Data shows that women-owned businesses continue to be major economic drivers.
- Between 2018 and 2019, U.S. women started an average of 1,817 new businesses per day, representing 42% of all businesses.
- Over the past five years, the number of women-owned businesses went up by 21%, more than double the increase of 9% for all businesses.
- Entrepreneurship grew by 99% among African American women, 70% among native Hawaiian and Pacific Islander women, and 63% among Asian American women.
Small businesses are a major part of the American economy, and women appear to run them better. Small businesses fuel job growth, generate taxes and make up a large percentage of American businesses overall. While immigrants and other groups have carved out a large portion of this segment of the economy, a newly released survey suggests an even bigger demographic contributes to the small business landscape: women.
The ninth annual State of Women-Owned Businesses Report estimates that approximately 42% of all American businesses are owned by women. That block of businesses generates $1.9 trillion and employs 9.4 million workers. According to the study, commissioned earlier this year by American Express, women with "diverse ethnic and geographic backgrounds started an average of 1,817 new businesses per day."
Based on U.S. Census Bureau data that's been adjusted by gross domestic product figures over the last five years, researchers said the number of women-owned businesses has grown by 21%. During that time, employment at women-owned companies increased by 8% and revenue rose by 21%. In every case, women-owned businesses performed better – often by significant margins – than the national average.
"The face of entrepreneurship is evolving to include all women, regardless of demographics," said Courtney Kelso, senior vice president at American Express. "Even more impressive is that women are starting businesses on their own terms. The economic impact of women-owned businesses is undeniable."
Industries where women-owned businesses thrive
When looking at the overall block of women-owned businesses, researchers found that their efforts were largely focused in three main industries.
Approximately 2.8 million businesses, or 22% of all women-owned businesses, were found in "other services" like hair and nail salons and pet care. Roughly 15% of all women-owned businesses, approximately 1.9 million businesses, were in the healthcare and social assistance industries, which largely consists of child day care and home healthcare services. Professional, scientific and technical services like legal, bookkeeping and public relations firms make up approximately 15% of all women-owned businesses, with 1.6 million businesses in this segment.
While they make up most of the women-owned business group, those three industries don't generate the most money, researchers found. That distinction goes to wholesale trade (17%), retail trade (14), and professional, scientific and technical services (10%).
Women of color continuing to hustle
While small business owners tend to look to their ventures as their main source of income, many of the women who start their own businesses opt to make it a source of extra income. For them, the "side hustle" is real, with researchers finding that "sidepreneurship" is growing "at a rate that is nearly twice as fast as the overall growth in female entrepreneurship" over the last five years.
The largest group of women fueling that burst in growth are those in minority groups, who saw their business growth (65%) explode two times higher than all businesses (32%). According to the report, side entrepreneurship has grown by ...
- 99% for African American women;
- 70% for Native Hawaiian and Pacific Islander women;
- 63% for Asian American women;
- 46% for Latina and Hispanic women;
- 36% for Native American and Alaska Native women.
Census data shows that 39% of all women in the U.S. are women of color, but that same group makes up 89% of the women-owned businesses created each day over the last year. That growth among businesses owned by women of color, according to the study, occurred in nearly every category.
As of this year, approximately 6.4 million businesses owned by women of color make up 50% of all women-owned businesses. That block of business employs almost 2.4 million people and generates approximately $422.5 billion in revenue.
While those numbers are encouraging, researchers said they also found that a pay disparity between white women and women of color is holding back this segment of the U.S. economy. They said the average amount of revenue dropped from $67,800 in 2014 to $65,800. Those numbers stand in contrast to the non-minority women-owned businesses that saw their average revenue increase from $198,500 in 2014 to $218,800 this year.
If the gap were addressed, researchers said, the U.S. economy would see an influx of 4 million new jobs and $981 billion in revenue.
States that foster women-owned business growth
Along with the economic impact that women-owned businesses have had on the U.S. economy, researchers said they examined how those businesses fare in their respective states. With that data in hand, they shared the top five locations that became home for female entrepreneurs.
While women-owned business growth has been trending upward for years, researchers found that Michigan saw the largest amount of growth in this area. Georgia, Florida, South Carolina and Nevada also showed significant growth.
The state with the highest employment growth rate among women-owned businesses, as well as their average number of employees, from 2014 to 2019 was Maine. Minnesota and Indiana came in second and third, respectively, with Delaware and Virginia tied for fourth.
Researchers also examined the "economic clout" of women-owned businesses in their states. Defined as "growth in the number of firms and growth in employment and revenue," the state with the highest economic clout was Georgia. Oregon came in second, while Idaho and Nevada tied for third. South Dakota was fourth. The top metropolitan areas with the highest economic clout were Detroit, Michigan; Charlotte, North and South Carolina; Atlanta, Georgia; Austin, Texas; and San Antonio, Texas.