According to the National Foundation for Women Business Owners, the number of businesses owned by women jumped 78 percent from 1988 to 1998. By the year 2000, reports estimate over one-half of all small businesses will be owned by women. The increasing role women are playing as business owners is part of the overall impact women are having on society today. Women in the media are bringing new insights in reporting; women in the movies are featured in expanded roles beyond those of wife, girlfriend, or mother; women in medicine are offering new dimensions to caring for patients and more research on women's health issues; women in law are seeking justice for crimes committed against women; and women in politics today represent the largest constituency in history.
While the trend of women owning businesses is growing, it is certainly not new. Women have owned and operated businesses since the beginnings of American history and much earlier in other parts of the world. They rarely were recognized, however, or given credit for their efforts. Often women were invisible as they worked side by side with their husband in business and may have only stepped into the leadership position when their husband died. Many recognizable businesses today are owned and operated by the wife or daughter of the founder. Two well-known examples are Tootsie Roll, which is controlled by a woman and her four daughters, and the Playboy empire, taken over by Hugh Hefner's daughter, Christie Hefner.
In other cases, women began a business on their own or they were given the impetus to begin one. Lila Bell Acheson Wallace helped to start Reader's Digest. Knox Gelatin was started by Mrs. Knox. Pepperidge Farms was started by a mother to create food products to help her asthmatic son. Josephine Dickson and her husband created Band-Aids. Susan Hoover gave the name to Hoover Vacuum Sweepers. Elizabeth and Olivia Norris brought William Procter and James Gamble together, and Alice Marriott ran a root beer stand with her husband Bill, which was the beginning of the Marriott hotel and food business. Eleanor Roosevelt operated her own school.
Most operated businesses are in the service sector, which coincides with most new women-owned businesses being started today. Women tend to launch businesses in the industry where they have had direct experience, mostly in traditional fields. This explains the lack of women business owners in nontraditional fields such as manufacturing. This is slowly changing, however. From 1980 to 1989, women-owned sole proprietorships increased over 175 percent in mining, construction, manufacturing, and transportation.
In the late 1990s, 60 percent of women-owned businesses were concentrated in retail and service sectors and in traditional industries such as cosmetics, food, fashion, and personal care. Famous women business owners in these industries include: Mary Kay Ash, Mrs. Fields, Estee Lauder, and Donna Karan.
Unfortunately, U.S. Census Bureau statistics lag by several years and many questions about women entrepreneurs are still unanswered due to the lack of available data. Today, women-owned businesses are a vital economic force which, according to the National Association of Women Business Owners, employ more people than the Fortune 500 firms. Also, most women conduct business as sole proprietors. According to Sarah Gracie in Management Today, women founded almost one-third of all new businesses in 1997 in the small and medium-sized business sector.
More and more women are becoming role models each year. Today, numerous women own and manage billion-dollar businesses in a variety of industries with several thousand employees.
Women start businesses for different reasons than their male counterparts, most citing independence as their key motivator (men most commonly cite money as their primary goal). Women start businesses about ten years later then men. Motherhood, lack of management experience, and traditional socialization can all be reasons for delayed entry into a career as a business owner. Most women never plan to own a business or even consider business ownership as a career option. In fact, over 30 percent started a business due to some traumatic event such as divorce, discrimination due to pregnancy or the corporate glass ceiling, the health of a family member, or economic reasons such as a layoff.
A new talent pool of women entrepreneurs today is coming from those leaving corporate America to chart their own destiny. Many of these women have developed financial expertise and bring experience in manufacturing or nontraditional fields. Armed with more management experience and business savvy, these women will be the trendsetters of tomorrow.
Family businesses may indeed be the best training ground for women entrepreneurs as 78 percent of women business owners polled in the mid-1990s mentioned some type of family business connection. While men start businesses for growth opportunities and profit potential, women most often found businesses for personal goals such as achievement, accomplishment, or stepping in to "help" their family. Women consider financial success as an external confirmation of their ability rather than a primary goal or motivation to start a business. According to Joline Godfrey, author of Our Wildest Dreams, women gave the following reasons for starting businesses:
Despite gains, women business owners still have many barriers to overcome before obtaining truly equal opportunity in the marketplace. Many of these challenges are rooted in childhood socialization, which plays a critical role in the choices adults make throughout their lifetime. These early experiences are the beginnings of a management style developed by both males and females.
