Revenues struggle at women-owned businesses

According to the Center for Women’s Business Research, women-owned businesses account for 40 per cent of all privately held companies – which is not too shabby. But only about 3 per cent of all of these companies have revenues of $1m or more, compared with 6 per cent of companies owned by men. According to a study by the Kauffman Foundation, just 1.8 per cent of women-owned companies have revenues above $1m.

So why are women-owned companies smaller than those owned by men? And what can be done about it?

Ernst & Young, the accounting company, today announced the winners of its annual Entrepreneurial Winning Women competition – a contest designed to help female small business owners increase the size of their companies by connecting them with a network of advisers, venture capitalists, and other seasoned entrepreneurs.

I spoke to Herb Engert, E&Y’s leader of Americas strategic growth markets, about the contest.

Noting that women entrepreneurs are starting businesses at a tremendous rate, he told me:

“Women are a significant force in our economy. There a lot of women-owned businesses, but they’re not scale to where they could be.”

The competition, now in its fourth year, has already hit some big milestones. In an upcoming case study, conducted by the Babson College Center for Women’s Leadership, company revenues of the contest’s participants have grown almost 50 per cent each year on average, with a corresponding annual job growth rate of more than 25 per cent.

E&Y chose 10 winners including: Stephanie Point, who runs a company that provides specialised security services to Fortune 500 companies, private businesses and government agencies; and Dr. Mary Jo Gorman, whose business provides telemedicine services to hospital intensive care units.

Engert said:

“This year’s winners [represent] an elite group of women who are taking on important challenges…They’re coming up with some creative and innovative business models.”

Can E&Y follow its own advice and “scale up” this programme? We shall soon see. It is now being launched in Indonesia and Australia. Programmes are in development in Brazil, South Africa, the Middle East, North Africa, Ukraine and Hungary.

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Liz Bolshaw

Liz Bolshaw is a business journalist and editor. She has been a successful book publisher, online editor, magazine editor and publisher.

She was launch editor of the Europe-wide online community Entrepreneur Country, has published magazines for PwC, 3i, dunhill and Bafta, and launched The Sharp Edge, a magazine for and about entrepreneurs, with Duncan Bannatyne. She is a regular contributor to Thomson Reuters’ Venture Capital Journal.

Her last project for the Financial Times was as editor of the paper’s Business Education magazine.

Rebecca Knight

Rebecca Knight is a freelance journalist based in Boston. She writes regularly for the FT on business education, entrepreneurship, and management.

Andrew Hill

Andrew Hill is an associate editor and the management editor of the FT. He was City editor of the FT and editor of the daily Lombard column on British business and finance from September 2006 to December 2010.

He was the FT’s financial editor from June 2005 to September 2006, with overall responsibility for coverage of companies and markets. Before becoming financial editor, he was the FT’s comment & analysis editor, in charge of the paper’s opinion and features pages.

From 1999 to 2003, he was the FT’s New York bureau chief. He joined the FT in 1988 and has also worked as foreign news editor, UK companies reporter and correspondent in Brussels and Milan.

Pino Bethencourt

Pino Bethencourt is a professor and leadership expert at IE Business School in Madrid. She is also an author and executive coach.

Lynda Gratton

Lynda Gratton is professor of management practice at London Business School.

Linda Tarr-Whelan

Linda Tarr-Whelan, former ambassador to the UN commission on the status of women, is a Demos distinguished senior fellow.