Research Summary

Women-Owned Firms Are Selling to Governments, Corporations

Center for Women’s Business Research  ·  October 15, 1998

Women lag men in sales to corporations; minority women advance

The survey also reveals that government efforts to include more business owners of color in the procurement process are paying off for minority women-owned firms, and that mentor-prot,g, programs and programs which certify that a business is woman-owned have proven helpful for many firms seeking entry into government and corporate markets. The survey cautions that many women and men business owners have placed little emphasis on the capacity to bid and transfer data online, though this is becoming increasingly necessary for participation into these marketplaces.

“While it is impressive that 42% of this nation’s nearly 8 million women-owned businesses sell products or services to government agencies or corporations, women-owned firms overall are less likely than men-owned firms to take advantage of this market opportunity,” said Lois E. Haber, CLU, ChFC, President of Delaware Valley Financial Services, Inc. in Berwyn, PA, and chair of NFWBO. Sixty-one percent (61%) of men-owned firms sell to government agencies and large corporations. Federal government purchasing alone is a $157 billion market, according to NWBC.

The market penetration gap between women- and men-owned firms is widest in the area of corporate purchasing. Fully 49% of men-owned firms sell products or services to large corporations, compared to 30% of women-owned firms a 19% gap. The market gap is 13% in state and local government procurement markets, and only 3% in Federal government procurement.

“Women mean big business. In order for women-owned businesses to grow, we must build bridges between women entrepreneurs and the public and private sources of contracts,” observed Kay Koplovitz, Chair of NWBC. “Where we find these bridges exist, women contractors are getting the job done.”

Federal government set-aside programs have resulted in nearly one-quarter (23%) of firms owned by women of color having some sales to the Federal government, compared to 13% among firms owned by white women business owners. Women’s business enterprise (WBE) certification has had a positive effect according to 45% of those who are certified, though 49% say that certification has had no impact on the sales and growth of their business.

“In addition,” Koplovitz pointed out, “the NFWBO/NWBC survey shows more women than men entrepreneurs participate in corporate and government mentor-prot,g, programs to help business owners gain a better understanding of government procurement and corporate purchasing.” Twelve percent (12%) of the women-owned firms that are currently in the government procurement and large company purchasing markets participate compared to 6% of men-owned firms.

The survey determined that women-owned businesses are less likely to have experience subcontracting supplying goods or services to a prime contractor than men-owned firms; just over one in five (22%) of women-owned businesses have been a subcontractor under a larger contract to a government agency or large corporation, compared to 31% of men- owned firms. Women business owners who have had experience with subcontracting have had less success in getting work when bidding as a subcontractor than have their male counterparts. Fully 28% of the women-owned firms that have had subcontracting experience say they never or almost never receive work when bidding as a subcontractor twice the share of men-owned firms (14%).

“The growth of women-owned firms in the U.S. continues to outpace overall business growth by nearly two to one, and the top growth industries are construction, wholesale trade, transportation, and manufacturing,” Haber observed. “These firms are a great source of suppliers for government agencies and large corporations. In fact, the survey showed that women-owned businesses that produce goods such as manufacturing and construction and those in transportation or communications are among those most likely to be involved in procurement and contracting.”

Women and men entrepreneurs who are involved in government procurement or large corporation purchasing report that the most important factors that contributed to their market success are: having perseverance; having an administrative framework in place; knowledge of procurement/purchasing procedures; and developing relationships with procurement and purchasing officials.

“The NFWBO/NWBC survey identifies a key area in which business owners would benefit from additional training. Neither women nor men business owners report that having electronic data interchange (EDI) capability to bid and transfer data online has been necessary to effectively sell goods and services to government agencies and large corporations,” explained NFWBO’s Haber. “However, both government agencies and corporations are increasing their use of technology for procurement and purchasing and business owners will need this capability.”

“NFWBO’s wide-ranging research documents that there are many similarities with respect to the ways in which women- and men-owned businesses sell to governments and corporations, finance their firms, utilize information technology, and establish retirement plans,” Haber observed. "Our research also shows that women entrepreneurs are more likely than men business owners to place value on both relationships and factual information, are more likely than men entrepreneurs to seek out the opinions of others, and are more reflective than their male counterparts when making decisions. As women-owned firms continue to increase in numbers and economic power, it is increasingly valuable for policy makers and other business owners to understand and benefit from these similarities and differences."

Charts

Over 4 in 10 Women-Owned Firms Sell Products or Services to Government Agencies or Large Corporations

Largest Access to Markets Gap Seen in Large Corporation Purchasing

The National Foundation for Women Business Owners (NFWBO) is a nonprofit research and leadership development institute. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. Up-to-date intelligence about women business owners and their enterprises worldwide is documented in NFWBO’s original research and analysis. The Foundation is affiliated with the National Association of Women Business Owners (NAWBO).

The National Women’s Business Council (NWBC), a bi-partisan Federal government advisory panel, was reauthorized by Congress in 1997 [Public Law 105-135]. It was created to serve as an independent source of advice and counsel to the President, the Congress, and the Interagency Committee on Women’s Business Enterprise, its public sector counterpart on economic issues of importance to women business owners. The mission of the Council is to promote bold initiatives, policies and programs designed to support women’s business enterprises at all stages of development in the public and private sector marketplaces.

NWBC acknowledges the Department of Defense for its generous support of this study.

Study Methodology: The study was conducted by telephone among a nationally- representative sample of 1,000 business owners 800 women and 200 men randomly selected from Dun & Bradstreet’s Dun’s Market Identifier database. The interviews were conducted from mid June through mid July, 1998. Decision Insight of Kansas City, Missouri, a woman- owned firm, conducted the interviews.

The sampling error for sample sizes of 800 and 200, respectively, are approximately 3.5 percent and 7.1 percent at the 95% level of confidence. This means that, 95 times out of 100, survey results will be within the above ranges compared to true population values.

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