Since the end of the Great Recession in 2010, minority- and women-owned businesses have been steadily increasing. Although average earnings for businesses owned by women still tend to lag behind that of men, they are seeing large increases year over year. In 2014, there were 9.1 million business owned by women in the United States; those businesses employed 7.9 million workers, and grew at 1.5 times the national average.
What factors are causing women-owned businesses to succeed?
Quite simply, more women are becoming entrepreneurs and finding business success because they have more role models and mentors. According to the National Women’s Business Council, having a mentor who has faced similar challenges to a specific entrepreneur is a predictor of success. Since businesses owned by women, and specifically women of color, face a unique set of barriers to capital, funding and entrepreneurship, having someone help them navigate these waters is key to success.
Traditional banks have always had a reputation for only wanting to lend money to those who don’t already need it. Women who start their own businesses often have lower credit scores than their male counterparts, and generally start with about half the capital of male entrepreneurs. This means that they’re less likely to be able to access bank funding at lower interest rates. They may need to raise capital through non-traditional lenders or credit cards, which can handicap a business in the early years.
As more businesses are becoming successful, however, banks are becoming more willing to lend to women entrepreneurs. In 2014, roughly 27 percent of the business loan applications received by banks were from businesses owned by women. That figure is painfully low, but is double what women-owned businesses applied for the previous year.
Businesses that survive economic difficulties often emerge stronger, leaner and more flexible. This appeared to be the case for women-owned businesses that weathered the Great Recession. According to the NWBC, businesses owned by women lost a smaller share of their employees than those owned by men, and after the recession, were a significant portion of the businesses that quickly began to add jobs again.