Women Need Higher Levels of Capital at Startup

Women own more than 7.8 million businesses, or nearly 29 percent of the total in the U.S. But their firms generate only 3.95 percent of all revenue. This disparity in number of firms versus revenue speaks to a profound opportunity loss and unrewarded risk.

Further, newly released data from the U.S. Census Bureau shows that, even though the number of women-owned businesses grew 44 percent between 1997 and 2007, our already small market share, as measured by revenue, declined more than 10 percent, dropping from 4.41 percent in 1997 to 3.95 percent in 2007.

What's the solution?

One key to improved performance by women-owned firms is starting with higher levels of capital. A Kauffman Foundation study this year found that women-owned firms typically start with less capital and therefore underperform in terms of revenue, assets, and profitability. The banking community can be particularly helpful in overcoming this shortfall. By providing greater energy and engagement with current and potential women business owners, and assisting them to establish better business models, plans, and resources so as to secure larger pools of capital and credit, bankers can help push the growth, market position, opportunities, and revenue of women-owned firms more quickly. Business revenue will rise, and everyone will win.

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