Women- and Minority-Owned Businesses

California’s dominance in many economic areas is based, in part, on the significant role small businesses play in the state’s $3.1 trillion economy.  Two separate studies, one by the US Census Bureau and another by the Kaufman Foundation, found that net job growth was strongest among businesses with less than 20 employees.  Among other advantages, small businesses are crucial in the state’s international competitiveness and are an important means for dispersing the economic positive impacts of trade within the California economy.

Business Ownership by Gender, Race, and Ethnicity

The Gender Differences in US Businesses chart shows selected data from the 2012 Survey of Small Business Owners (most current).  Among other findings, the data shows a 27.5% increase in women-owned businesses between 2007 and 2012, as compared to a 7.9% increase in businesses owned by men and a -45.8% decrease in firms owned equally by men and women.  Women-owned businesses also experienced the greatest increase in the number of people they employed and wages paid.

States with the highest percentage of women-owned firms included District of Columbia, Georgia, Maryland, New Mexico, and Florida.  Delaware, Alaska, North Dakota, Maine, and New Jersey were the states where women-owned firms collected the highest amount of receipts.

Gender Differences in US Businesses
 
Percent Change 2007 to 2012 Women-Owned Firms
Percent of Change 2007 to 2012 Men and Women-Jointly Owned Firms
Percent Change 2007 to 2012 Men-Owned Firms
US. Firms
27.5%
-45.8%
7.9%
Receipts from all firms
(employer and nonemployer)
35.1%
6.7%
33.8%
Employer Firms
15.7%
-25.8%
5.3%
Receipts from Employer Firms
35.4%
13.2%
34.9%
Employment
19.4%
-11.9%
11.5%
Payroll
35.3%
-0.9%
25.8%
Source:  National Women's Business Council

Women entrepreneurs, according to the Ewing Marion Kauffman Foundation, have unique skill sets, which both set them apart from other business owners and make them successful entrepreneurs.  Among other advantages, the Kauffman Foundation states, women entrepreneurs have a more nuanced understanding of businesses risk/reward profile.  Women are more comfortable with financial risks, but more sensitive about risks that may seem foolhardy.  The Kauffman Foundation also believes that there is a correlation between a rise in women entrepreneurs and increased business returns and payout ratios.

Comparison of Business Growth by Race, Ethnicity, and Veterans
Business Ownership
Percent Change 2007 to 2012
Number of all Firms
Asian American Women
44.3%
Asian American Men
25.7%
Black Women
67.5%
Black Men
18.8%
Hispanic Women
87.3%
Hispanic Men
39.3%
White Women
10.1%
Veteran Women
29.6%
Veteran Men
  7.7%
Source: 2012 Survey of Business Owners

In California, business ownership by women was up 13.7%, which was the highest among states with the largest number of women-owned businesses.  In Texas, women-owned businesses were up 8.7%, Florida 8.18%, New York 7.3%, and Illinois 4.23%.  California also had the highest number of Hispanic and Asian American women-owned firms.  For businesses owned by Black women, Georgia had the largest number of firms, and California had the fifth largest number.

The Comparison of Business Growth by Race, Ethnicity, and Veterans chart shows additional information from the 2012 Survey of Business Owners relative to race and ethnicity.  The largest percentage changes in business ownership were by Hispanic women, where the number of firms grew by 87.3% between 2007 and from 20012.  As a comparison, male Hispanic-owned firms grew by 39.3%.

Women-Owned Businesses

There were 1.1 million women-owned employer firms in the US, according to the 2019 Annual Business Survey.  These women-owned businesses employed 10.1 million workers and accumulated $1.8 trillion in receipts.  Women-owned firms comprise approximately 20% of all employer firms in the US.  The most recent data from the SBA shows that women remain underrepresented in every demographic group.  Of the 1.1 million women-owned employer firms, approximately 26% are owned by women of color.

Most women-owned firms are small with over half of all having less than five employees.  Approximately 90% of all women-owned businesses have no employees.  

The Chart below, Top 5 Industries by Women-owned Employer Businesses, shows the top five industry sectors for women-owned businesses based on employment.  While women-owned firms are predominately within the professional, scientific, and technical services industry and  health care and social assistance industry, the greatest concentration of women-owned businesses based on employment are health care; accommodation and food services; and administrative and support. These three sectors account for 47% of total industry employment by women-owned businesses.

Top 5 Industries by Women-owned Employer Businesses
Industry
Employees
Firms
Payroll ($billions)
Health care and social assistance
1,972,252
189,351
$64.0
Accommodation and food services
1,522,579
108,135
$27.8
Administrative and support
1,277,280
71,019
$43.4
Professional, scientific, & technical services
989,099
191,230
$60.4
Retail trade
871,369
130,203
$25.8
Source: https://cdn.advocacy.sba.gov/wp-content/uploads/2021/08/03103255/Small-Business-Facts-Women-Owned-Businesses.pdf?utm_medium=email&utm_source=govdelivery  

Additional information on women-owned business can be found in Small Business Facts Women-Owned Employer Businesses, released by the SBA Office of the Small Business Advocate in August 2021.

Minority-Owned Businesses

While business ownership in the US is diverse, according to the 2017 Business Survey, as firm size increases there are less businesses owned by women, Blacks, and Latinos.  Businesses without employees (nonemployer firms) are the most diverse with women comprising 42%, Blacks 12%, and Latinos 14% of all firms.  Among employer firms, women comprise 20%, Blacks 2%, and Latinos 6%.   

The chart below, Firms and Receipts by Owner Demographic, 2017, provides data on women-owned and minority-owned, including number of employer and nonemployer firms.

Firms and Receipts by Owner Demographic, 2017
 
Nonemployer Firms
Employer Firms
Total Firms
 
Number of Firms (millions)
Receipts ($billions)
Number of Firms
Receipts
Number of Firms
Receipts
Total   
25.31
1,184.6
5.74
36,579.6
31.05
37,764.2
Women  
10.55
286.1
1.13
1,490.3
11.68
1,776.4
Men
13.91
784.0
3.48
10,018.6
17.39
10,802.7
Minority
8.17
279.3
1.01
1,401.8
9.18
1,681.1
Non-Minority
16.83
846.3
4.37
11,147.0
21.20
11,993.3
Black
2.95
65.6
0.12
127.9
3.08
193.4
American Indian/ Alaska Native
0.08
2.7
0.02
38.0
0.11
40.7
Asian
1.96
94.1
0.56
814.8
2.52
908.9
Latino
3.64
129.6
0.32
422.6
3.96
552.1
White
19.99
965.2
4.77
11,681.8
24.76
12,647.0
Source: Business Ownership Demographics (sba.gov)

Additional information on the diversity of small business ownership in the US is available in this report, Small Business Facts Business Ownership Demographics, released by the SBA Office of the Small Business Advocate in March 2021.

Success Stories

Entrepreneurship training serves as an important step in helping dynamic and talented individuals turns their talents and passions into viable businesses.  During Agenda Item, III Carmen Herrera-Mansir, Executive Director, El Pájaro Community Development Corporation, will be presenting a case study their work to support business development though technical assistance and programs, such as their retail incubator, Plaza Vigil, and Commercial Kitchen Incubator Program.  Below are links to three success stories from clients of the El Pájaro Community Development Corporation. 

 

 

 

 

 

 

 

 

 

 

 

 

 

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