Research Summary

Fast-Growth Women and Men Entrepreneurs Take Different Paths to Business Success

Center for Women’s Business Research  ·  July 10, 2001

July 10, 2001

FAST-GROWTH WOMEN AND MEN ENTREPRENEURS TAKE DIFFERENT PATHS TOWARD BUSINESS SUCCESS

When owners of fast-growth firms were starting or acquiring their firms, less than half of the women had a mentor or role model. “Women who own fast-growing businesses are also less likely than men who own fast-growing firms to indicate that someone close to them was an entrepreneur when they were growing up,” according to Mark Lange, Executive Director of the Edward Lowe Foundation. "Only 43% of fast-growth women owners had an entrepreneurial role model, compared to 59% of fast-growth men owners.”

However, women may compensate for the lack of mentors by consulting more with outside sources while they grow their businesses. When asked who they consult with on business issues, women owners of fast-growing businesses are the most likely to say they consult with accountants, family members and fellow business owners. “Gaining new perspectives from outside sources on business management and growth issues is an important ingredient in expanding a business,” noted Lange. “Sixty percent (60%) of the fast-growth women owners consult with accountants compared to 44% of men owners of fast-growing firms. Furthermore, women owners of fast-growing firms are the most likely to discuss business issues with their family and fellow business owners.”

Editor’s Note: When referring to the study, it should be called “Entrepreneurial Vision in Action: Exploring Growth Among Women- and Men-Owned Firms,” conducted by the National Foundation for Women Business Owners

While 49% of these fast-growth women discuss business management with their family, only 36% of fast-growth men do. Thirty-one percent (31%) of fast-growth women confer with fellow business owners compared to 26% of fast-growth men.

The survey also shows that women entrepreneurs who have achieved fast growth for their firms have taken a more varied path to business ownership than did their men counterparts. “The diversity of characteristics and life experiences that fast-growth women owners bring to their firms illustrates that there is no single or best path to owning a fast-growing firm,” said Kate Hodel of the Kauffman Center for Entrepreneurial Leadership. “Although women owners of fast-growing firms are less likely than their men counterparts to have had managerial or executive experience, they are more likely to have a professional background. Twenty-three percent (23%) of women who own fast-growth firms had managerial experience compared to 50% of men owners of fast-growth businesses. In contrast, 31% of the fast-growth women business owners have professional experience compared to 16% for men.”

Further, the fast-growth women owners surveyed also do not bring as much past experience with business ownership as their men counterparts do. Thirty percent (30%) of women owners who have achieved fast growth for their firms had past experience owning other businesses, compared to 45% of the men owners who have achieved fast growth.

“Despite these differences, women increasingly are leading fast-growing businesses,” noted Nina McLemore, NFWBO Chair and President of Regent Capital. “Past NFWBO research has documented trends showing that the women who are starting businesses today are more likely than in the past to have managerial and professional experience. In addition, the emergence of strong entrepreneurial programs such as those offered by the Edward Lowe Foundation and the Kauffman Foundation are a major influence in helping women who wish to lead growing, profitable businesses.”

Hodel also noted that most business owners don’t have an exit strategy. Less than one-third of growth-oriented women business owners (26%), other women business owners (27%), and men business owners not oriented toward growth (30%) say that they have an exit strategy. Although growth-oriented men business owners are the most likely to say that they have an exit strategy, only 37% do so.

“The overwhelming majority of business owners are fully engaged in the operation of their businesses, regardless of their outlook toward growth, and often ignore the importance of an exit strategy as part of their business growth plan, “ said Lange. “This survey reinforces the importance of Edward Lowe’s strategies for providing business owners, both women and men, with the outside information and perspectives to focus on key issues of growth and business success.”

The survey, “Entrepreneurial Vision in Action: Exploring Growth Among Women- and Men-Owned Firms” was conducted in mid-2000 among 1,194 business owners - 602 women and 592 men.

The National Foundation for Women Business Owners (NFWBO) is a nonprofit research institute. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policymakers, 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 Edward Lowe Foundation fulfills its mission to “champion the entrepreneurial spirit” by providing information, research and peer-learning experiences for owners of growing companies and by working with partner organizations that support the entrepreneurial community. The foundation assists Stage 2 (post-start-up/pre-IPO) entrepreneurs in gaining perspective to take their businesses to the next level. The foundation produces a monthly newsletter, The Edward Lowe Report, which provides “plain talk about growing your company" and a web site at www.lowe.org, which offers practical resources for entrepreneurs. Edward Lowe, creator of Kitty Litter®, and his wife, Darlene, established the foundation in 1985.

The Kauffman Center for Entrepreneurial Leadership takes an innovative approach to accelerating entrepreneurship through educational programming and research. The Kauffman Center is the largest organization solely focused on entrepreneurial success at all levels - from elementary students to high growth entrepreneurs. The Kauffman Center is funded by the Ewing Marion Kauffman Foundation.

FleetBoston Financial is the eighth largest financial holding company in the United States. A $179 billion diversified financial services company, it offers a comprehensive array of innovative, financial solutions to 20 million customers in more than 20 countries and territories. The Small Business Services group at Fleet currently serves over 500,000 customers. Within this group, the Women Entrepreneurs’ Connection is dedicated to the financing and investment needs of women business owners and entrepreneurs. Information on the Women Entreprenuers’ Connection is available at http://theconnection.fleet.com, any Fleet branch office, or at 1-800 CALL FLEET.

Study Methodology

This nationwide study of women and men business owners was conducted by telephone from mid-July through mid-August 2000. A total of 1,194 interviews were completed, 602 with women business owners and 592 with men business owners, Interviewing was conducted by Consumer & Professional Research (CPR) of Chicago, IL, a woman-owned firm.

The sample pool of women and men business owners was compiled from Dun & Bradstreet’s Dun’s Market Identifier database. Respondents were chosen based on the gender of the owner and the firm’s sales and revenue growth. The Cognetics definition of “gazelle” firms was used in an attempt to sample equal numbers of growth and non-growth. A disproportionate number of larger firms were interviewed to ensure adequate numbers for analysis. The sample was weighted back to proper proportions, based on employee size and growth.

The statistical analysis confirmed two distinct indicators of growth. Thus, for the analysis, growth is measured in two ways - past growth performance and future growth strategy or orientation. Growth-oriented women and men are those who indicate that their business growth strategy over the next five years is either to expand their businesses at a solid rate to provide increasing opportunities for their employees and the community, or to grow their businesses into a large enterprise that may someday be sold or go public. Fast-growing firms are those that have had revenue or employee growth of 30% or more over the past three years. In the weighted data, this yields 169 fast-growing women-owned firms, 407 other women-owned firms, 123 fast-growing men-owned firms, and 439 other men-owned firms. Twenty-six (26) women and 30 men refused to indicate their employee or revenue growth. The sampling error for sample sizes of 169, 407, 123, and 439 are ± 89%, ± 5%, ± 9%, and ± 5% respectively, at the 95% level of confidence. This means that, 95 times out of 100, survey results will be within 5%, 8% and 9% of population values.

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