This file was prepared for electronic distribution by the inforM staff. Questions or comments should be directed to inform-editor@umail.umd.edu. Facts on Working Women U.S. Department of Labor Women's Bureau No. 89-5 December 1989 WOMEN BUSINESS OWNERS Women continue to make inroads into business ownership in the United States. Women-owned nonfarm sole proprietorships increased 62.5 percent between 1980 and 1986, from 2.5 million to 4.1 million. (1) Total nonfarm sole proprietorships increased 41.8 percent during the same time period, from 9.7 million to 13.8 million. Women's share of total nonfarm sole proprietorships increased from 26.1 percent in 1980 to 29.9 percent in 1986. The largest number of women-owned businesses historically has been in services and in wholesale and retail trade and this trend continued into 1986. As indicated in Table I, 2.4 million women-owned businesses were in the services industry followed by 975,000 in wholesale and retail trade. However, women's business ownership in nontraditional areas has increased significantly since 1980 with a 165.9 percent increase in mining, construction and manufacturing, and a 110.9 percent increase in agriculture, forestry and fishing, for example. Women-owned nonfarm sole proprietorships represented 12.9 percent of total business receipts in 1986, up from 8.8 percent in 1980. Between 1980 and 1986, total receipts of women-owned nonfarm sole proprietorships virtually doubled, increasing from 36.4 billion to 71.6 billion. The average receipts of women-owned sole proprietorships rose 19.9 percent in current dollars from $14,348 in 1980 to $17,362 in 1986. Women's increasing share of both proprietorships and receipts are indications of women business owners growing importance in the American economy. Table I Women-Owned Businesses by Industry (in thousands) and Percent Change 1980 through 1986 Percent Change 1986 1980 1980-1986 Total 4,121 2,535 62.5 Agriculture, Forestry, and Fishing 65 31 110.9 Mining, Construction,and Manufacturing 224 84 165.9 Transportation, Communications, and Electric Utilities 52 28 86.1 Wholesale and Retail Trade 975 825 18.2 Finance, Insurance, and Real Estate 451 355 27.2 Service 2,355 1,213 94.2 According to a report issued by the Bureau of the Census in 1982, businesses owned by women were more likely than businesses owned by men to: -- be home-based (56 percent as compared with 51 percent). -- have no paid employees (84 percent as compared with 76 percent). Women were employed in 11 percent and minorities were employed in 4 percent of women-owned firms. Also, women business owners were less likely to work more than 40 hours a week in ownership activities. -- provide no income to the owner from the firm (18 percent as compared with 13 percent). On the other hand, about one-fourth (23 percent) of women business owners reported deriving 100 percent of their income from the firm compared with 29 percent of men business owners. -- have been newly acquired. Twenty percent of businesses owned by women were acquired in 1982 (the year of the survey) as compared with 15 percent of businesses owned by men. Only 6 percent of women-owned businesses were acquired by the owner before 1960 as compared with 11 percent of those owned by men. Nearly three-fourths of women business owners were the original founders and 13 percent purchased their businesses. However, women-owned businesses were more likely than those owned by men to have been acquired as a gift or through marriage. -- have been started or acquired with no capital required or borrowed (75 percent as compared with 66 percent). Thirty-six percent of women owners did not borrow because capital was not required, as compared with 26 percent of men owners. As a group, women sole proprietors relied less than men sole proprietors on banks as a source of borrowed start-up or acquisition capital. -- have been started with less capital. In real (1982) dollars, women founded their businesses with about half the capital used by men ($10,503 as compared with $20,717). Women business owners tended to be somewhat younger than their male counterparts. About 69 percent were between the ages of 25 and 54 while 16 percent were age 55 to 64 and 8 percent were age 65 years and over. Among men business owners, 67 percent were between 25 to 54 years of age, 18 percent were 55 to 64 years, and 9 percent were 65 years of age and over. The remaining respondents were under age 25. Seventy-one percent of women business owners were married as compared with 82 percent of men owners. Of the remaining women owners responding, 11 percent were divorced or separated, 9 percent had never married and 6 percent were widowed. According to a study by Faith Ando and Associates, of women-owned sole proprietorships in 1982, 92.5 percent were owned by white women, 3.8 percent by black women, 2.1 percent by Hispanic women and 1.6 percent by Asian women (see Table 