• Were motivated by the same factors that motivate male entrepreneurs--the desire for independence, money and to utilize a skill or talent. Had a mother or father who had been a business owner, and most had a working mother. • Started their businesses in recent years. While the 1972 Census survey, the first attempt at collecting such data, provides valuable benchmark information, it does not provide a true picture of the current status of female entrepreneurship because of both its age and its methodology. For example, since the survey relied primarily on business tax returns to identify its participants, there is no distinction made between full- and part-time business owners. Also, large woman-owned corporations with more than 10 shareholders filing the 1120 tax return were not included, and women who filed joint income tax returns were probably under-represented. The data also compared such enterprises with all firms in the U.S., large and small, rather than with just other small businesses. Although the picture may have changed since 1972, the Census survey still provides us with some interesting information. For example: • Compared to all large and small U.S. firms, the 402,025 woman-owned businesses identified by the study represented only 4.6 percent of all U.S. firms. (Excluding large corporations, those with over 10 shareholders, woman-owned businesses represented 5.7% of U.S. firms.) (5) • Their receipts, $8.1 billion, represented only 0.3 percent of all U.S. business receipts from both large and small firms. (Excluding large corporations, woman-owned businesses represented 2.3 percent of receipts.) (6) • Woman-owned businesses were clustered in industries that required low capitalization and were labor intensive, such as services and retail trade. These industries, incidentally, also tend to show a lower return on investment. California and New York were the states with the highest percentage of womanowned business, and business tended to be located in major cities. Only 13 percent of woman-owned businesses had paid employees, and of those employer firms, 73 percent had fewer than 5 employees. Ninety-eight percent of the firms were organized as sole proprietorships and accounted for 89 percent of the gross receipts of woman-owned businesses. More details from this 1972 survey and the Bureau of Labor Statistics' data can be found in the appendix. A major problem in assessing data on womanowned businesses is that there is no uniform definition of the term. The Bureau of the Census, for example, defines a woman-owned business as one in which the sole owner, or one half or more of a partnership is female or 50 percent or more of the stock in a corporation is owned by women. The Department of Transportation uses a somewhat similar definition--51 percent equity in a partnership or 51 percent ownership in a corporation. Other agencies, such as the Small Business Administration (SBA) have various definitions. For example, SBA uses a 50% ownership criterion for data collection purposes, but a 51% ownership criterion for eligibility in its programs for "socially or economically" disadvantaged people. The Task Force developed the following definition of a woman-owned business, which it believes should become standard within the federal government: A woman-owned business is one While the Task Force recognizes that too rigid a definition may exclude many pertinent factors and a broader definition may be warranted for some purposes, it limited its definition for the purposes of this report to the 51 percent criterion, basing it on the definition of minority owned businesses and other groups that are currently targeted for federal programs. The emphasis of the definition is as much on active control and operation as it is on ownership, because there are many businesses in which the bulk of the assets are owned by women who are not active in management or participants in day-to-day activities and problems. The Task Force recommends the use of this definition for most programs, because it believes the use of a standard definition has importance beyond mere statistical analysis. Without such a definition, it will be very difficult to develop a coordinated program thrust for women business owners. The Task Force Inquiries It was the lack of sufficient data that, to a large degree, led the Task Force to undertake special inquiries--its own study and a special study done by the American Management Associations. The results of these studies, although not statistical samples, provide some valuable insights that help to dispel many of the myths that have persistently hampered women business owners. The Task Force Study Because of the Task Force's short time frame, public hearings were not feasible. Instead, it developed and distributed a detailed questionnaire through the regional offices of the Department of Commerce and the Small Business Administration and through business and professional associations. Public service radio announcements also were used to announce the study and to request voluntary participation. More than 3,400 responses were received and, while hardly scientific or comparable to existing data from such sources as the Bureau of the Census or the Bureau of Labor Statistics, the response was sufficiently large to show a relatively consistent picture that is useful in illuminating the barriers faced by women as entrepreneurs. Eight-five percent of the respondents