Over the past year, women started an average of 1,821 new businesses every day in the US, according to the 2018 State of Women-Owned Businesses Report, commissioned by American Express. Women-owned businesses now employ more than 9 million people and rake in $1.8 trillion in annual revenue.
“This new data demonstrates not only the remarkable impact women entrepreneurs have on our economy when it comes to creating jobs and generating revenue, but also the growing role of women-owned businesses in our communities,” Julie Tomich, SVP of American Express Global Commercial Services, said in a statement.
More women are starting businesses, but high-growth companies remain few and far between
“Over the past 11 years, we’ve seen women’s entrepreneurship and economic impact increase—especially among the growing number of women-owned companies that generate more than $1 million in revenue,” Tomich continued.
The number of women-owned businesses that generated revenues in excess of $1 million increased by 46 percent over the past 11 years, compared to a 12 percent increase among all US businesses. Still, these high-earning firms make up only 1.7 percent of all women-owned companies, according to the report, which analyzes data from the US Census Bureau’s Survey of Business Owners.
Likewise, though the number of women-owned businesses increased substantially in the past decade, employment and revenue numbers remained relatively stagnant. Women-owned businesses employed roughly 6 percent of the American workforce in 2007, a proportion that marginally increased to 8 percent this year. Similarly, where women-owned firms generated 4 percent of all business revenue in 2007, they now pull in 4.3 percent.
Data points like these indicate that although more women are starting their own companies, their businesses aren’t growing at the same rate as those led by men, and many are lean operations with few employees.
Women of color are pushing through, but barriers remain
Women of color are America’s fastest growing entrepreneurial population. The number of firms owned by minority women has grown by 163 percent since 2007, and—despite making up around a quarter of the female population—women of color now represent nearly half of America’s women entrepreneurs. Entrepreneurship rates grew most among black and Latina women, 4.5 million of whom now sit at the helm of their own companies.
Still, as with women-owned businesses overall, discrepancies remain regarding the types of businesses founded by women of color—and their growth potential. The Atlanta-based social enterprise DigitalUndivided (DID), which helps women of color build their businesses, looks to quantify how black women fare in the high-growth-potential startup space through a data analysis called ProjectDiane.
DID identified 8,000 women-led, high-growth-potential startups in its most recent analysis, but a mere 4 percent of those companies were led by black women. This mirrors the findings in the latest AMEX report, which reveals that companies led by minority women tend to make less money than women-owned businesses overall—representing a substantial loss for the US economy. If firms owned by black and brown women generated the same revenue as all women-owned businesses, they would add 4 million new jobs.
Though the broader business community tends to zero in on equitable funding as a means to create more high-growth companies led by diverse teams, DID founder Kathryn Finney says that’s only part of the story.
“People tend to focus on the funding problem and not on the pipeline problem,” Finney told TriplePundit. “How are we developing more companies that are positioned well to receive funding? How do we support [women founders of color] who have received funding to raise the amount they truly need to build and scale their companies?”
Nathalie Molina Niño, founder of the gender-lens equity investment firm BRAVA Investments, agrees—arguing that while firms headed by women of color have the potential to bolster the American economy, too many black and brown founders struggle to get their companies where they need to be.
“Women of color, especially black and brown women, are the most entrepreneurial women in this country, but they’re stuck in survival mode,” Molina Niño recently told Conscious Company. “If we unlock that population from survival mode—to the point that they can invest in themselves, educate their kids, and build their businesses—you won’t see one Oprah Winfrey or one Sara Blakely [the billionaire founder of Spanx]. You’ll see armies of black and brown women with the potential to take over the economy.”
Though far more work is needed, conversations around founder diversity continue to amplify—which is a shift in and of itself—and the volume of women- and women of color-owned businesses grows every day: a million new women-owned businesses have come online since AMEX published its last analysis last year.
Image credit: Henri Meilhac via Unsplash