One In Five Small Businesses Now Has A Majority Of Female Ownership

Women are now beginning to open up new businesses faster than ever before. Their pace for creating new businesses is now currently quicker than men. However, they are doing so while having to face many high hurdles that men still don’t have to get through. This makes opening up a new small business more difficult for a woman than for their equal male counterparts.


Around one out of every five small businesses now are mostly owned by females. Coincidentally, many of these same businesses also saw growth by more than 20-percent between the year 2007 and 2015. This was a recent report which was published by both the Federal Reserve Banks of Kansas City and New York.

It has been added that more than 970,000 different smaller firms have a majority in female ownership. The Federal government refers to a small business as one that has less than 500 employees working in it. This is far fewer than the number of male-run businesses that is around three million. This number also grew in the same time period at around 6-percent.

Different Challenges

Unlike the male-owned small businesses, female startups will face many more challenges in terms of growing and operating. This was stated by Dell Gines, the senior advisor of community affairs in the Kansas City Fed. This report also seems to speak volumes about the hot topic of women’s participation in the country’s economy. This is a subject that has been championed by the Fed’s chair Janet Yellen. She argues that the overall growth of the economy will be stronger with more women in the job market.

Yellen has also noted in her speech done in May that even though progress throughout generations has suggested that the barriers restricting women’s progression still remain, they are persevering.

Small Business Sector

This information is even more relevant in the small business arena. Companies which are run by women seemed to have more challenges in making profits compared to their male counterparts. Alternately, both male and female-owned businesses had around the same amount of outstanding debts, though the females earned less. Despite having the debts, women are typically more likely to report their financial problems in the first year of opening. They are not reported to apply for loans as often as men with businesses because they fear being rejected or making business loan application mistakes. Less than 50-percent of women-owned businesses which applied for the financing actually got approved. This is in comparison to more than 60-percent of male-owned businesses which got their loan applications approved.

To make up for the lack of their access to credit, women who own businesses will end up relying more heavily on small business grants and credit cards in order to keep their businesses afloat. Their businesses tend to be much smaller than their male counterparts. A little more than half of women-owned small businesses have only one to four employees working for them. Only around three percent of women-owned businesses have more than 50 employees.

This information was gathered from thousands of different firms to get a more accurate perspective of the difference between small businesses ran by men and women. The Kansas City Fed and the New York Fed had surveyed around 16,000 different firms and their employees throughout the country to get their information to create the report.






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