Women-Owned Firms’ Hiring Outpaces Nation : Trends: Survey shows the companies are as financially sound as businesses nationwide, have more staying power.
Women-owned businesses added to their staffs more than twice as fast as the national average and their financial soundness is equal to businesses nationwide, according to a study released Tuesday.
Women-owned businesses have also expanded beyond traditional service and retail sectors and have greater longevity than most U.S. businesses, according to the study by the National Foundation for Women Business Owners.
The 15.5 million people working in 7.7 million women-owned businesses nationwide represent an 11.6% increase from 1991 to 1994, compared to employment growth of 5.3% among all firms nationwide during the same period, the study found. Women-owned businesses generate nearly $1.4 trillion in sales annually, it shows.
“Women-owned businesses have become a substantial employer in this country,” said Patty DeDominic, president of the National Assn. of Women Business Owners, a 5,000-member group that oversees the nonprofit foundation.
The study, the second in four years prepared by the foundation in collaboration with Dun & Bradstreet Information Services, provides evidence of the robust financial health and growth enjoyed by women-owned businesses, DeDominic said. This basic information should help change the way banks and regulatory agencies deal with women-owned businesses, which still face substantial financing difficulties, she said.
“It should make access to credit a little easier,” she added.
The foundation’s first study, in 1992, estimated that 5.4 million women-owned businesses employed 11 million people and predicted that sales in those businesses would reach $1 trillion annually by 2000.
The fact that women-owned businesses topped that projection six years earlier than forecast is a dramatic example of their financial soundness and growth, DeDominic said .
Most women-owned businesses are small, with less than 1% of the total having more than 100 employees.
As for their financial health, the study reported that 92% of women-owned firms pay their bills within 30 days of the due date, a rate not significantly different from the 93.6% of businesses nationwide. The failure rate was also nearly identical for women-owned businesses as for those nationwide, with 14.7% of women-owned firms at a relatively high risk of failure, compared to 13.7% for all U.S. firms. Women-owned firms also scored better than average on Dun & Bradstreet’s credit index, with 40.5% of them at risk of becoming delinquent in paying bills, compared to 44% for all firms nationwide.
Businesses owned by women also showed staying power, DeDominic said. According to the study, 72% of them active in 1991 are still active today, compared to 67% of all businesses nationwide.
Although the majority (72.5%) of women-owned firms remained solidly in retail trade and services, they continued to diversify, the study shows. Substantial increases were seen in the number of such firms in construction, manufacturing, transportation and communications.
Overall, the statistics are important for workers whose middle-management corporate jobs are threatened by downsizing, DeDominic said. The study shows that significant growth is still occurring in women-owned businesses and that job-seekers would do well to seek them out as a “first-choice career option,” she said.
The survey may help banks take a look at the demographics involved to see if they are missing out on a profitable market, said Eugene Valdez, owner of Claremont Advisory Co., a banking consulting firm in the San Gabriel Valley.
Although banking remains an industry dominated by white males and one in which “antiquated views about women-owned businesses” can still exist, such surveys may prompt banks to at least more seriously consider making loans to female business owners if they are credit-worthy, he said.
Richard Barkhurst, executive vice president and chief credit officer for First Interstate Bank of California, agreed that such studies do not affect individual credit decisions. Instead, bankers look at businesses individually, including their performance and longevity, he said.
“We would compare (the study) to our own history,” he added. “Intuitively, it validates what we’ve known all along, that gender doesn’t make any difference in the way the owner of a business handles credit.”
The study results were compiled using projections from the U.S. Census Bureau, tax reports, other business databases and a survey of association members.
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Making Gains
The growth in the number of women-owned businesses in “non-traditional” industries is outpacing the overall growth in those field. Percentage change in the number of firms from 1991 to 1994: Manufacturing:
Women-owned businesses: +13.4%
U.S. as a whole: -2.0 Transportation, communications:
Women-owned businesses: +18.0
U.S. as a whole: +5.0 Construction:
Women-owned businesses: +19.2
U.S. as a whole: -0.8 Finance, real estate:
Women-owned businesses: +21.0
U.S. as a whole: +14.0
*
Women-owned firms have more U.S. employees than the Fortune 500 companies do worldwide. Number of employees, in millions:
Women-owned businesses: 15.5
Fortune 500: 11.5
* Sources: Dun & Bradstreet Information Services; National Foundation for Women Business Owners.