2). Table 2 Women Business Owners By Percent, Race, and Ethnicity, 1982 Race Percent ---------------------- White 92.5 Asian 1.6 Hispanic 2.1 Black 3.8 ---------------------- Total 100 ________ Table based on data from "Minorities, Women, Veterans and the 1982 Characteristics of Business Owners Survey, A Preliminary Analysis," by Faith Ando and Associates, Haverford, Pennsylvania, September 1988. Women business owners were less likely than men business owners to have previously owned a business--about 14 percent compared with 22 percent. Managerial experience provides individuals with experience in decisionmaking and employee supervision which might be drawn upon once these individuals become business owners. Although women sole proprietors may tend to have less work experience and even less managerial experience than their male counterparts, women business owners have the highest proportion of persons with at least a high school education (86 percent versus 83 percent for men owners). While men owners are somewhat more likely to have acquired 5 or more years of college education, slightly more than half of women business owners (52 percent) had at least 1 year of college, 15 percent had 5 or more years of college, and 63 percent had attended a business course, seminar or workshop. Opportunities for women in business should be enhanced as a result of recent public attention to the status of women business ownership and passage of legislation to provide training and assistance for women owners. For example, in June 1988, the U.S. House of Representatives issued a report, _New Economic Realities: The Rise of Women Entrepreneurs_, which was the result of hearings held by the Congress on women-owned businesses. Recently, the Office of Women's Business Ownership in the U.S. Small Business Administration (SBA) announced a program for long-term training and counseling called Women's Network for Entrepreneurial Training (WNET). This program is designed to foster year long mentoring relationships between successful women-owned businesses and fledgling women-owned businesses of 1 to 3 years. Additional information about this program may be obtained from the Office of Women's Business Ownership at (202) 653-8000. The Women's Business Ownership Act of 1988 authorizes $10 million over a 3-year period for financial assistance to private organizations to provide financial, management, marketing, and technical assistance to women business owners. The intent of the law is to replicate existing programs offering long-term training and counseling. The U.S. Small Business Administration recently announced three Federal grants totaling more than $700,000--the first in a series expected under the act. Organizations funded under the program must match the Federal funds dollar for dollar with private money. The organizations must also have proven experience in providing this kind of training, must be able to quickly initiate the new training, and must be able to provide specialized training to women who are socially and economically disadvantaged. Additional information about this program may be obtained by calling the Office of Women's Business Ownership in the U.S. Small Business Administration at (202) 653-8000. The Women's Business Ownership Act also amends the Equal Credit Opportunity Act to add certain business loans to those already covered by the Act. It contains provisions such as the establishment of a 5-year National Women's Business Council to review the status of women-owned businesses, data collection procedures and other government initiatives relating to women-owned business and recommends ways to promote greater access to financing and procurement opportunities for such businesses. Women's business ownership is seen by the Women's Bureau as a significant step in efforts to improve the economic status of women. Women-owned businesses represent a significant part of the overall U.S. economy and also provide important sources of employment for the growing numbers of women entering the labor force. In addition, home-based businesses may often serve as a viable option for those women who may wish to enter the labor force but who, for various reasons, may not be able to seek employment outside the home. The Voice of Working Women 1920 - 1990 NOTES: (1) The State of Small Business: A Report of the President, Transmitted to the Congress, 1989; The Small Business Administration notes that these figures still represent an underestimate of the total business ownership of women since women- owned corporations and partnerships are not tabulated by the Internal Revenue Service. (2) 1982 Characteristics of Business Owners CB082-1, Bureau of the Census, U.S. Department of Commerce, issued August 1987. This report presents data about the characteristics of minority-owned and women-owned businesses and their owners as well as a comparable non-minority male business universe