One of the biggest differences in approaches -- and one that experts agree is a hindrance to growth of female-owned enterprises -- is the way the genders manage the finance and business ends of their companies. Although the U.S. Census Bureau's most recent survey shows women-owned businesses to be the fastest-growing sector of the economy (those with at least 100 employees are growing at six times the national rate), they receive only 12 percent of small-business credit, according to a report by the Milken Institute and National Women's Business Council.
Even among fast-growth companies -- firms that have grown 30 percent over the past three years -- only 39 percent of those owned by females have a commercial bank loan, compared to 52 percent of their male counterparts, and a third of women owners use personal credit cards and business earnings to finance their business, 10 percent higher than men, according to a recent study by the National Foundation for Women Business Owners (NFWBO).
A Fork in the Road
The propensity to accrue personal debt to help a business grow (or keep one afloat) is not always a choice. Because women overall have had a shorter history, less executive and professional experience, a smaller mentoring system, fewer entrepreneurial role models and are more risk-averse, they obtain fewer commercial and institutional loans. The Small Business Administration loan program, for instance, awarded women less than $2 billion out of the $9.8 billion it backed in loans during the first half of 2000. An NFWBO survey conducted last year shows only 9 percent of all institutional investment deals involved women-owned firms.
Some of it has to do with having to slowly learn the ropes in places where men have had role models and mentors to guide them through the maze and help open doors. It also has to do with perceptions among both genders, Julie Weeks of the Washington D.C.-based NFWBO, said in a telephone interview. "Studies show that women business owners receive less credit and start-up funding than men," she says, "and we and other organizations are trying to educate women about accessing capital and how it can help a business."
Part of that task is overcoming misperceptions that outside money, whether it means getting a commercial loan or taking on partners, means a loss of entrepreneurial control. "Some women correlate outside financing with diminished control and independence," Weeks says. "Their line of thinking is, 'I don't want anybody else telling me how to run my business.' But they aren't considering or aren't aware of what equity capital can do for a company." In addition, she says, partnering with investors doesn't have to mean an entrepreneur gives up majority ownership status.
What may appear gender-based at first glance, however, is made more a statistical response when considering that financial institutions for the most part target companies that gross between $2 million and $5 million annually. And although women-owned businesses are growing in dynamic numbers -- charting a 103 percent hike in just 13 years -- almost three-fourths of those companies gross under $1 million a year.
The Uphill Climb
To complicate things even more, surveys the NFWBO conducted with business owners also show that some women are intimidated by the process of securing a loan and aren't confident that they'll get fair consideration. The survey also indicated women are more predisposed to consulting people outside the business -- mainly accountants, family members and other business owners -- about financial and growth decisions than men are, but are almost half as likely to allow investors to buy into their enterprises. Women also are playing catch-up in terms of learning processes and establishing relationships that have been available to men through entrepreneurial role models and mentoring systems for eons. But they are learning the ropes, with a survey of equity investors reporting that about 65 percent have considered investing in women-owned businesses in the past two years and 38 percent have done so.
It isn't that women entrepreneurs aren't open minded. Women are only slightly less inclined than men to bank online with comfort and to conduct at least some of their business banking over the Internet. Women, however, are significantly more likely -- about 20 percent -- to use the Internet, and particularly their bank's Web site, for financial and general business information. The study, Online & In Focus: How Women and Men Business Owners Use the Internet, released last month by the Center for Women's Research, indicates a continued increase in Internet use in the future by both genders, especially among newer companies and firms owned by younger entrepreneurs.
When it comes to hiring practices, studies indicate women are very open-minded, hiring women at a rate that's 11 percent higher than the national average in whole sale and retail trade. Overall, women business owners employ more than 51 percent women and almost 49 percent men compared to men owners' average of 38 percent women and 62 percent men.
To answer the inequities and differences in operations and opportunities for business women, national and local organizations like the nonprofit NFWBO, the Small Business Administration, Center for Business Research and a host of others are seeking to gather and disseminate information, conduct workshops and act as resources for companies trying to proceed down the road to success.
When it comes to philanthropy and volunteer work, women business owners tend to be on par with men. A NFWBO/Merrill Lynch study released last year, Leaders in Business and Community: The Philanthropic Contributions of Women and Men Business Owners, showed that 92 percent of women and 88 percent of men contribute to charities and almost an equal number in each gender volunteers time monthly. Women owners, however, are considerably more likely than men (46 percent to 29 percent) to take on leadership roles in their volunteer work, and are equally more likely to help plan and execute a special event for a charity organization.
Weeks says she believes the playing field will become more level as women become more versed in business options and the business arena becomes more knowledgeable about the special assets and economic forces of women-owned businesses.