A multitude of organizations and networks support participation of girls and women in the economy, including entrepreneurship, and in science and technology. The growth of LinkedIn, Facebook, Twitter, Meetup and other social media platforms, which generally do not charge for basic membership, has bolstered the role of informal networks and associations. The organizations and networks highlighted below represent organizations known for support of women in business.
Networks that support women’s access to capital and assets:
Networks that support women’s access to markets:
Networks that support strengthened capacity and skills for women in business:
Networks that support women’s leadership, voice and agency:
Networks that support women and innovation and technology:
This decade has shown a sharp increase in the number of private-sector initiatives that target and support women entrepreneurs. Firms of all sizes from different industries—accounting, consumer goods, and technology, to name some—offer programs for aspiring or current women entrepreneurs. Many of the ones that provide access to capital are stepping in to serve mid-sized women-owned business generating around $1 million in revenue, which have a particular issue obtaining services and capital. Some initiatives are remarkably innovative, bringing together investors, experts, advisers, and women entrepreneurs to holistically address the issues these women face. And there is still room for growth: initiatives that help women entrepreneurs access markets receive the least attention of all private-sector initiatives, which flags a potential opportunity for private sector companies.
Initiatives that support women’s access to capital and assets:
Initiatives that support women’s access to markets:
Initiatives that support strengthened capacity and skills for women in business:
Initiatives that support women’s leadership, voice and agency:
Initiatives that support women and innovation and technology:
No Cabinet-level government post in the U.S. federal government is dedicated specifically to gender equality and women’s empowerment. However, the government has recognized the importance of women business owners since 1979, when President Carter issued the Executive Order to create a national women’s business enterprise policy. This order specifically calls on the Small Business Administration (SBA) to support women entrepreneurs and coordinate support from other federal agencies. A number of the SBA’s `Women Business Centers advise current and potential entrepreneurs. A significant amount of funding across government agencies is intended for programs that benefit women entrepreneurs.
Recent changes in domestic legislation have benefited women in business. For example, the Jumpstart Our Business Startups Act of 2012 made it easier for entrepreneurs to crowdfund from nonaccredited investors and relaxed various security registration requirements. This development offers potential benefits for women, who have a higher success rate from crowdfunding (69.5 percent) versus men (61.4 percent), according to a study by Marom et al in 2015. The study notes that women borrowers are successful at crowdfunding because their capital goals are lower than men, who price themselves out of crowdfunding. In 2011, the Obama Administration also created a $1 billion early stage innovation fund to target the gap in financing for businesses needing from $1 to $4 million.
The United States has effectively piloted the use of federal contracting to target support of different types of businesses. The Women-owned Small Business (WOSB) targets for government contracts could potentially help women-owned businesses: in 2007, such businesses received only 9 percent of Department of Defense and 14 percent from the National Institutes of Health for innovation funding.
Given the barriers that women reportedly still face in obtaining capital, SBA loan programs financing, often at more competitive loan rates than commercial credit providers do. Few programs specifically target women-owned businesses for the purpose of exporting products and services; indeed, women in the United States have one of the lowest rates of international trade. Just 7 percent of women-owned businesses export, compared with 16 percent for U.S. men-owned businesses.
Several U.S. government departments in addition to the SBA support entrepreneurship, international trade, innovation and technology and women, including the Department of Commerce, the Office of the U.S. Trade Representative, the Department of State and the National Aeronautics and Space Administration. The programs below specifically focus on the intersection of all women and entrepreneurship.