2016 Small Business Credit Survey: Report on Women-Owned Firms

Abstract

Majority women-owned firms, where 51 percent or more of the business is owned by women, are an important segment of U.S. businesses. Since 2007, women-owned firms in the United States, both the self-employed and firms with employees ("employer firms"), have been growing—in number and as a share of all U.S. firms. As of 2015, women-owned firms totaled over one million and accounted for one-fifth of U.S. firms. Among women-owned employer firms, jobs and annual receipts have grown since 2012. Between 2007 and 2015, the share of employment by small women-owned firms increased by twenty percent, while the share of employment by all small firms declined by about four percent. This report uses a unique dataset to examine the experiences of women-owned small employer firms, especially as compared to their men-owned peers. Small employer firms have traditionally played an important role in U.S. job creation, and women-owned firms are an emerging share of the sec­tor. Understanding the opportunities and challenges facing this growing segment of women-owned employers can provide insight into future economic contributions of the sector overall. Even as their numbers grow, businesses owned and/or managed by women are encountering significant performance and financial challenges and growth limits. Women-owned firms historically have had lower survival rates, profits, employment, and sales than businesses owned by men — what has been called the "entrepreneurship gender gap." Moreover, Kauffman Firm Survey findings from 2004 to 2006 indicate women-owned firms start with less capital than their male counterparts, and raise less debt and equity in their early years. This disparity can have long-term effects, since startup and growth capital are key contribu­tors to future business success.