Women Entrepreneurs
ARE the Trend!

BY SHARON G. HADARY

omen business owners are changing the face of business, both literally and figuratively. The dynamic growth and expansion of women-owned businesses is one of the defining trends of the past decade, and all indications are that it will continue unabated.

Center for Women's Business Research is dedicated to capturing the full impact of women on business ownership. Our most recent research shows there are 10.1 million businesses in the United States that are 50 percent or more owned by one or more women. This is almost half (46 percent) of all privately held businesses in this country.

Women-owned businesses are providing employment for 18.2 million workers. This means that in the United States, 18.2 million people put food on the table, pay the mortgage and send a child to college because of a business owned and operated by a woman.

Further, women-owned businesses are generating close to $2.3 trillion in revenues, contributing to the health of our economy.

For more than a decade, the number of women-owned businesses has been growing at one-and-a-half to two times the rate of all businesses. Even more important, the expansion in revenues and employment far exceeds the growth in number. While the number of women-owned firms increased by 11 percent between 1987 and 2002, employment by women-owned firms increased by 18 percent, and revenues of women-owned firms skyrocketed 32 percent.

Clearly, women-owned businesses are larger, more substantial, and larger contributors to the U.S. economy with each passing year. The Center has been collecting data on women-owned businesses for more than a decade - and the trends have remained strong and consistent throughout that time.

The New Woman Business Owner
Women-owned businesses are in all industries, but the fastest growth in these businesses is in what might be called the "non-traditional" fields of construction, engineering, wholesale distribution, and manufacturing.

Women of all ethnicities are seizing the opportunities presented by entrepreneurship. In fact, businesses owned by women of color are growing at a rate twice that of all women-owned businesses. As of 2002, women of color own 20 percent of all women-owned businesses!

Across the nation, one of every 11 adult women is an entrepreneur. These women are not only achieving economic independence and wealth creation for themselves. Through job creation, they also are providing opportunities for others, particularly for other women.

The Center's research shows that the workforces of women-owned businesses tend to be more gender balanced than the workforces of men-owned businesses. It also shows that women business owners are more likely to hire women. Put simply, an investment in women's entrepreneurship is an investment in the economic independence and well-being of all women.

The profile of women business owners is changing as women move aggressively into entrepreneurship.

NIn comparison to their women counterparts who established their businesses up to 20 years ago, women who started their businesses sometime during the past decade are more likely to have a higher level of education and to have previous professional and managerial experience, as well as executive level experience. Their businesses already are as successful as those of their counterparts who have been in business longer, and whether as a function of business life cycle or financial sophistication or both, these new entrepreneurs have a greater appetitive for capital, both credit and equity.

The result of these trends is that women-owned businesses span the entire range of business life cycle and business success, whether the measuring stick is revenues, employment or longevity. This must drive the programs and policies targeted to strengthening women's entrepreneurship to expand and diversify to meet the specific needs of each segment of women-owned businesses.

Key WBO Challenge #1: Capital
The three key challenges confronting women business owners have been, and continue to be: access to capital; access to markets; and access to networks and technical assistance.

The Center for Women's Business Research has been tracking access to capital for more than a decade. Over this time, our research has documented significant improvements in access to capital.

Today, women business owners are very similar to men in how they rate their relationships with banks, and many women business owners say they are satisfied with their access to capital. Further, over the past six years, we have seen women entrepreneurs moving into the equity markets.

However, women entrepreneurs still lag men entrepreneurs in access to capital. Regardless of growth levels, women entrepreneurs are less likely than their male counterparts to seek or have commercial bank loans.

When they do have commercial credit, women business owners have lower levels of credit than do the men. Further, women entrepreneurs are less likely to use all forms of credit except credit cards. In the equity world, women are less likely to seek or have equity investment, and they receive only 9 percent of the deals and 2 percent of the dollars.

Clearly, then, accessing and using capital is central for the success of women-owned businesses.

The Center's research shows that the faster growing women-owned businesses are more likely than other women-owned businesses to use multiple sources of capital. For women who aspire to high growth, this provides one indicator of what it takes to achieve that type of growth. For financial institutions, it identifies a high potential market for financial products and services.

Key WBO Challenge #2: Access to Markets
Access to markets is a second key area. There has been tremendous focus on federal procurement, an area in which women are receiving only 2.9 percent of the contract dollars. However, the greatest potential for business is in private sector markets. Of the billions spent by corporations for products and services, women's business enterprises capture only an average of 4 percent.

The Center's research shows that the women-owned businesses that are most successful in the corporate markets are larger than most other women-owned businesses. For example, 56 percent of the revenues of women's business enterprises with $1 million or more in sales came from large corporations.

