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Lead Your Team Women in Business

Despite Growth, Women Business Owners Hit Size Ceiling

Women are driving the growth of small businesses in the U.S., according to a new report, but many run out of steam when they try to break through the 100-employee and $1 million revenue barrier.

According to the latest U.S. Census data, outlined in a new report from American Express OPEN, women start businesses at 1.5 times the national rate and are now estimated to own just over 8.1 million enterprises that generate nearly $1.3 trillion in revenues and employ 7.7 million Americans.
While they initially take off quickly, many women business owners face difficulty sustaining that trajectory.

Though their companies generally exceed those of their male counterparts in growth rate in revenue and employment in their early stages, they run into a glass ceiling when they hit the $1 million/100 employee mark and begin to lag national averages for growth in both revenues and employees.

“Women are driving the growth of our smaller businesses,” said Susan Sobbott, president of American Express OPEN, an issuer of payment cards for small businesses.  “They do a great job of bringing new ideas to life and they show strong results up to a certain level. In terms of both revenue and employment, then share of women-owned firms as the highest levels of business accomplishment has remained essentially unchanged over the past 14 years.”

In 1997, the report said, 2.5 percent of women-owned businesses had 10 or more employees and 1.8 percent had $1 million or more in revenues. Today, 1.9 percent of women-owned firms have 10 or more employees and 1.8 percent have $1 million or more in revenues.

Encouragingly, women-owned businesses continue to diversify in all industries, with the fastest growth coming in education services (up 54 percent), administrative and waste services (up 47 percent) and construction (up 41 percent).

OPEN’s analysis also shows a changing dynamic over the past 14 years, with both women- and men-owned firms losing pace as larger firms grow more dominant. As of 2011, while privately held firms still account for nearly all (97 percent) businesses, they are now contributing less than half of U.S. jobs) and 36 percent of business revenue. Large, publicly traded firms — though just 3 percent of U.S. businesses — now employ 53 percent of all workers and generate 64 percent of business revenues (up from 43 percent and 55 percent in 1997).

“While we know women-owned firms are typically both younger and smaller than their male-owned counterparts, this analysis dispels the myth that women are ‘lifestyle business owners’ or that their firms are small by choice,” said Sobbott. “During a period when larger enterprises grew at the expense of small, privately held firms, women-owned businesses actually grew faster than men-owned firms up to the 100-employee threshold and $1 million revenue marks.”