Women Are Geared for Growth
Nearly one in three female entrepreneurs in the Southland say they’re running their businesses out of their homes, part of a nationwide work-at-home movement that’s reshaping the way America toils.
That’s one of the findings in a recent survey conducted by the Los Angeles Times and USC’s Marshall School of Business, which shows Southern California’s women-owned businesses to be agile, tech-savvy and seemingly geared to thrive in an environment where the lines between home and work have blurred.
“It’s the best of both worlds,” said survey respondent Linda Lee, a mother of six who runs a custom engraving business out of her San Diego home. “I love the independence . . . and you can’t beat the commute.”
National studies confirm that home-based enterprises are growing at a rapid clip among both male and female entrepreneurs. An estimated 12.6 million Americans are operating businesses out of their homes, double the number in 1990, according to Cyber Dialogue, a New York-based research firm that tracks the trend.
Economists say corporate downsizing, a healthy economy and low-cost technology are fueling the movement. While these businesses are nimble and require fewer resources to start, they often face growth limitations, some of which were reflected in the Times/USC survey results.
The region’s women-owned businesses tend to be younger, smaller and less likely to have bank financing than their male-owned counterparts, according to the June mail survey of 1,670 small-business owners. The women-owned firms were more concentrated in retail and services, they employed fewer workers, and they were less likely to hire any in the coming year.
Both genders are frustrated by taxes, government regulations, a tight labor market and other pocketbook issues. Female business owners reported sales growth on par with their male counterparts and were just as confident about the future as any entrepreneurs in the region.
“Women are coming into business with more skills than ever before,” said Ron Wesson, who tracks minority- and women-owned businesses for Dun & Bradstreet. “They have good reason to be optimistic.”
The Times/USC survey shows that women are slightly more likely to be operating a home-based business than men--nearly one in three women entrepreneurs compared with one in four men--with 26% of all entrepreneurs surveyed saying they were working from home.
A Dun & Bradstreet telephone survey conducted earlier this year showed a similar composition. In that national survey, about 40% of female entrepreneurs interviewed said their businesses were home-based, compared with 37% of male business owners. Overall, Dun & Bradstreet found that 38% of all business owners surveyed were running their companies from home.
Industry data vary widely on the exact size and composition of this hard-to-track segment. What’s clear is that a significant number of entrepreneurs are starting businesses in their living rooms, many motivated by lifestyle issues.
Research by the National Foundation for Women Business Owners shows that frustration with the corporate work environment is leading many women to venture out on their own. Increasingly, home is becoming the logical base for launching a new enterprise.
“The key is flexibility,” said NFWBO spokesman Bruce Rosenthal. “Growth in home-based businesses is very much tied to that.”
Staff cutbacks at her former employer led survey respondent Michelle LaPointe to form Virtuosi, a direct-marketing firm she runs out of her Simi Valley home in concert with business partner Becky Remy, who works from her residence in Torrance.
Formed in 1996, the “virtual” business has grown large enough that LaPointe and Remy huddled recently to discuss whether to establish a conventional office. But for now, LaPointe is loath to give up the rewards of a home-based setup, which include spending more time with her two children.
“We decided to table the idea at least a year,” LaPointe said. “We don’t want to be trapped into becoming the kind of business we wanted to get out of.”
Small-business watchers credit technology for allowing Virtuosi and other home-based businesses to thrive. In fact, when it comes to embracing online commerce, the Southland’s women-owned businesses appear to have a slight edge over the men.
The Times/USC survey shows that 46% of female entrepreneurs said they’re using the Internet to do business, compared with 45% of their male counterparts. Just over 36% of the women-owned businesses had a Web page, compared with 29% of men-owned.
These figures mimic the findings of other national surveys, which show that female entrepreneurs have been quick to adapt to online sales and communication.
“The Internet is about relationships,” said Thomas E. Miller, a researcher and vice president of Cyber Dialogue. “Women seem instinctively to understand its power to connect, whether that means selling or customer service or access to information.”
Survey respondent Leslie Safarik embodies that pragmatic approach to technology. The sculptor knew little about computers when she and her husband launched StudioSoftware Multimedia in 1993. Now she spends her days surrounded by more than a dozen machines, directing a far-flung cadre of freelance programmers, designers and graphic artists, all linked via the Net.
“I’m still creating things, only now it’s by computer,” Safarik said. “What can I say. It rules.”
Like most entrepreneurs surveyed, Safarik has financed her enterprise through a combination of savings, credit cards and earnings from the business.
Only 27.7% of the Southland’s small-business owners reported using bank loans over the last year. But women, at 22%, were even less likely to have this financing than men, 30% of whom said they had bank credit. In fact, 16.5% of Southland female business owners named access to capital as the most critical problem they face, more than any other challenge cited.
Industry watchers say women’s access to financing has improved over the last decade, with the recognition that women-owned businesses are among the fastest-growing in the nation. Banks and other financial institutions are courting their business like never before.
Despite this progress, a 1996 NFWBO survey found that women-owned businesses still have lower levels of credit than men and are less likely to seek outside financing than are male-owned firms.