were women who considered themselves to be business owners during any part of 1977. The distribution of the responses was 33.4 percent from the West, 30.5 percent from the South, 21.5 percent from the North Central region, and 14.6 percent from the Northeast (7). Over 40 percent of the respondents were between the ages of 36 and 50. The remainder were equally divided between older and younger women, with 29 percent over 50, and 30.3 percent under 35. This age distribution is similar to that for self-employed women, published by the Bureau of Labor Statistics. Of the respondents, ethnic and racial minorities made up 19 percent. Also, similar to the existing 1972 statistical data on woman-owned firms was the pattern. of types of businesses owned. Forty-three percent were in service industries or selected services (8). The next greatest concentration, 35.2 percent, was retail trade. At the other end of the spectrum, only .1 percent owned mining businesses and no more than 7 percent of the respondents owned businesses in any other industrial classification. Once again, the service-oriented businesses predominate. Perhaps because of the nature of the businesses in which women find themselves, or because so many woman-owned businesses are relatively new, the gross receipts of respondents tended to be quite low. Almost fortynine percent of the respondents reported gross receipts in 1976 of less than $50,000; 19 percent reported less than $10,000. Only 4.5 percent had gross receipts that exceeded $1,000,000. The sales picture in 1977 was slightly better. The number of women who exceeded $50,000 increased by 4 percent (to 53 percent) and those who grossed less than $10,000 declined by 1.9 percent (to 17.4 percent.) The businesses also had few employees. Nearly all, 99 percent, reported fewer than 100 employees and 85 percent employed fewer than nine full-time people. Thirty percent had no full-time employees. Twentyfive percent employed no part-time help, while 78.4 percent employed four or fewer part-time workers over the course of a year. A look at the organization of these firms offers a clue as to why these businesses start small and tend to stay small. Although the Task Force inquiry showed a greater number of women owning partnerships and corporations than did the 1972 survey of women business owners, sole proprietorships were still the predominant form of ownership. Almost half (49.3 percent) of the Task Force inquiry respondents indicated this type of ownership. Another 20.7 percent owned 50 percent or more of the stock of a corporation. Only 22.5 percent described themselves as either joint or co-proprietors, or as partners. Of particular interest to the Task Force, in light of the question of husband and wife "fronts," or operations nominally owned by women, was the fact that 64 percent of the respondent businesses were 100 percent female-owned, and 73.5 percent were 51 percent or more female-owned. Woman-owned businesses are much like most small businesses in being service-oriented and closely held, except that they represent so small a portion of all businesses. And what of the women themselves? Basically, they started their businesses for the same reasons that have motivated men, for the traditional entrepreneurial reasons: to make money, to be their own bosses, and to use a skill. In addition, they: • Started or bought their businesses, rather than inherited them. • Had worked between 10 and 20 years prior to starting, although not necessarily in management positions. Were married. • Had a parental role model as a business owner. • Had started their businesses in the last 10 years. The women participating in the Task Force inquiry, then, are classic entrepreneurs. Of those responding, 79.6 percent were founders of the business, 43 percent started the business alone, and another 29.8 percent with their spouses. Of those who did not start the business, 56.1 percent bought it from a non relative. Only 4.3 percent inherited their business from a spouse or relative. Typically, attempts at financing and startup capital were modest. About 31 percent of the women obtained some startup money from a commercial bank, and 11.2 percent from a government program. Funds were most often obtained from personal savings (55.6 percent of respondents used this source), joint savings (23 percent), and family (18.1 percent) (9). Sixty-five percent reported that they had applied for bank credit. Of these, 90 percent sought $50,000 or less, and 58.8 percent sought $10,000 or less. This aspect of the survey is discussed in greater detail elsewhere in the report. That most of the respondents were recent and first-time entrepreneurs was also clear from the survey. For 69.4 percent of the women, the businesses they owned in 1977 were their first and only 9.6 percent had owned more than one other business in the past. Nor had most of them been business owners for very long: 75 percent had owned any business for 10 years or less, and 14.7 percent for 1 year or less. These figures suggest that 1972 data need to be updated to get an adequate picture of the status of women-owned business in the U.S. These women business owners were not, however, newcomers newcomers to the labor force. Forty-three percent had been working for at least 21 years, and only 21.5 percent for 10 or less years. However, their experience in the labor force did not necessarily reflect entrepreneurial training. Only 13.4 percent