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 the 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.

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 business risk/reward profiles.  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.

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

Approximately 90% of all women-owned businesses in the US had no employees, according to the 2018 Nonemployer Demographic Survey.  Relative to all nonemployer firms, women comprise 41% (10.9 million) of businesses without paid employees, with $300 billion in receipts and 32.7% (8.7 million) of businesses owned by minorities, with $306.1 billion in receipts.

There were 1.2 million women-owned employer firms in the US, according to the 2020 Annual Business Survey, which covers 2019 businesses.  These women-owned businesses employed 10.1 million workers and accumulated $1.8 trillion in receipts.  Women-owned firms comprise approximately 20.9% 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 1.2 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.  While women-owned firms are predominately within the professional, scientific, and technical services industry and the 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.  The Chart below, Top 5 Industries by Women-owned Employer Businesses, shows the top five industry sectors for women-owned businesses based on employment. 

Additional information on women-owned businesses 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 fewer 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%.  

Other Nonemployer Information on Minority-Owned Businesses in the US (2020 Annual Business Survey)

• Hispanic-owned businesses made up approximately 14.7% (3,897,000) of businesses, with $143.9 billion in receipts.

• Veteran-owned businesses made up about 5.3% (1,406,000) of businesses, with $60.0 billion in receipts.

• There were about 2,074,000 Asian-owned businesses with receipts of $101.6 billion, the largest receipts among businesses owned by minority race groups.

• There were about 3,115,000 Black- or African American-owned businesses with receipts of $72.5 billion.

• There were approximately 89,000 American Indian and Alaska Native-owned businesses with $3.0 billion in receipts.

• There were roughly 40,000 Native Hawaiian and Other Pacific Islander-owned businesses with $1.3 billion in receipts.

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

Combined 2019 statistics for employer and nonemployer businesses by demographics include:

• The total number of minority-owned businesses operating in the United States in 2018 was 9,709,323, with $1.8 trillion in receipts.

• The total number of women-owned businesses was 12,001,410, with $2.1 trillion in receipts.

• The total number of Hispanic-owned businesses was 4,228,625, with $599.5 billion in receipts.

• The total number of veteran-owned businesses was 1,743,934, with $1.0 trillion in receipts.

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.