Seriously. That's amazing!
- Over the past two years, (2018 & 2019) women have created/launched over 1,800 new businesses DAILY.
- By the end of 2018, the number of women-owned businesses climbed to a total of nearly 13 million (12,943,400) which was 42% of all privately held companies according to the American Express report on the State of Women-owned Business 2018)
This is a HUGE shift.
Too bad this tremendous grow in women's business ownership is just a drop in the ocean of private business wealth in the U.S. Even though the number of women-owned companies is growing fast, our economic power is not.
Women-owned businesses employ 9.4 million people -- only 8% of the total employment in privately held firms.
Worse: total 2017 revenue by women-owned businesses was $1.9 trillion which leaves women with only 4.3% of the revenue booked by all privately held firms.
Women own 42% of privately held companies but bring in only 4.2% of revenue? That's what I call the Gender Revenue Gap
Stop for a second and think about your company.
- What if your business was 10 times larger than it is today. What would that look like?
- How many people would you employ?
- How many more lives would your business touch?
- How much MORE would you be able to achieve and do with 10x revenue?
- What would 10x profit look like to your family? Your workers? Or your favorite charity?
Now, I know not every company needs to be 10 times larger or richer or more impactful. Many businesses are designed to be small or solo; to be a side gig or a flexible alternative to a full-time job. I don’t have a problem with that. You don’t have to be a mega-large corporation to make a difference.
But stop for a minute and dream with me about what your community and our world would look like if women-led social impact companies had equal economic and political power. We could make amazing progress on issues like waste, education, healthy food, and regenerative agriculture.
But how do we get there? What is holding us back?
Here’s what I see through my work (also validated with several reports):
- Women-owned companies tend to start small and grow slowly (WENYC report 2015)
- Women-owned companies have less access to capital – money that would fuel faster growth;
- Only 2% of firms that received VC funding in 2018 were owned and led by women;
- Women are less likely to apply for credit; and when they do they take on less debt: According to Biz2credit the average funded amount for women-owned businesses ($57,097) was 45% lower than that of men-owned businesses ($103,604) in 2017.
- Women report and exhibit lower confidence around financing, investment and money management. (WENYC report 2015)
In my view, these statistics are all related. Companies with lower revenue tend to also have lower profit. Lower profit makes it harder to qualify for debt from traditional lenders which reinforces slower growth.
Lack of confidence around financing investment and money management translates into taking fewer risks, not pushing for higher debt limits or not knowing when it’s even right to ask for financing. For some business owners, the lack of financial knowledge has also contributed to taking on high-priced debt and falling into a vicious cycle of debt draining the business of operating cash.
That’s why my path to accelerate change is to focus on helping women business-owners improve the growth trajectory for their companies: to set higher targets, figure out the financing needed; and make sure that each business maximizes profitability and social impact as you grow.
My vision is to be part of building a wider community of efforts that are breaking down barriers for women and people of color; to link arms, strategies and checkbooks to invest in each new generation of businesses, and to keep the wealth growing.
This, my friend, is why I’ve created a new service to support women-led companies that are seeking breakthrough growth in 2020. Check out Easy as PIE: Powerful Insights and Execution.
In the next few weeks, CFO on Speeddial will be releasing more resources, creating more access and publishing more stories about the Gender Revenue Gap and how to change the ratio. In the meanwhile, please share your stories, ask questions and connect here or on social media.