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Women Are Starting 1,821 Businesses a Day. Now for the Bad News.

Topics: Data & Research
women-owned businesses

Women are starting new businesses at an encouraging rate, according to the 2018 State of Women-Owned Businesses Report. But it’s not all good news for female entrepreneurs.

This report, which was commissioned by American Express and used data going all the way back to 1972, found that women started an average of 1,821 new businesses a day between 2017 and 2018. However, women-owned businesses accounted for only 4.3 percent of the total revenue for all businesses.

“It is true, for instance, that women lead 4 in 10 businesses in the U.S., but most are actually one-woman shows, according to the analysis,” wrote Guadalupe Gonzalez at Inc. “Their ventures make up about 8 percent of all employment and account for only 4.3 percent of total revenues.”

More Women-owned businesses

Over the past 48 years, the number of women-owned businesses has increased 31 times — from 402,000 businesses in 1972 to 12.3 million in 2018.

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Employment in women-owned firms also increased. It expanded 40-fold, growing from 230,000 in 1972 to 9.2 million in 2018. The revenue generated from these organizations also expanded at an impressive rate. It rose from $8.1 billion to $1.8 trillion.

More High-revenue Generating, women-owned businesses

The number of women-owned businesses that generate revenue greater than $1 million has grown significantly. These businesses are up 46 percent over the past 11 years, compared to 12 percent for all businesses.

“This new data demonstrates not only the remarkable impact women entrepreneurs have on our economy when it comes to creating jobs and generating revenue, but also the growing role of women-owned businesses in our communities,” said Julie Tomich, SVP, American Express Global Commercial Services, in a statement about the report. “Over the past 11 years, we’ve seen women’s entrepreneurship and economic impact increase – especially among the growing number of women-owned companies that generate more than $1 million in revenue.”

The Bad News: the vast majority of women-owned business aren’t high-earning

Yes, more women-owned businesses are earning more than $1 million a year than in the past. However, these high-earning companies make up only 1.7 percent of all women-owned businesses.

High-earning firms account for 68 percent of the total employment in women-owned companies. And, they earn 69 percent of all of the total revenue generated by these businesses.

Businesses owned by women are still primarily small and don’t generate high earnings or employ many workers. However, it’s good news that the share of women-owned businesses is expanding so dramatically, no matter their size.

The number of women-owned businesses has increased nearly 3,000 percent since 1972. Only time will tell how these trends will play out.

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