The State of Women-Owned Business
On the last day of Women’s History month, we want to talk about the state of women-owned businesses and how women-owned businesses contribute to the economy. But first, let’s talk about why women owning businesses is important.
In a capitalistic system, having capital [money] and the means to secure capital translates directly to power. We know this because we see corporations contributing massively to political campaigns, large development groups shaping the future of small towns, people with wealth running for office, etc.. We know that owning a business translates almost directly to purchasing power; when you own a business, you decide who to source your materials from, where to invest your business’s money, who to employ, and where you donate. This is purchasing power, but purchasing power can also be as simple as deciding to shop at a local grocery store despite slightly higher prices because you can afford it.
Women’s purchasing power through owning small businesses leads to change- a recent study by Harvard shows that women-owned businesses are more likely to have meaningful social-responsibility initiatives. Generally, women are almost 10% more likely to donate to charity than men of similar means, and “small businesses donate 250% more than larger businesses to local nonprofits and community causes, and a staggering 75% of small business owners donate an average of 6% of their profits to charitable organizations annually”. This means that women-owned small businesses are leading the charge in contributing funds back into their community through donations to charitable organizations.
And you know who gives more to their community than women who own businesses? Women of color who own businesses. First off, almost 64% of women-owned businesses started in the last year were started by women of color. WOC are driving the growth in women-owned business across the nation, and they are also more likely to be committed to influencing their community. While women-owned businesses are more likely to have social-responsible initiatives within their business, women of color owned businesses are most likely to take action. In a study done by McKinsey and Company, it was found that women of color rank providing opportunities for minority women to open businesses and mentoring minority women opening businesses as the most meaningful way to effect change. For white women, the top ranked action was to call out discrimination when it’s seen, and the same for white men.
So why is it important to support women, and especially women of color owned businesses? You get the greatest return on your investment in the form of community giving and effecting change.
Today in the US, about 40% of small businesses are owned by women and the percentage of women owned businesses has grown by over 60% in the last 20 years. Almost one third of businesses owned by women are owned by women of color, and that number is growing rapidly. A couple more amazing growth statistics?
There are 114% more women entrepreneurs than there were 20 years ago.
62% of women entrepreneurs cite their business as their primary source of income.
Women-owned businesses added half a million jobs between 1997 and 2007.
64% of new women-owned businesses were started by women of color last year [2020].
Latina women-owned businesses grew more than 87%.
Women-owned businesses in the US are growing at a significant rate, but they still face significant barriers as compared to startups and businesses owned by men. Women are less likely to secure bank loans for their small business, and when they do, they receive an average of $5,000 less than men when asking for a similar amount. A recent study shows that more than 70% of women feel more empowered since starting their business, but more than 65% of them report significant challenges in securing the funding they need. Further, businesses owned by BIPOC women receive $30,000 less than other women owned businesses when asking for a similar amount, and almost 40% say they feel discouraged from applying for loans altogether due to racism and other factors.
A commonly used argument for investing in women-owned businesses boasts that they are more profitable than other businesses- a Forbes article cites that companies with at least one woman in charge or on their board outperform companies without gender diversity in their ownership. While this is true in many cases, businesses owned by WOC and particularly black women still face significant revenue disparities as compared to white women owned businesses.
Women of color owned businesses face more economic barriers than white women owned businesses due to systemic and outright racism, and generally women-owned businesses are required to overcome more economic barriers than businesses started by men.
National statistics are great, but what does the situation for women-owned businesses in Montana look like? Montana has seen a 67-percent increase in the number of businesses owned by women over the past 20 years, though it is ranked 32nd nationally compared to other states. According to the 2020 Census, there are 112,000 registered businesses owned in Montana, but only 35,000 of them are owned by women and even less are owned by people of color- about 5,000. To put this in perspective of the population with just over a million people living in Montana, 47.9% of its population are women, but women-owned businesses make up less than 30% of all small businesses. Non-white people of color make up about 10% of the largely white state, but are represented in .44% of small business owners.
According to the Montana Native Growth Fund, the challenges that women and women of color face in starting a small business are even greater in Montana, because it is a large state with sparse access to technologies and the majority of the population falls well below the federal poverty line. In Montana, about 15.5% of the population falls below the federal poverty line, and in Missoula it’s 14.8%. The average salary for men in Missoula County is $59,856/year, for women is $42,840/year, and indigenous and non-white populations make less than white men and women in every dominate industry. Why do these salary numbers matter if we’re talking about women who own their own business? Women are more likely than men to fund their businesses through their savings or through self-reliant funding options. These salary disparities create even larger wealth accumulation disparities- a woman making almost $20,000/year less than a man in Missoula will miss out on $100,000 in just five years. Starting a business requires capital, financial security, and the ability to secure a favorable business loan- and men in Missoula have a $20,000/year advantage.
Beyond the impact that women owning businesses has on the community, the handmade economy has its own advantages. Buying handmade is the new american manufacturing and supports a tradition of skilled work that cannot be accomplished by machinery or technology alone. It preserves knowledge that is the foundation of products that we use on a daily basis, and helps to hold craft goods in high esteem over mass-produced goods. Buying handmade lends to a culture of valuing craft and artistic skill, and valuing creative expression is increasingly important as society shifts online. Art is often considered a form of communication- relaying collective values and translating experiences across time and space. The handmade economy makes art accessible and visible by incorporating it into products you use everyday. Yes, your handmade coffee mug does the same job as your mass produced one, but with each sip you can see the art and experience that went into it. Using handmade products in your daily life changes the way you conceptualize products, experiences, and community.