In a unique study announced in 2003, the Center examined women business owners' access to the corporate markets from the perspective of both the women business owners and the corporate supplier diversity executives. Both agreed that the keys to success in this market include: relationship building; providing quality products and services; persistence; and being creative in building alliances or bidding second tier opportunities. (For more information regarding success strategies for doing business with corporations, see "Methods that Work for Creating Corporate Clients: A Resource Guide for Women Business Owners," available in print from the Center or online at www.womensbusinessresearch.org/resourceguide

Key WBO Challenge #3: Access to Networks & Technical Expertise
Access to networks and technical expertise continues to be an important area for women business owners.

In fact, the key to being able to successfully access markets and sophisticated forms of capital investments is being visible in the right networks. Part of the value of the Center's data documenting the dynamic growth and financial viability of women-owned businesses is the credibility and visibility the data provides within key networks. The result is opening the doors for women.

When women are visible in the networks that act as "feeders" to markets and investment, they are more likely to gain access. For example, equity investors who had already made an investment in a woman-owned business were more likely to say that they are considering similar investments in the future. Gaining access to, and visibility in, these markets is a major factor in growing a successful business.

WBOs Use Both Sides of Their Brains
Women-owned businesses continue to move in the direction of looking like all businesses in terms of size, maturity and industry distribution. However, the leadership and decision-making styles of women entrepreneurs distinguish this group of leaders from men entrepreneurs.

In a groundbreaking study, the Center compared the styles of women and men business owners. We called the study "Styles of Success" to demonstrate that there are multiple styles of leadership and that all these styles, in fact, lead to success.

The research shows that men entrepreneurs strongly preferred what we have come to call "left brain" thinking, characterized by logic, facts and hierarchy. Women entrepreneurs, on the other hand, are more likely than men to use "right brain" thinking, characterized by relationships, values and intuition.

But, what is most interesting is that women are almost equally likely to use right and left thinking - so their decision-making and leadership styles are characterized by building relationships, emphasizing values, using intuition, and collecting the facts and building a logical case.

For women, this translates into a style that is consultative and participative. Women entrepreneurs are more likely than men business owners to consult with others when making a decision and to consult with more sources, including those that will be affected by the decision.

Thus, what sets women entrepreneurs apart (their consultative and participative leadership style) is what positions them for success in this new millennium - a time when ideas and collaboration are taking precedence over production and procedure.

The Code of the Successful WBO
The Center's research has shown that women and men entrepreneurs define success differently. Men define it in terms of achieving goals, as if checking them off on a list; women define success in terms of building relationships, doing something worthwhile, and having control over their own destinies.

Taking control of your own destiny means knowing your goals and moving toward achieving these goals in everything you do. Based upon the Center's research and 15 years of experience with women business owners, the most successful women business owners seem to have 10 characteristics that set them apart from the masses. It's as if they live by the following code:

1. Define success in your own terms. Do not let others, no matter how well intentioned, define success for you. Define your goals and take control of your own destiny by deciding how you define success.
2. Be values based. Know what your values are and, in everything you do, have the courage to lead based upon these values.
3. Acknowledge and own your power. Recognize your power to influence others, and use that power to foster change and success in all areas - in your business and in your community.
4. Trust your instincts. Believe in yourself and your instincts whether in your leadership style, your decision-making, or your ability to take control of your own destiny. If it feels right, it usually is right.
5. Build on your strengths and what you like to do. You can hire someone to do those tasks that you hate to do or don't do well.
6. Nurture the Midas touch. Build wealth creation skills. Profitability is integral to business growth, and it's your way of rewarding yourself for all that you put into the business.
7. Treat your time and energy as scarce resources that are as valuable as any other resource in the business or family budget. This means saying "yes" at the right times - and saying "no" at the right times.
8. Invest in yourself - in your intellectual, spiritual and physical well being. Invest time and money in learning, nurturing your soul and maintaining your health.
9. Build support networks - for business opportunities, for business advice, and for personal support and friendship. Recognize that you may need different networks for each, but that all are vital to your business and personal success.
10. Always leave time for serendipity. Don't pack your schedule so full that there isn't time for doing those spontaneous things with family and friends that bring delight and joy into your life. Enjoy yourself.

SHARON G. HADARY, PhD, is the executive director of the Center for Women's Business Research. She can be contacted at 202-638-3060 (e-mail: shadary@womensbusinessresearch.org).

Authors' Note: The research cited in this article was made possible by the Center for Women's Business Research supporters who recognize the importance of investing in advancing the knowledge about women's entrepreneurship. On behalf of this nation's 10.1 million women business, we thank these organizations: Wells Fargo; AT&T; AT&T Foundation; IBM; FleetBoston Financial; Wachovia; OPEN: The Small Business Network from American Express; The Ewing Marion Kauffman Foundation; Edward Lowe Foundation; Key Bank; Smith Barney; Women's Business Enterprise National Council; National Association for Women Business Owners; Committee of 200; and the National Women's Business Council. For copies of specific research reports and for more information on women-owned businesses, visit www.womensbusinessresearch.org or contact the Center at info@womensbusinessresearch.org.