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Women, Especially Women of Color, Are Fueling Business Startup Activity

New analysis from the 2016 State of Women-Owned Businesses Report, commissioned by American Express OPEN, finds women-owned firms are increasing at five times the national average rate, and nearly eight in 10 net new women-owned firms are being launched by women of color.
President & CEO, Womenable
POINT MADE FILMS
BARB LEE
MEMBER SINCE 02
April 06, 2016

For the sixth year running, Womenable and American Express OPEN have taken a look at the state of women-owned businesses across the U.S., focusing this year on trends between 2007 and 2016. Bolstered by the publication late last year of the 2012 Survey of Business Owners data by the U.S. Census Bureau, the 2016 State of Women-Owned Businesses Report estimates that:

  • Between 2007 and 2016, while the total number of firms increased by 9 percent, the number of women-owned firms increased by 45 percent—a rate fully five times the national average;
  • There are now 11.3 million women-owned businesses in the country, employing nearly 9 million people and generating over $1.6 trillion in revenues;
  • Women-owned businesses now comprise 38 percent of the business population, employ 8 percent of the country's private sector workforce and contribute 4 percent of the nation's business revenues;
  • Since 2007, there have been 1,072 net new women-owned firms launched each and every day.

Big Business Growth for Women of Color

The most remarkable trend seen over the past nine years has been the phenomenal growth in the number of firms started by women of color. Their numbers have more than doubled since 2007, from 2.2 million to now nearly 5 million, comprising fully 44 percent of all women-owned firms.

swob-report-2016-weeks-openforum-embed1

American Express OPEN/Womenable estimates as of 2016 based on data from the U.S. Census.

In fact, comparing the growth in the number of minority women-owned firms with the overall increase in women-owned firms since 2007 finds that nearly eight out of every 10 (79 percent) of net new women-owned firms launched over the past nine years have been founded by a woman of color.

As of 2016, there are an estimated 1.9 million African-American women-owned firms, just under 1.9 million Latina-owned firms, 922,700 Asian-American women-owned firms, 153,400 Native American/Alaska Native women-owned firms, and 31,100 Native Hawaiian/Pacific Islander women-owned firms.

Geographic Trends of Women in Business

What other trends are we seeing? Geographically, as in years past, there's been greater growth in the number of women-owned firms in the South compared to other regions of the country.

Across the U.S., women-owned firms have been flexing their economic muscle over the past nine years. The 10 fastest-growing states since 2007 in terms of “economic clout” (a combination of number of firms, employment and revenue) are found in every region. They are:

  • North Dakota, South Dakota, Texas (all tied for first);
  • Iowa;
  • Indiana and Wyoming (tied for fifth);
  • Georgia and Tennessee (tied for seventh);
  • Utah; and
  • Maine.

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American Express OPEN/Womenable estimates as of 2016 based on data from the U.S. Census.

Further, the 10 fastest-growing metropolitan areas for women-owned firms in terms of combined economic clout, from among the 50 most populous cities, are:

  • Charlotte, North Carolina /South Carolina;
  • San Antonio, Texas;
  • Dallas, Texas and Memphis, Tennessee/Mississippi/Arkansas (tied for third);
  • Austin, Texas and Indianapolis, Indiana (tied for fifth);
  • Miami, Florida;
  • Detroit, Michigan;
  • Richmond, Virginia; and
  • Houston, Texas.

These top-ranked cities, like the top-ranked states, are located across the country, but it is worth noting that four of the 10 top-ranked cities are located in Texas.

Growth in Traditional Industries

Finally, while the long-term trend in women's entrepreneurship has been an increase in diversity—not only with respect to the women launching new businesses but in the types of firms they are founding—in recent years, some of the greatest growth has been seen in some of the most traditional industry sectors. Compared to an overall increase of 45 percent in the number of women-owned firms between 2007 and 2016, the following four industries have seen the greatest increase in the number of women-owned firms:

  • other services (home to hair and nail salons and pet care businesses, up 98 percent);
  • administrative, support and waste management services (including janitorial and landscaping businesses as well as office administrative support and travel agencies, up 64 percent);
  • accommodation and food services (up 62 percent); and
  • construction (up 56 percent).

The Bottom Line

So what can we take away from this exciting new analysis? First, we can see that women-owned firms have bounced back from the recession and are driving much of the business formation and job creation in the national economy. Second, this dynamism is coming largely from women of color, who are entering into business ownership in impressive fashion. Finally, it’s important when looking at trends in entrepreneurship to not only pay attention to the growth in new firm formation, but also in the growth in employment and revenues of those firms. By doing so, we get a much richer sense of the growing strength of women-owned firms that can be seen in every region of the country. 

To learn more about the current state of women-owned businesses, download, read and share the 2016 State of Women-Owned Businesses Report and the news release.

Photos from top: Eric Ryan Anderson, charts courtesy of 2016 American Express OPEN State of Women-Owned Businesses report

Methodology

The 2016 American Express OPEN State of Women-Owned Businesses Report is based on data from the United States Census Bureau, specifically their quinquennial business census, the Survey of Business Owners (SBO), which is conducted every five years in years ending in 2 and 7. Data from the past three Census surveys – 2002, 2007 and 2012 – were collated, analyzed and extrapolated forward to 2016, factoring in relative changes in Gross Domestic Product (GDP) not only nationally but also at industry, state and metropolitan statistical area levels. All GDP data were obtained from the Bureau of Economic Analysis (bea.gov) – another bureau, like the Census Bureau, within the U.S. Department of Commerce.

Specifically, growth in GDP from 2002 to 2012 ($10.6 to $16 trillion) was compared to that from 2012 to the fourth quarter of 2015 ($16 to $17.2 trillion). Relative annual growth rates were then used to estimate the growth in the number of firms over the 2012 to 2016 period – thus adjusting a straight-line extrapolation to account for relative economic growth between the two time periods. This was done not only at the national level, but also by applying actual gross state, metro area and industry-level output figures (which were available up to the fourth quarter of 2014).

 

President & CEO, Womenable