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The state saw a 54.2 percent increase in the number of women-owned firms from 1997 to 2011, according to an American Express survey. Sales were up 58.9 percent. Nationally, that ranks California 17th and 27th, respectively. But the number of workers in those firms rose just 5.1 percent during the 1997-2011 period. That's lower than the national average, which is already low at 8 percent. So why are women-owned businesses smaller than the ones owned by men? Sharon Hadary, founding executive director of the Center for Women's Business Research, has some ideas in this WSJ piece:
Women often come to entrepreneurship with fewer resources available to them than men. The result is that they are more likely to go into industries such as retail or personal services where the cost of entry is low--but so is the growth potential. Why the lack of resources? Again, women must accept part of the responsibility. Research shows that women tend to view debt as a "bad thing" to be avoided. For expansion capital, most turn to business earnings, which usually limits growth potential. Research supports the idea that one of women's strengths is relationship building, yet women seldom focus on building relationships with bankers. Lack of relationships with bankers and limited knowledge about financial products and services explain to a great degree why more women don't seek more sophisticated forms of financial products and services.
From the report:
The industries with the highest concentration of women-owned firms are: health care and social assistance (52% of firms in this sector are women-owned, compared to a 29% share overall), educational services (46%), other services (which includes personal care services such as beauty salons and pet-sitting, dry cleaners, and automobile repair) (41%), and administration and waste services (including employment and travel agencies, janitorial and landscaping services, and convention organizers) (37%). The industries with the lowest concentration of women-owned firms (in industries contributing 2% or more of the business population) are construction (a fast-growing industry for women as previously noted, but where just 8% of firms are women-owned) and finance and insurance (20%).
By the way, California is home to the greatest number of women-owned firms in the country, at 1,080,000. Not a big surprise, given the state's size. Texas is next, at 636,000.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.