Challenges of Women-Owned Businesses

Women have a unique stake in economic markets, policy and outcomes. We contribute to the U. S. economy; we have driven the creation of new businesses and jobs, moved into leadership roles providing financially for our children and families our employees and the community and we hold the majority vote. And we have done so by managing our many roles, including that of Mother.
Mothers are at the core of their families’ economic security. 72% of mothers work; the percentage of mothers working full time has increased over 61% since 1979. And a record 40% of all households with children under 18 include mothers who are either the sole or primary source of income for their family. Working mothers now account for 63.3% of household earnings.
Women have progressed from the home to the workplace and into business ownership, we now own 36% of all businesses and control up to $15 trillion in purchasing power, and we are expressing our unique views and needs from this position of power.
Unfortunately, women in business have not realized their full potential as our revenues are not commensurate with our numbers – women-owned firms produce only 4.23% of all firm revenues an annual opportunity shortfall of over $10 trillion dollars. And mothers are even more challenged given their dual roles.
A number of challenges face all women in business. The U.S. Women’s Chamber of Commerce has identified the top three challenges that impact the business bottom line.  They are access to capital, access to federal contracts and access to family friendly work environments.

Access to Capital

First, we must end the minimized access to capital, composition and high capital cost which holds women-owned businesses back from realizing their full economic potential.  Women entrepreneurs face significant barriers in obtaining the right capital – at the right cost – to maximize their opportunity for growth. For example, women are much more likely to fund their businesses with high cost capital sources (such as credit cards) and they start their firms with about 23 percent less of the capital needed with which men start comparable firms.
Despite the vast economic importance of women-owned businesses, in 2012, only 9.3 Small Business Administration (SBA) 7(a) loans were issued per 10,000 women-owned businesses compared with 24.7 for male-owned small businesses. Women account for only 16 percent of conventional small business loans and these loans account for only 4.4 percent of the total dollar value of loans from all sources. Overall, just $1 of every $23 in conventional small business loans goes to a women-owned business.
Aside from the discrimination women face when applying for loans, women are less educated regarding capitalization and tend to have a limited set of resources / connections to the full range of the lending community. And the SBA has not aggressively sought to fulfill their role in ensuring that loan dollars backed by SBA funds are committed across the full range of market needs, nor do they hold their lenders accountable.

Access to Federal Contracts

Despite Small Businesses’ critical importance to our nation’s economy, their share of federal contracts continues to decline. Small business awards were $23.6B less in FY2015 than they were in FY2010 – including a large contraction of $20B between FY2014 and FY2015. Finally, of the 261,969 small businesses listed in the Small Business Administration (SBA) database of firms seeking federal contracts, only 108,660 secured contracts in FY2014.
Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) are being even further hurt. The stated goal is to award 5 percent of federal contracts to WOSBs as prime or subcontractors – despite the fact that women own ten million firms representing 36 percent of all U.S. businesses. Moreover, according to a 2014 Government Accountability Office (GAO) report, in 2012 and 2013, 40 percent of the WOSB and EDWOSB awarded contracts went to ineligible firms. According to the SBA Inspector General, federal agencies’ contracting officers awarded 15 of 34 set-aside awards, totaling $7.1 million, without the companies meeting the set-aside requirements of WOSB. Specifically, 10 of 34 WOSB set-aside awards were for ineligible work, and 9 of the 34 were awarded to firms that did not provide required documentation to prove that they were eligible for WOSB.
Yet each year the SBA reports the federal government is exceeding the 23 percent minimum goal for contracting with small businesses – even though the facts do not support this claim. For example, the SBA small business goaling report and scorecard for FY2013 reports $83.7B spent using small businesses. Yet an advanced search on the Small Business Dashboard reports only $4.8B. Furthermore, companies listed as receiving small business awards listed in the reports included such companies as Raytheon, Booz Allen Hamilton, and The Boeing Company, among numerous others that clearly are not small businesses in actuality.

Access to Family Friendly Work Environments

A failure to achieve positive workplace environments, compensation, advancement, and costly childcare has driven many women out of the workplace and into their own non-employer firms.
However, many of these women are not seeking significant business growth but rather they are either working as 1099 workers (without security and benefits), have their own firms in addition to jobs, or are simply performing service industry or craft work on their own. These women and their families are at great financial risk.
The lack of fair pay, paid sick leave or paid parental leave, workplace flexibilities impacts not only women workers but also women-owned firms. Women-business owners seek to offer fair pay, benefits, higher wages and a better workplace environment because many of them have been previously in workforces that did not offer these critical benefits. However, they are competing with companies that do not offer the aforementioned – which places undue competitive pressure on them.
While these challenges are decades old, 2016 brings in a unique opportunity to drive change.  As women have gained critical mass in our numbers as business owners, consumers and voters, we can take action to bring about financial growth. It is our choice – we can continue to allow the disparities or we can step up to lead the change.
By targeting our purchasing power with women-owned firms first and women-friendly firms second, we can ensure fair pay and family friendly work environments.  And as voters, when we choose candidates that support the Women’s Economic Priorities, we can ensure policies that reflect our economic growth and security.
As women behave with authority on economic issues and act as a mature major market force, we grow our financial success and advance our Nation’s economic achievements; we must change the conversation and we must position ourselves as industry and market experts. We must call out inequities and get involved in policy and politics to ensure our views and needs are represented.
And above all, we must step up and take ownership of our future as industry and market leaders.

To be a part of the change, you can join the U.S. Women’s Chamber of Commerce and advance the power and clout of the Women Led Economy and work to kick open the doors to career and business growth and political leadership.

“Be the change that you wish to see in the world.” ― Mahatma Gandhi


Margot Dorfman

Margot Dorfman is the CEO and Co-Founder of the U.S. Women’s Chamber of Commerce, a 501c6 not-for-profit trade association based in Washington DC. Dorfman is a visionary leader who has dedicated herself to promoting the economic and leadership interest of women.Her extensive background in business, business ownership, publishing and nonprofit leadership has prepared Ms. Dorfman to set the vision for the U.S. Women’s Chamber of Commerce.

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