Research Summary

Largest Women-owned Firms Demonstrate Increasing Economic Power

Center for Women’s Business Research  ·  November 13, 2001

November 13, 2001

Washington, DC –The expansion in the number of women-owned businesses with 100 or more employees, as well as those with $1 million or more in revenues, is outpacing the growth rate of all businesses of the same size, according to a new study from Center for Women’s Business Research (founded as the National Foundation for Women Business Owners), which was underwritten exclusively by Wachovia Corporation and conducted in cooperation with D&B. The study also documents that women-owned businesses are as financially robust and creditworthy as all businesses, regardless of size.

The study, “Removing the Boundaries: The Continued Progress and Achievement of Women-Owned Enterprises” takes an in-depth look at the characteristics of commercially active women-owned firms in the United States between December 1997 and December 2000, focusing on growth and financial strength.

“Women-owned businesses are exhibiting a tremendous momentum in growth and are expanding rapidly as a percent of the U.S. business economy,” said Nina McLemore, Chair of Center for Women’s Business Research and President of Regent Capital. The study found that the number of women-owned firms with 100 or more employees increased by 43.9%, which was 68% faster than all businesses breaking the “100 employee mark” during the 1997 to 2000 period. The ranks of women-owned firms with 500 or more employees are expanding even faster. The number of these firms increased by 124.3% over the same period, nearly triple the growth rate among all firms of this size. Further, the number of women-owned firms with revenues of $10 million or more grew by 36.8%, more than three times the rate of comparably-sized firms.

“These larger enterprises also are the fastest growing segment of all women-owned businesses,” continued McLemore. “The number of all women-owned firms has been increasing from one-and-a-half to two times the rate of the national economy for the past decade. The growth rate is even stronger amongst the largest businesses owned by women. The number of women-owned firms with 500 or more employees is expanding nine times as fast as all women-owned businesses and the number of firms with more than $10 million in revenues grew at more than 2.5 times the rate for all women-owned businesses.”

The study also reaffirms that women-owned businesses are just as financially robust and creditworthy as the average U.S. firm. “This new and compelling information demonstrates women-owned firms’ continuing vitality and growth,” said John Guy, Small Business Segment Executive for Wachovia. “There are no differences between the scores registered by women-owned firms and the scores of the average U.S. firm in three key measures – bill payment, financial stress and overall creditworthiness. On a five-point scale of financial stress, the vast majority of women-owned and all firms are at the low end of the scale, with 74.3% of women-owned and 70.6% of all firms under very low levels of financial stress. In addition, when assessing overall creditworthiness, 65.7% of women-owned firms have a low to moderate credit risk rating, compared to 62.9% of all firms.”

“Women-owned businesses continue to alter the business landscape, crossing all traditional boundaries and fueling the U.S. economy in unprecedented ways,” said Ron Wesson, Senior Vice President for Minority- and Women-Owned Business Solutions for D&B. “New information now available in our database shows that women are having an impact in all facets of business – ranging from publicly-traded enterprises to home-based businesses. This is the second time we have partnered with the Center on such an extensive analysis, and each study has demonstrated the strength and growth of women-owned businesses.”

Less than two-tenths of one percent of commercially active women-owned businesses are publicly traded, as are just 0.5% of all firms. “Yet, publicly-traded women-owned firms generate employment at a level far in excess of their numbers, accounting for 2.3% of the employment in women-owned firms,” said McLemore. “It’s apparent that these women-led businesses are a major contributor to our nation’s employment.”

Contrary to common perception, women business owners are no more likely than men to have home-based businesses. “Just over one-fourth (27.9%) of women-owned firms are home-based, as are 23.9% of all commercially active U.S. firms,” added McLemore.

The study also confirms that women own businesses in every industry and the rate of growth in the number of women-owned firms exceeds the industry average in nearly every major industry group. The growth in the number of women-owned businesses is highest in agriculture/forestry/fishing (79.3%), engineering/accounting/research services (30.4%), real estate (26.7%), durable manufacturing (26%) and other services (21.9%).

“Women-owned businesses also continue to start firms in every industry, with one-third (33.6%) of women-owned firms being less than four years old,” added Wesson of D&B. “The industries with the greatest share of women-owned startups over the past three years are health services (45%), retail trade/general merchandise stores (44.4%), finance and insurance (37.5%), engineering/ accounting/research services (36.4%) and business services (36.2%).”

Women-owned firms are as likely as all firms to remain in business. Two-thirds (65.5%) of the women-owned firms that were in business in December 1997 were still in business at the end of 2000, similar to 66.2% of all U.S. businesses.

The age profile of women-owned businesses is moving toward that of all firms, although women-owned firms are still somewhat younger than the average U.S. firm. There is significant growth in the number of early stage growth women-owned firms – more than one-third (37.7%) of women-owned firms are from three to 11 years old, compared to 29.6% of all U.S. firms.

“Clearly, women-owned businesses are a key in helping to grow our economy,” added Guy. “That is why Wachovia has designed specific outreach and education programs for women business owners, to help them obtain such things as working and expansion capital. Wachovia has made a corporate commitment to loan a minimum of $5 billion to women-owned businesses through 2005.”

