The hype surrounding the tremendous growth of women-owned businesses continues to overlook the bottom line for measuring the success of all businesses: revenue and profits. 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.
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. This loss of job creation, market demand, tax revenue and potential retirement assets will greatly impact America's financial future. Even so, the media hype continues to emphasize the number of women-owned firms, rather than the grossly stunted financial success of these firms and the impact this underperformance has on the American economy, communities and families. Failure to access capital, failure to access large market opportunities (like government contracts and large corporate supply chain participation), and segregation from mainstream business development and leadership have contributed to the failure of women's businesses to achieve market share growth, commensurate with their growth in numbers, and has contributed to America's economic decline.
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.
Women and men at all levels of banking leadership have the ability to drive greater opportunities for business relationships with women-owned firms. By taking the simple step of engaging with organizations like the U.S. Women's Chamber of Commerce to select and include promising women business owners in meetings, business interactions, and elevated discussions about business funding options, matching capital to business stages, and partnership arrangements, these bankers can help women gain the expertise and connections needed for growth. Building relationships with these businesses also would generate profitable opportunities for the banking community as the businesses grow and flourish.
Executives at banks and other financial institutions are vital to the establishment of a strong community engagement and pipeline program that includes women business owners. Your top-level leadership and goal-setting drives the activity at every level of the financial community.
We call on all leaders within the banking community to energize the relationships your organizations have with women business owners. Help us to elevate our business opportunities. Connect us to the wealth of business relations that are held by thebanking community. And help us to elevate and improve ourbusiness aspirations and planning so as to secure increased capital and generate increased revenue and profits for our businesses. Women own nearly 30 percent of all firms in the U.S.-clearly a gateway to new growth for financial institutions. Banks that help women-owned businesses grow will help themselves grow as well.
Margot Dorfman is the CEO of the U.S. Women's Chamber of Commerce