March was Women’s History Month and never before in US history have women been so successful in launching and growing their own businesses. A recent report by Biz2Credit underscores the rapid advances of women in the business world. Their 2nd annual ‘Women in Business Report’ found that average earning of companies owned by females increased by a stellar 54% in year-over-year comparisons. Another report commissioned by American Express OPEN, the credit card giant’s small business division, showed that an estimated 8.6 million women-owned businesses contribute $1.3 trillion to the nation’s economy while The Guardian Small Business Research Institute projects women-owned businesses will generate 5 million new jobs by 2018.
The number of women-owned businesses with $10 million or more in annual sales has increased 57% over the past decade while average earnings for women-owned businesses grew to $54,114 in 2013 from $35,135 in 2012. In addition to increased earning, the credit scores of women applying for business loans rose to 610 in 2013, up from 592 in 2012. “The 600 benchmark is critical for any business seeking funding. Companies with credit scores under 600 find it next to impossible to secure bank loans and often resort to borrowing money from higher cost sources of capital, such as alternative lenders,” said Rohit Arora, CEO of Biz2Credit, who oversaw the research. “While the average credit score for women-owned businesses was 14 points lower than for male-owned companies, the gap has closed; in 2012, the difference was 40 points.”
“Women are growing very substantial businesses, and not in the traditional areas that you’d expect women to be in,” says Marsha Firestone, president and founder of Women President’s Organization, citing a concentration of manufacturing, staffing and consulting businesses on the list. “Women don’t just bake cookies and make crafts. They’re starting businesses that can be scaled.”
There are several reasons why women-owned businesses are thriving:
No. 1: Costs of launching a business have dropped. Thanks to laptop computers, tablets, and smartphones, companies no longer need big mainframes and large servers. They can store data on a cloud system.
No. 2: The idea of working from home suits many females just fine. Today women can conduct their business from their house and still take care of the family. It is not easy, but it is possible. In decades past, having children meant a disruption to business success.
No. 3: Promotional costs have plummeted, thanks to digital marketing and social media. So rather than spending on costly network TV spots that may or may not reach the desired target audience, marketers can connect with their targets on specialized YouTube channels, as well as their followers on Facebook and Twitter.
No. 4: Use of technology in small business lending has quickened the process and lowered the cost of capital. Competition in the marketplace among banks and other financiers in the small business lending space has been a great benefit to business owners.
No. 5: More women than men attend and graduate from college these days. Further, as they gain experience running their own firms, they have become better negotiators, marketers and CEOs. Women are running their businesses more efficiently than ever. The result is that they are looking to expand their companies at earlier stages of the business life cycle.
In this 2014 Valley Business Journal’s ‘Women In Business’ issue, you’ll meet some of Southwest California’s business women, entrepreneurs, employers and community leaders. The contributions they make to our community cannot be underestimated as they make a difference – one job at a time.