considered themselves to have been managers for 21 years or more. Thirty-nine and onehalf percent reported having five or fewer years of managerial experience; however, 55.3 percent felt that their work experience prepared them very well for entrepreneurship. Respondents reported a wide variety of educational backgrounds and the relationship between work background and ownership appeared greater than that between educational history and ownership. The survey showed 46.1 percent had attended one to four years of college; 26.3 percent had taken some post-graduate courses; and 22.4 percent had their interest in a particular field. They went into business because they wanted to take advantage of a particular skill, or they had an idea they wanted to try. American Management Concurrently, with the Task Force survey, and as an additional aid in developing a profile of the woman business owner, the American Management Associations (AMA) volunteered to conduct a survey for the Task Force. Much of what the AMA found paralleled and supported the findings of the Task Force survey. Although the AMA worked with a smaller sample--264 women responding--of more successful women, its direct interviewing of 40 of the respondents produced a vivid picture of the problems faced by women going into business for themselves. Demographically, the majority of the MA respondents were evenly dispersed throughout the country, under 50 years of age and were or had been married. Nearly three-fourths were Caucasian and one-fourth were racial minorities. This study is appendixed. AMA's profile of the successful woman entrepreneur indicated that she: • Came from a close, supportive family. • Was married to a supportive husband who was either a business owner or professional. • Exhibited a strong entrepreneurial drive early in life, often during the elementary and high school years. • Tended to be highly educated. • Exhibited an inordinate capacity for hard work and dedication to her enterprise. Was well informed concerning her business field. Was persistent in her approach to workrelated tasks. and perhaps most important: • Had an uncanny ability to redirect negative situations and attitudes to her advantage, much as a judo expert might apply the art of self-defense to the business environment. Finally this woman had the ability to juggle, yet integrate, the many diverse aspects of the different roles in her life. The dedication she applied to her business was equally applied to her husband and children. The AMA interviews made it clear that many of the women felt that early childhood experiences contributed significantly to their business aspirations. Said one: I credit my success to my father. He never encouraged my sister or me just to work. He felt that you should have either a profession so that you could go out on your own, or something that would put you into your own business so that you would never have to be dependent on anyone else. Another said: My father always has been in business and my mother has been a housewife, but she worked with my father whenever it was necessary. My mother reinforced all three of her children; she taught us that we are individuals first. This is the way I always felt. Therefore, whatever I wanted to do, I felt I could accomplish. The AMA interviews were particulary useful in articulating the problems of women as entrepreneurs. Women starting in business face their first obstacle in financing. Of those surveyed by the AMA, 63.7 percent started with money from their own savings, 15.9 percent with commercial bank loans, and 10.2 percent with money from family members. In the second six months of business, 45.8 percent drew from personal savings, and 32.2 percent from commercial bank loans. The women reported that banks offered their first major brush with discrimination. Many of the women interviewed found that obstacles dissolved when they came to the bank with a husband or male friend. Borrow ing suddenly became possible. Dealing with the financial establishment, the AMA survey showed, was only one of many problems of discrimination. Among the others encountered were the perceptions men have of women business owners. Respondents indicated that men believe that: women are intruding in a man's world; they are in business for fun; they have inadequate business experience; they cannot comprehend business intricacies; or they are overly emotional. Among the reports: Men don't take me seriously because they're not used to having women in executive capacities in a male-dominated business. You have to be better than men are, because you have to prove yourself all the time. If a woman asserts herself, it's not A particularly interesting reaction was the degree of difficulty the women reported in dealing with certain male colleagues. They listed in descending order of difficulty, bankers, suppliers, lawyers, customers, and accountants. Most of the women reported dealings with one or another government agency. On the whole, they found their dealings to be satisfactory in terms of their needs. They found problems, though, with the manner in which those services were delivered. Representative of the complaints was: I just feel that there is so much wasted time. I spent half a day just trying to find out what a particular federal agency was all about. I did sign up with the agency, but only afterwards did I find out that this is not the same thing as the program I was looking |