The realms of family and business have been separated since the Industrial Revolution. This has resulted in different gender roles and expectations based on different socialization experiences. Men and women in families and in business are still struggling with the results of these forces today because these roles carry deep-rooted emotions that are slow to change. Gender socialization has been described as the lifelong process of developing attitudes, skills, expectations, behaviors, and values. The study of gender focuses on people's perceptions and how males and females differ socially rather than biologically.
This process begins at birth when little girls are dressed in pink and boys in blue. Girls are described as cute and boys as strong. Girls are given baby dolls and household items and boys receive combat and sports items. Parents then begin to reward the "right" behavior and punish "unacceptable" behavior according to their preconceived ideas developed from society.
The management style people use as adults is developed at this early time in their lives. Girls begin to learn skills that are not conducive to today's business world. Females are taught to be sensitive and tactful; they learn to be "helpless" and to be dependent on their fathers, rather than to be self-assertive and self-reliant. They are taught to be economically dependent. Parents also protect their daughters rather than prepare them and are reluctant to give females much freedom to take risks.
During this early period, females learn to collaborate and work toward the good of the group, and they nurture and serve as peacemakers. They do not learn about winners and losers but rather they learn to feel responsible for the welfare of the group. Girls also attribute their own success to luck, effort, and ease of the task; whereas they attribute failure personally, ascribing it to their lack of ability. In March 1992, the American Association of University Women released a study titled "How Schools Shortchange Girls," documenting how girls are called on less, encouraged less, and overall get unequal treatment in the classroom setting.
Research during the 1990s revealed that many fathers aim to protect their daughters rather than prepare them for the realities of today's world. Women business owners are succeeding despite the negative comments from their fathers such as: "Don't worry your pretty little head about business," "Business is not for women, marry a good businessman," "Women should not be too smart or compete too much."
In contrast, boys learn traits such as aggressiveness, competitiveness, and dominance—particularly when playing with war toys and sporting games. They learn strategy and tactics needed to win. And they learn that if they lose, there is always another opportunity. They are called on more in the classroom and guess more often.
Family, siblings, and peer groups have been identified as additional settings in which unequal socialization takes place. Stereotypes are reinforced daily through television, magazines, and radio song lyrics. Families also set rules that are gender based. Female roles are inside the house with cooking, cleaning, and laundry. Male roles are outside with grass cutting and taking out the trash.
Women organize their lives around the needs of the family, whereas men organize their lives around the demands of their work. Women's work roles have been second to executing the material, emotional, and social life of the family. It is not surprising then that women consider business ownership as a way to have more flexible time with their family.
This lifelong socialization process provides a basis for most of the challenges women business owners face in the marketplace. The process does not provide most women with the skills and traits needed to compete as men do in today's business world, nor does it educate most men about how the natural talents of women can be used to advantage in business. Until now, women have been led to believe that they are the ones who need to cope and adjust. Since women business owners have gained an economic clout over the past 20 years, however, now firms that have traditionally done business with males are beginning to recognize they should also make adjustments toward the needs of women.
Since this socialization process has taught women not to think big, to be risk averse, and to fear financial issues, most are undercapitalized in their businesses and have limited access to resources such as financing know-how and the male network. It is not surprising then to learn that three out of four women-owned businesses started out with their own financing of less than $5,000. Today 38 percent still have no bank financing; 52 percent have used credit cards in their business as compared to 18 percent of all business owners.
Study after study confirms women business owners are not getting equal treatment at financial institutions. Sixty-seven percent of women business owners report difficulty in working with financial institutions as compared to 55 percent of all firms. Over one-half of women business owners believed they faced gender discrimination when dealing with a loan officer; therefore, most women business owners actually grow their businesses by reinvesting profits.