Experts attribute some of the disparity to the relative youth and shorter track record of women-owned firms, which now account for a third of all new businesses.
“Banks don’t make loans for entrepreneurs to start businesses,” said William Dennis, economist with the National Federation of Independent Business.
Women-owned firms also lean heavily toward services, which require less capital but are tougher to finance because there is little heavy equipment, land or machinery to use as collateral.
“You can’t get a business loan unless you pledge your house,” said survey respondent Marilyn Ratliff, owner of BTI Professional Services, a Tustin-based tax and bookkeeping service. “I didn’t want to do that, so I just gave up.”
She and other female entrepreneurs surveyed said the lack of capital is hampering their ability to expand.
Ratliff would like to hire a couple of more employees to meet brisk demand for her services, but she’d need a working capital loan to finance the growth. Ditto for San Diego County fence company owner Laurann Volk, who swears financing is tougher to come by now than when she started in business in 1986.
“Sometimes I wonder if my name had a Mr. in front of it if it would be easier,” said Volk, owner of Hurricane & Poway Fence in Ramona.
Like their male counterparts, female business owners rated high taxes, burgeoning regulations and general frustration with government among their chief concerns.
Patty Hillis, co-owner of Pete’s Plumbing in Long Beach, pointed to recent legislation out of Sacramento that increases the amount of work unlicensed handymen can perform for homeowners without being subjected to the same licensing and insurance requirements as companies like hers.
“You get discouraged, you really do,” said Hillis, ticking off the taxes, fees and permits her business shells out annually. “Small businesses like ours are the backbone of this economy. Yet we don’t get any help.”
Still, female business owners generally are as optimistic about the future as their male counterparts, perhaps in part because they remember the past.
“When I was younger there were basically three career choices for women: nurse, secretary or schoolteacher,” said 52-year-old Lee, owner of Lasting Impressions Custom Engraving. “We’ve come a long way, baby.”
More information on the survey is available online at https://www
.latimes.com. The poll results will be discussed at The Times’ Small Business Strategies Conference Oct. 17-18 at the Los Angeles Convention Center. For more information, call (800) 350-3211 or visit https://www.latimes.com/sbsc.
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Home Work
Women-owned businesses in Southern California are more likely to be home-based than those run by men.
WOMEN-OWNED BUSINESSES
Homebased: 32%
Not homebased: 68%
MEN-OWNED BUSINESSES
Homebased: 24%
Not homebased: 76%
* Source: Southern California Business Climate SurveyHome Work
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La Difference
Women-owned businesses are younger, smaller and have fewer employees than their men-owned counterparts.
Sales less than $100,00
Women-owned: 33%
Men-owned: 19%
Median number of employees
Women-owned: 2
Men-owned: 3
Median age of business
Women-owned: 12 years
Men-owned: 16 years
Sales greater than $1 million
Women-owned: 19%
Men-owned: 30%
Industry concentration of women-owned businesses
Services: 51%
Retail: 26%
Manufacturing: 13%
Miscellaneous: 10%
* Source: Southern California Business Climate Survey
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How the Poll Was Conducted
The Times and USC’s Marshall School of Business mailed out a seven-page questionnaire on June 19 to a random sample of 30,000 businesses in Los Angeles, Orange, San Diego, San Bernardino, Riverside and Ventura counties. The firms were drawn from Dun & Bradstreet’s database of all businesses in the six-county region, from which companies with fewer than 500 employees were selected, in accordance with the Small Business Administration’s definition of small businesses. About 3,000 questionnaires were returned undeliverable. From the remaining 27,000, 1,670 valid responses were received by the cutoff date of Aug. 8, representing a return rate of 6%, considered good for an unsolicited direct-mail survey. The responses were tabulated under the direction of William Gartner, professor of entrepreneurship at USC’s Lloyd Greif Center for Entrepreneurial Studies. The results were benchmarked against national figures and regional industry data kept by the Los Angeles Economic Development Corp. The survey results show that 55% of the responses came from Los Angeles County, 16% each from Orange and San Diego counties, 6% each from Riverside and San Bernardino counties and 1% from Ventura County. The sample also is fairly representative of the industry mix in the region, although there are significantly more manufacturers and somewhat fewer construction firms and food retailers than their actual numbers in the six-county area. The sample tends to favor older, mature firms, reflecting D&B;’s database, which generally is made up of more-established businesses with a credit report. Based on the sample and the results, however, Gartner determined that the survey is representative of the small-business population in Southern California.
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Business Climate Survey to Detail Crime Concerns
Next Wednesday The Times will run the last in a series of stories on the state of small business in Southern California. They were based on a first-of-its-kind poll of firms from San Diego to Ventura that was conducted by The Times and the USC Marshall School of Business.
Coming: Violent crime may be down, but small businesses continue to be plagued by the petty variety. From graffiti to vandalized pay phones, loitering to the use of sidewalks as public toilets, small-time crime--which often goes unnoticed by officials--hits entrepreneurs in the pocketbook and takes its toll in frustration.
