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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | FEBRUARY 28, 2001 FINANCE Small-Business Stats, by Gender A new survey adds some fresh details to the emerging picture of the ways in which women-owned outfits differ from those run by men
As women-owned companies come to represent a larger slice of the small-business pie, and as small business itself plays a bigger role in the national economy, entrepreneurial women are coming under scrutiny by commercial, academic, and government institutions. The basic issue: Do the assumptions about small-business owners that were formed back when most entrepreneurs were men still apply? This latest survey, underwritten largely by FleetBoston Financial, as well as the Kauffman Center for Entrepreneurial Leadership and the Edward Lowe Foundation, aimed to define the characteristics of fast-growth companies and compare them with their slower-growing counterparts, and then to determine the differences between fast-growth businesses owned by women and those owned by men. The study categorized fast-growth businesses as those that have experienced a 30%-or-higher increase in revenue or number of employees over the previous three years. Some of the results: -- Women entrepreneurs are more inclined to ask for advice. Some 60% consult an accountant, and 49% seek the opinion of a family member. Only 40% of men who own fast-growth companies consult an accountant, and 38% get advice from a relative. -- Fast-growth small companies are rarely in a high-tech field. Fewer than one in five, whether man-owned or woman-owned, is involved in information technology, telecommunications, the Internet, or life-sciences. -- Some 32% of women who head growing companies use personal credit cards to finance some of their business, vs. 21% of men. Male owners are more likely, 52% vs. 39%, to have a current commercial bank loan. -- While 55% of female small-business owners see access to capital as very important for their fast-growth companies, only 41% of male owners share that opinion. Most fast-growing businesses do not tap venture capital (5% of women owners, vs. 8% of men owners), or angel investors or other individuals (6% of women owners, vs. 11% of men owners). -- Regardless of gender, those heading fast-growing businesses tend to be younger and better educated. Women owners, however, are less likely to have had an entrepreneurial role model while growing up (43%, vs. 59% of the men) and are less likely to have owned a business previously (30% vs. 45%). -- Regardless of their owner's gender, growth-oriented companies are more likely to have a Web site than slower-growing businesses. -- Growth-oriented companies owned by women have an average of 9 employees, vs. 18 for men-owned companies. -- Both men and women with fast-growing businesses listed good service and hard work as the top reasons for their success. THE ART OF LEVERAGE. FleetBoston, which has earmarked $2 billion for women-owned businesses over the next five years, wants to know how to get these successful entrepreneurs to sign on as customers. "A question we were trying to answer with this study is, how do women gain access to capital?" says Teri Cavanaugh, senior vice-president and director of the Women Entrepreneurs' Connection at Fleet. "How do we shorten the financial ladder for women? We need to teach them about leverage." Cavanaugh acknowledges that Fleet is interested in lending to established, successful small businesses rather than fledgling ones. "What we don't have as an industry is a startup product," she says, acknowledging that banks have not made efforts to seek out small-business customers in the past. Today, more small businesses are financed with personal credit -- a credit card or home-equity loan -- than with a commercial loan or other investors' money. For almost-new businesses, those with at least a six-month track record, Fleet recently established the Business Express loan, which has a one-page application and a 24-hour turnaround time. But approval of this "business loan" is based solely on the applicant's personal credit. TIGHTER CREDIT? Across the board, there is a growing eagerness among banks to get good small-business customers, says Paul S. Nadler, professor of finance at the Graduate School of Management at Rutgers University in Newark, N.J. "Small business is where it's at for them because the big corporations can go elsewhere." he explains. "They want the business, sure, but they want to make sure they've got the quality," adds Nadler, who also predicts "a great selectivity" among banks because of the slowing economy, which has already seen an increase in debt levels and small-business failures. Nadler's advice to any small-business owner looking for a loan: "Make 20 phone calls. It's amazing what you'll find. This one will say no, and the next one will say yes." So far, there's no study on whether your chances of getting the money are better with a female banker or a male one.  By Theresa Forsman in New York  | | |
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