In the dark cloud the recession cast over the job market from 2007 on, there is a silver lining: the growth of women-owned businesses.
Described sometimes as “necessary entrepreneurship,” a lot of people who couldn’t find new jobs decided to start their own businesses in the recession, including women in record-breaking numbers. The 2016 State of Women-Owned Businesses Report by Womenable shows that women-owned businesses experienced accelerated gains in growth during and after the recession.
That development picked up steam in 2015, when the rate of women entrepreneurs grew faster than any point in the past 20 years. The numbers from the Womenable report and a 2016 report from The Kauffman Index on startup activity tell a story of progress. From 2002-2007 (pre-recession), growth in the number of women-owned firms outpaced overall growth of new firms, 20.1%-18.0%. The recession and ensuing recovery led to even greater growth for women-owned businesses. In 2007-2016, the number of new women-owned businesses grew at a rate of 45.2%, even as the overall rate of new firm openings fell by 9.2%.
With this growth in entrepreneurship comes serious returns. An estimated $1.6 trillion in annual revenue is generated by the 11.3 million women-owned businesses in the U.S.
More Diversity in Female Business Ownership
A deeper look inside the numbers reveals even more progress: 44% of all women-owned firms are owned by women of color. That’s 5 million businesses, broken down along the following ethnic lines:
Still Room for Progress, But the Future is Bright
The Kauffman and Womenable reports, as well as other studies, demonstrate that women remain underrepresented in major facets of the entrepreneurial world. For example, despite the impressive growth in sheer number of firms, women-owned businesses have seen little advancement in share of total employment (8% in 2016) and share of revenues (4% and holding for the past 15 years).
In addition, these numbers from a White House Council of Economic Advisers report show that there is still more room for growth when it comes to venture capital investment:
Still, the general trajectory of entrepreneurial growth is promising for women in the business world. According to the 2016 Womenable report, new hires by women-owned businesses are up 18% since 2007, even though new hires are down 1% overall among all U.S. companies.
What Doesn’t Kill You Makes You Stronger
According to a 2012 report from the National Federation of Independent Business, the women-owned businesses that survived the recession have a competitive advantage. The strategies most women business owners employed to stay in business, including improving customer service, introducing social media, increasing community involvement and optimizing operating hours, are becoming institutionalized, thereby producing more competitive businesses than before.