Regional differences can be seen among women-owned firms in terms of growth, entry of new women-owned firms, and financial strength and creditworthiness.

• In every region of the country – with the exception of West North Central – the growth rate in the number of women-owned firms exceeds the regional growth rate among all firms.
• The regions with the greatest share of new women-owned firms are the Mountain and West South Central states (49.9% in each region are less than six years old) and the South Atlantic region (47.3%).
• Women-owned firms in the North and East exhibit the best overall financial strength and creditworthiness. On three measures – bill payment, financial stress and overall creditworthiness – women-owned firms in the Northeast and West North Central regions perform better than the national average.
• On an industry basis, women-owned firms in mining and finance/insurance/real estate have better than average ratings on all three measures of financial strength and creditworthiness.

Editor’s Note: When referring to the study, it should be called “Removing the Boundaries: The Continued Progress and Achievement of Women-Owned Enterprises” published by Center for Women’s Business Research (founded as the National Foundation for Women Business Owners)

Center for Women’s Business Research, founded as the National Foundation for Women Business Owners, is the premier source of knowledge about women business owners and their enterprises worldwide. The Center provides original, groundbreaking research to document the economic and social contributions of women-owned firms. To maximize the benefits of this knowledge, the Center has a comprehensive strategy to disseminate its research through the media, publications, seminars and consulting. Corporations, government policy makers, educators, organizations, the media, and individuals rely on the Center’s leading-edge knowledge to strengthen their support of women business owners.

Wachovia Corporation provides both educational support and a vast array of business and personal financial services to women business owners. In 1999, a corporate-wide Focus on Women-Owned Businesses was initiated to better serve the financial needs of women business owners. The commitment consists of an alliance with the National Association of Women Business Owners (NAWBO) on a national level, and “market champions” who focus on providing educational programs and sponsorships to support NAWBO chapters on a local level. The program also features a website that offers resources and information specifically tailored to the business and personal needs of women business owners. This site includes education on managing money, financing, building wealth and small business services. In addition, Wachovia has committed to a goal of lending $5 billion through 2005 to support women business owners.

Wachovia Corporation (NYSE: WB), created through the September 1, 2001, merger of First Union and Wachovia with pro forma assets of $322 billion as of June 30, is a leading provider of financial services to 19 million retail and corporate customers throughout the East Coast and the nation. The company operates full-service banking offices under the First Union and Wachovia names in 11 East Coast states and Washington, D.C., and offers full-service brokerage with offices in 47 states and global services through more than 30 international offices.

D&B (NYSE: DNB) provides the information, tools and expertise to help customers Decide with Confidence. D&B enables customers quick access to accurate, global information whenever and wherever they need it. D&B’s Minority & Women Owned Business Solutions is the most trusted source of minority and women owned business information in the marketplace today. D&B’s Minority & Women Owned Business Solutions support the identification, growth and development of minority and women owned businesses as well as helping businesses recognize and capitalize on the opportunities within these rapidly growing markets.

Customers use D&B Risk Management Solutions to reduce credit exposure, D&B Sales & Marketing Solutions to find profitable customers and D&B Supplier Management Solutions to manage suppliers efficiently. D&B’s E-Commerce Solutions are also used to authenticate and verify potential trading partners online, increasing trust and confidence in e-commerce transactions. For more information, please visit www.dnb.com.

Study Methodology The detailed data on commercially active firms in the U.S., which are the basis of the analysis in this report, are derived from the proprietary databases of Dun & Bradstreet. A subset of these databases, Dun & Bradstreet’s U.S. Marketing file, was used for this analysis. This is the most comprehensive publicly available database of businesses in the U.S. The file contains demographic information on nearly all full-time, commercially active firms in the U.S. It is used both because the records in the file contain relatively complete and current information, and because the firms contained in the file are determined to be “commercially active.” This file identifies women-owned businesses, and is a virtual census of full-time, commercially active businesses in the country. By virtue of being a census rather than a survey, all differences noted in the report are statistically significant. However, not all differences are meaningful.

The U.S. Marketing file was further filtered for this analysis to exclude non-headquarters establishments, so that company subsidiaries and branches or divisions would not be double-counted. Also excluded were certain Standard Industry Classification (SIC) codes – public administration and government entities, religious organizations, private households, museums, schools and hospitals. After these firms were excluded, the for- profit business database used for this analysis contained 9.8 million U.S. firms in total in 2000, including 1.5 million firms identified as women-owned or managed. The 1997 data included 9 million U.S. firms, including 1.4 million women-owned firms. The file contains information on business size, industry, location, age of business, sales, credit, payment history and other financial information.

Dun & Bradstreet identifies a business as woman-owned or managed if there is a female name in any of several corporate executive management positions. For this analysis, we restricted the definition to include only those businesses for which a woman held the following positions: President, Owner, Co-Owner, Chief Executive Officer, Chairman of the Board, Partner. It is therefore likely, but not completely certain, that the business is owned and managed on a day-to-day basis by a woman.

The U.S. Marketing files that were filtered as described above were dated December 1997 and December 2000. The same months were used to avoid any seasonality effects.

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