Female entrepreneurs continue to face an uphill battle compared with their male counterparts — but that’s not to say they aren’t making strides.
A new study published by financial services firm American Express found that the number of women-owned businesses increased 21% over the past five years to almost 13 million, compared with a rise of 9% in all other businesses. Taking into account United States Census Bureau data, the report defined “women-owned businesses” as those that are at least 51% owned, operated and controlled by one or more female executives.
Further, American Express’ analysis found that employment at women-owned firms climbed 8% to 9.4 million, generating revenues that shot up 21% to $1.9 trillion for the five years between 2014 and 2019. The annual growth rate in the number of companies spearheaded by women is more than double that of all businesses — up 3.9% during the same period versus 1.7% for all businesses.
Overall, women-owned businesses represent 42% of all companies, with the greatest gains happening at polar opposites of the spectrum: low-revenue firms as well as those that generate upwards of $1 million. Even more notable are the yields for women of color, who accounted for half of all women-owned businesses and opened companies at nearly five times the pace of all business owners across the country.
However, research continues to show that minority women could face heightened challenges — compared to their non-minority peers — when it comes to tasks such as securing funding and making their businesses consistently profitable. According to the study, businesses owned or operated by women of color took in $67,800 in annual revenues in 2014. This year, that figure dropped to $65,800. Companies owned by non-minority women, on the other hand, took in $198,500 in revenues five years ago and earn an average of $218,800 in 2019.
“Eliminating barriers that thwart the success of women-owned businesses is an economic imperative that can spur innovation and improve productivity, which will create jobs, build wealth and grow the economy,” read the report. It added that the U.S. economy could gain four million new jobs and $981 billion in revenues if the average earnings of firms run by women of color matched that of their non-minority female counterparts.
“Realizing the economic potential of women-owned businesses requires changes in policies, business practices and attitudes,” the study added. “Making meaningful change also requires understanding that women-owned businesses are not monolithic. Factors such as gender, race, ethnicity, entrepreneurial motivation, generation and geographic location make meeting their needs more complex.”
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