Traits Of Women Owners Of Fast-Growth Businesses.

Women who own fast-growth businesses are more likely than women who own slower-growing firms to access a wide range of credit sources and to borrow to finance their businesses. These fast-growth women entrepreneurs access this capital much differently than their male counterparts. Fast-growth women entrepreneurs are more likely than fast-growth men entrepreneurs to depend on their business earnings and personal debt for business financing; men are more likely to have a business or commercial bank loan.

The new survey among 1,194 business owners – 602 women and 592 men – was conducted by the National Foundation for Women Business Owners (NFWBO). The survey shows that women and men owners of fast-growing businesses – firms that achieved revenue or employee growth of 30% or more over the past three years – are similar in that they have a larger appetite for capital than those who own slower-growing firms.

“However, only 39% of women who own fast-growth firms have a commercial bank loan compared to 52% of men owners of fast-growth firms,” noted Nina McLemore, NFWBO Chair and President of Regent Capital. “One-third (32%) of women owners of fast-growth firms use personal credit cards to finance their firms compared to only 21% of men who own fast-growth firms.”

Teri Cavanagh, Director of the Women Entrepreneurs’ Connection at FleetBoston Financial, the primary underwriter of the NFWBO study, observed that “this reliance on personal debt is holding women business owners back. The study clearly indicates that women who understand how to leverage debt and equity have a far greater chance of becoming owners of fast-growing – or ‘gazelle’ – businesses. This confirms Fleet’s experience that access to capital is key for women entrepreneurs today.”

The study, “Entrepreneurial Vision in Action: Exploring Growth Among Women- and Men-Owned Firms,” was also underwritten by the Edward Lowe Foundation and the Kauffman Center for Entrepreneurial Leadership.

Most fast-growing firms are not in high-tech fields, nor are high-tech firms necessarily fast-growing, the study concluded. Most of the high-tech-related businesses surveyed did not meet the study’s criteria for fast growth. However, women are more likely to own those high-tech firms that are also fast-growing – 48% of high-tech firms owned by women are fast growth, compared to 28% of high-tech men-owned firms.

Furthermore, the high-tech-related women-owned firms are more likely to be in the fields of biotechnology or life sciences, while information technology dominates men-owned tech-related firms.

Mark Lange, Executive Director of the Edward Lowe Foundation, a study underwriter, noted that “women owners of fast-growing firms differ from other women owners in their desire for independence and more money as motivations for becoming owners. These women owners of fast-growth businesses are also better educated and younger than other entrepreneurs who were surveyed.”

Most women entrepreneurs who have achieved fast growth for their firms have a greater diversity of business-related characteristics and life experiences than men business owners. “Women owners of fast-growth firms are less likely than their male counterparts to have had an entrepreneurial role model, a managerial or executive professional background, or past experience in owning a business,” said Trish Costello, Director of Women’s and Venture Capital Initiatives at the Kauffman Center. “It is critically important that women have access to mentors as well as to knowledge and information about entrepreneurship to be successful in growing their businesses.”

Although keeping up with technology is a key business concern, only about 20% of all business owners surveyed consider the Internet and e-commerce to be critical elements of their business growth strategy. Even among owners who have identified growth as a primary business goal over the next five years, only 44% each of women and men owners have a web site; just under one-third of firms that are less growth-oriented have a web site.

“Women owners of fast-growth firms are less likely to share ownership of their firms with outside investors than their male counterparts – only 28% of women compared to 49% of men share owner-ship,” NFWBO’s McLemore added. “Women entrepreneurs should recognize that bringing in expansion capital is an important factor in achieving high growth, even if they must relinquish some equity.”

Other findings from the NFWBO survey include:

Among the fast-growth firms surveyed, 21% each of women- and men-owned firms have annual gross sales of $1 million or more;

Women owners of fast-growing businesses are more likely than other owners to consult outside sources on business management and growth issues. For example, 60% of women owners of fast-growing firms consult with accountants compared to 44% of their male counterparts; and

Businesses that have achieved recent fast growth tend to be younger, have higher revenues, and employ more workers than firms that are not growth-oriented. Likewise, firms that expect to grow in the future are younger and have higher revenues than firms that are not growth-oriented.

See attached charts, Click above on More Images.

Study Methodology

This nationwide study of women and men business owners was conducted by telephone from mid-July through the end of August 2000. A total of 1,194 interviews were completed, 602 with women business owners and 592 with men business owners. Interviewing was conducted by Consumer & Professional Research (CPR) of Chicago, IL, a woman-owned firm.

This sample pool of women and men business owners was compiled from Dun & Bradstreet’s Dun’s Market Identifier database. Respondents were chosen based on the gender of the owner and the firm’s sales and revenue growth. The Cognetics definition of “gazelle” firms was used in an attempt to sample equal numbers of growth and non-growth firms. A disproportionate number of larger firms were interviewed to ensure adequate numbers for analysis. The sample was weighted back to proper proportions, based on employee size and growth.

A statistical analysis confirmed two distinct indicators of growth. Thus, for the analysis, growth is measured in two ways – past growth performance and future growth strategy or orientation. Growth-oriented men and women are those who indicate that their business growth strategy over the next five years is either to expand their businesses at a solid rate to provide increasing opportunities for their employees and the community, or to grow their businesses into a large enterprise that may someday be sold or go public. Fast-growing firms are those that have had revenue or employee growth of 30% or more over the past three years. In the weighted data, this yields 169 fast-growing women-owned firms, 407 other women-owned firms, 123 fast-growing men-owned firms, and 439 other men-owned firms. Twenty-six (26) women and 30 men refused to indicate their employee or revenue growth. The sampling error for sample sizes of 169, 407, 123, and 439 are ± 8%, ± 5%, ± 9%, and ±5 % respectively, at the 95% level of confidence. This means that, 95 times out of 100, survey results will be within 5%, 8% and 9% of population values.

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