May 1, 2014 is the inaugural “Women-Owned Business Day.” I recently learned of it through Hannah Diamond, one of the driving forces behind the initiative. You may wonder, “What exactly is a ‘Women-Owned Business Day?’” Simply put, it’s time set aside to support women owned businesses and, in the process, raise our personal and the public’s awareness of these entrepreneurial women and the businesses they’ve started. To me, it’s a natural and necessary thing. It’s a way to help the women in our lives who reflect an entrepreneurial spirit and help close a disparity between them and their male counterparts (more on that in a moment). Yet some may ask if such an initiative is even necessary. After all, if women want to play in the same sandbox on a level playing field, why would they need special consideration? Those are excellent questions, and I’m happy to share my answers to them. I’ll cover:
- Why Focus on Women?
- Differences in Business Approach
- How We Can Show Support
Why Focus on Women?
Rohit Arora, the CEO and co-Founder of Biz2Credit, wrote an excellent article detailing why women owned businesses are thriving. His findings mirror the report Women-Owned Businesses in the 21st Century prepared by U.S. Department of Commerce’s Economics and Statistics Administration at the request of the White House Council on Women and Girls. Both sources testify to the growth among women owned businesses and their significant economic contributions in the United States. For example:
- In 2007, women owned 7.8 million firms, accounting for almost 30% of all non-farm, privately held U.S. firms. Women owned firms had sales/receipts of $1.2 trillion and those with employees had 7.6 million workers. – ESA report
- The average earnings of companies owned by females increased an astounding 54% in a year-to-year comparison. According to the research, average earnings for women-owned firms shot up to $54,114 in 2013, from $35,135 in 2012. – Rohit Arora’s foxbusiness.com post
- Between 1997 and 2007, the number of women owned business grew by 44%, twice as fast as men-owned firms, and they added roughly 500,000 jobs while other privately held firms lost jobs. – ESA report
Clearly, women owned businesses are doing well. So why focus on women? The reason is simple: A disparity still exists between women owned businesses and their male counterparts, and part of the reason is the way people in general view women in business. Thus it’s up to us, individually and collectively, to address the reasons and close the divide separating the two.
Differences in Business Approach
Sharon G. Hadary wrote an article appearing on the Wall Street Journal website that analyzes the reasons for the difference in size between women and men-owned businesses. Those differences have a direct impact on the growth sustained by women-owned businesses. Some of those differences highlight how we as individuals and society can have an impact on how well those businesses thrive.
- Different Goals. The first significant difference lies in the reasons why men and women choose to start their own business. Research shows men go into business to be their own boss, and hope to grow their business as large as possible. Women, on the other hand, seek personal challenge and want to integrate work and family. Therefore they want to keep their business at a size they can personally manage.
- Access to Capital. Women often enter entrepreneurial endeavors with fewer resources than men. Therefore they tend to favor businesses with low start-up costs, but which also have lower growth potential. Part of the problem lies with women. In general, they view credit as something “bad,” and tend to use business earnings to finance growth. This limits their growth potential. According to research from focus groups, women business owners’ perceive lenders as unwilling to give them funds. Therefore they don’t bother to apply. This is especially true regarding women of color. Unfortunately, this feeling isn’t entirely without merit, according to Ms. Hadary. Her personal experience is that many bankers on the local level perceive women businesses as having low growth capacity, making them a poor credit risk.
- Access to Markets. Whether in the government or private sector, many organizations have goals for including women owned businesses. In practice, however, the reality falls short of the ideal. One reason is corporate purchasers’ reliance on “bundling,” or consolidating purchasing through a select few large suppliers. According to women business owner associations, these large suppliers (typically men owned) include women owned businesses when submitting their bids. However, when awarded the prime contract, these suppliers rarely give women businesses any of the work.
- Access to Networks. One of the best ways to increase knowledge, generate leads, and gain access to community, financial, and purchasing decision makers is through networking. Yet too often women aren’t taken seriously and are frequently shut out of conversations leading to lucrative deals.
These challenges highlight a need for re-education, both of women business owners and of people in general. If we as a whole change our views we’ll see our actions change as a result of our collective adjusted outlook. Sharon Hadary made some great suggestions on how we can accomplish this in her article. I’ll focus on some things we can do to help make Women Owned Business Day a significant and long-lasting success.
How We Can Show Support
For this initiative to work, we all have to do our part. Thankfully, the “work” involved is both simple and reasonably enjoyable. Here are a few suggestions:
- The first step is simple: Agree to throw your hat in the ring (and we all know I like hats). Click the link below to visit the “Women-Owned Business Day” event page on Facebook and say you’ll “attend” (aka “participate”).
- The next step takes a little more work. Before you can support a woman owned business, you need to know that it exists. A great place to start is your state and local government. If you’re not sure where to find the info, a search for “women owned business [state]” (where you substitute the appropriate two-letter state abbreviation for “[state]”) will yield a host of useful links. You can also contact your borough, city, and state chamber of commerce, which likely maintains lists of women owned businesses. Here in NYC, contact Rochelle White with the Greater New York Chamber of Commerce for assistance.
- This third step takes the most work – but is also the most fun! I don’t expect you to simply buy from a woman owned business because it exists. You only do business with people and organizations you know, like, and trust. Therefore, think of the things you need in the next few weeks, whether on a personal or professional level. Identify businesses from the list you created in the preceding step who can meet those needs. Then take some time and contact them. Get to know the owners and people with whom you might rub shoulders if you choose to use that business. Even if you don’t use them right now, you’ll likely get to meet some great people.
- Finally, buy from those businesses on May 1, 2014 – and anytime thereafter that it’s appropriate. Heck, feel free to buy before that day! We won’t mind. The work you did in getting to know the business owners helped forge bonds likely to last well beyond Women-Owned Business Day, and that’s the real win.
Do we need a “Women-Owned Business Day?” The answer is a resounding “YES!!” It’s not because women can’t cut it, nor because they can’t grow significantly. We need one because they deserve it, and because we need to overturn some deeply entrenched misconceptions about who they are and what they can do. So let’s throw our hats in the ring and make preparations now to #buyfromwomen on May 1!