Companies led by women are highly confident in the economy, and the positions of their businesses, according to a new study by non-profit, peer advisory group, the Women Presidents’ Organization (WPO). And for good reason – the results show that they’re performing well, even outpacing the U.S. national average.
The 2014 Business Outlook Survey was sponsored by KeyBank’s Key4Women program, which provides access to capital, education and networking opportunities to female entrepreneurs. Women-led businesses, the survey suggests, are seven-times more confident in the economy this year than they were last. While half of women leaders polled cited the economic downturn as their biggest concern in 2013, this year, that number dropped to just 8%.
What’s most interesting about this study isn’t the confidence women-led businesses have in the economy, however, but rather the performance that backs that up.
Women-Led Businesses Poised for Success
To date in 2014, 28% of women-led businesses in the U.S. have achieved a growth rate of 25% or more, compared to a 5.4% average U.S. business growth rate. (Based on Sageworks’ Private Company Report.) These women-headed companies outperformed the national average by three times. And there are no signs of slowing down, with 42% of WPO members projecting that their revenues for the year will top US$5 million.
Women-owned/led businesses make up a significant percentage of all U.S. businesses – 30%, to be exact. And, according to the Global Initiative for Women’s Entrepreneurial Research, female-owned or led companies also account for 16% of all jobs, and contribute close to US$3 trillion to the economy.
“Not only are women-owned businesses thriving,” says Marsha Firestone, Ph.D., WPO President and Founder, “they’re outpacing their male counterparts and setting the bar high for success. They are increasing their bottom line, expanding their workforce and providing new jobs.”
Part of the success can be attributed to these leaders’ ability to make difficult choices, aong with a strong focus. Says Martha Seidenwand, Manager at Key4Women: “Women business owners…are not focused on competition or fluctuations in their individual regional market. Instead, they put their energy and effort into learning ways to operate their businesses more efficiently. They are evaluating their business goals, and they actively seek insight on how to attain them.”
Capital Funding Challenges
Women-led businesses still face major challenges. Women leaders are concerned with being able to grow their businesses to scale (17%), finding and retaining good staff (16%), increasing, or at least maintaining, profit margins (15%), and growth of the competition (8%).
But the main concern for women-led firms in the U.S. is access to capital. Women receive just 4% of the total value of conventional small business loans in the U.S., and just 7% of venture funding, as per the U.S. Senate Committee on Small Business and Entrepreneurship. Because of this, 33% of WPO members used their own personal savings to start the business, and 12% had to incur personal debut. Close to a third of WPO members cite interest in raising capital in the future. Will they run into the same problems after proven success?
“I think the bias that women don’t grow substantial businesses that generate increased revenue and employment is programmed into the DNA,” adds Firestone. “In some cases, these businesses are viewed as not creditworthy.”
Firestone says it’s common for WPO to have women on its 50 Fastest-Growing Women-Owned/Led Companies list that have relied on informal funding to get started, including both self-financing and incurring debt, as well as obtaining loans from family and friends. But, she adds, “thanks to angel investors and venture capital, the 2014 ranking showed a slight shift in how these second-stage companies had obtained financing.”
WPO in Canada
The positive outlook for women-owned businesses in the U.S. is good news for Canada as well.
WPO, by the way, has several chapters and representatives north of the border – in Atlantic Canada, Newfoundland & Labrador, Alberta, B.C., Quebec, and Ontario, including the most recent chapter that opened this past May in Ottawa. At a reception hosted by BMO at that time, Sandra Henderson, Senior Vice President, Eastern Ontario Division, Canadian Personal & Commercial Banking at BMO Bank of Montreal, noted: “More and more women are seeking financing to take their businesses to the next level…BMO is committed to helping Canadian entrepreneurs get their share of the $10 billion in credit BMO has made available, giving them access to the capital they need to grow their businesses.”
The survey was conducted in August with 339 women leaders and owners of multi-million dollar companies (23 in Canada) who responded anonymously. WPO spokesperson Susan Johnson tells us responses from the Canadian women “mirrored what members in other parts of the world said.”