Women often believed their professional advisers did not expect them to know a lot and spoke down to them, particularly when they were starting in business. The women felt an unjustified request was made of them when they were required to obtain their husband's guarantee in order to procure a bank loan. Women felt bankers were patronizing and this interfered with building relationships with their bankers. Many women said their personal ability to manage the venture was continually being questioned by male bankers. Women declared they wanted more details from their advisers, they wanted options and alternatives—not prescriptive advice, and not lectures.
Most women business owners do not have business degrees and most were never exposed in college to business ownership as a career option. Even today students have access to relatively few resources such as books, lectures, or role models of women business owners.
Furthermore, in business schools where most of the professional advisers today were trained, the male model of business is still being taught by an overwhelming majority of male professors. Examples of women entrepreneurs have been left out of textbooks, and rarely is a female business owner used as the example or case study. Neither the women nor the men students are learning about the natural abilities and talents women are using to succeed as business owners today. Unfortunately, without some very strong initiatives on the part of educators, the process will be slow to change.
Another area where women business owners are getting shortchanged is in the area of procurement, or the selling of their goods and services to city, state, and federal governments. Fewer than five percent of the women-owned firms in the United States are certified to do business with their state government and only 1.5 percent of the billions of dollars in federal contracts go to women-owned firms.
If a company is 51 percent woman-owned and controlled by a woman, it can obtain certification and bid on government contracts. Many women, however, may have heard it is difficult to do business with the government or believe the government will not be interested in what they are selling. Another myth is that government contracts are too large for small businesses (especially women-owned businesses) and one needs to be a legal and contract expert to bid on government contracts. In actuality, many governments have created set-aside programs that specifically help women-owned businesses in the process.
Despite the many challenges women face, this early socialization has given women specific traits and abilities that define the female model of business ownership. This different management style can be an asset and one from which men can learn. The style can be described as more cooperative than the competitive male model now taught in business schools. This style is often further developed through volunteer activities in early adulthood.
The cooperative style naturally used by most women comes from their early experiences and focuses on the welfare of the group. Participation is shared among the employees with attention paid to their ideas and needs. The style often extends to social issues that are frequently driving forces within the company. The business strategy is formed through active listening and educational experiences and focuses on issues—not just the bottom line. The ability to build relationships is an asset with customers and suppliers, and in the international marketplace. In order to overcome the obstacles they face, women often come up with creative, out-of-the-ordinary methods to help further their goal.
These variables help define the cooperative style that has developed from early socialization of females. Once aware of these traits they become more apparent to observation. This cooperative style is easier to recognize in women business owners where the women are not conforming to a culture set by males in a large corporation. This new, distinctive business is one from which we all can learn. The new model of business for the next century will combine the talents of this cooperative style used by women with the more traditional business approach.
With more and more women opening businesses every day, the future for the next generation of business owners is bright. While the business world is normally slow to change, economic advantages of women-owned firms will help speed the process. As more young women see a wider range of women business owner role models, they will be more encouraged. As mothers socialize their daughters to the business world during their preadolescent years, more are likely to choose business ownership as a career option.
A number of resources now exist to support women entrepreneurs. In 1988 Congress authorized the Small Business Administration (SBA) Office of Women's Business Ownership. They recently created a "Low-Doc" loan program that makes it easier for women entrepreneurs to obtain SBA financing. The SBA also has established a Women's Network for Entrepreneurial Training that links women mentors with protégées. Small Business Development Centers (SBDC) are also cosponsored by the SBA and operate in every state. They offer free and confidential counseling to anyone interested in small business. The SBA also posts resources for women business owners on the Internet. The site has corporate sponsors and provides information on financing, marketing, and management techniques.
Many states now have a Women's Business Advocate to promote women entrepreneurs within the state. These advocates are represented by an organization called the National Association of Women Business Advocates.
A number of trade associations now represent women entrepreneurs. The National Association of Women Business Owners is the largest group throughout the country. There are also some smaller regional groups that can be located through the Yellow Pages or local chambers of commerce. The American Business Women's Association provides leadership, networking, and educational support. The National Association of Female Executives makes women aware of the need to plan for career and financial success. In addition, a growing number of Yellow Page directories throughout the country list women-owned businesses as a special classification.
[ Cynthia lannarelli ,
updated by Wendy H. Mason ]
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