Ms. Julie Weeks
President and Chief Executive Officer, Womenable
It is an honor to have been asked to testify at this hearing, and offer my thoughts and observations on the state of women’s enterprise development, what lies ahead for the women’s business community, and what public policy actions could be most effective and impactful for the nation’s 8.3 million women-owned businesses and their 7.7 million employees. It is most fitting – for women’s enterprise advocates in particular – to reflect on this matter, as 2013 marks the 25th anniversary of the Women’s Business Ownership Act of 1988.
As all women’s business advocates know, there were four main tenets of the Act:
1) Extending the Equal Credit Opportunity Act of 1974, which allowed women to establish personal credit in their own names, to business credit – enabling women business owners to gain much wider and direct access to capital;
2) Directing the US Census Bureau to include women-owned corporations in their quinquennial business census for the first time, as leaving them out painted an incomplete, undervalued picture of the economic contributions of women-owned firms;
3) Establishing the National Women’s Business Council, providing a voice for women business owners and their associations in federal policy making; and
4) Launching a “demonstration project” of relational entrepreneurial training that has grown from 4 original training organizations to a network of over 100 women’s business centers in nearly every state today.
Since the passage of that landmark legislation in October 1988, there has been tremendous progress in support for women’s entrepreneurship, and in the growth and diversity of women-owned businesses. In my view, the main markers of progress and achievement have been:
• The proliferation of women’s business membership associations, and the increasing power of their voices;
• A growing body of research-based knowledge about women business owners and their enterprises;
• A sea-change in the way the “women’s business market” is viewed by corporations and financial institutions – from casual, part-time, home-based businesses not worthy of special attention to a growth market of customers and suppliers; and
• Above average growth in the number of women-owned businesses overall, as well as in the diversity of their owners and their industries.
We know that, as of 2012, there are an estimated 8.3 million majority women-owned businesses, employing 7.7 million people and generating nearly $1.3 trillion in revenues. Adding equally-owned firms into the picture, there are 13.2 million women- and equally-owned firms, employing 15.8 million workers and generating nearly $2.7 trillion in revenues.
We also know that, over the past 15 years, women-owned firms have been growing in number at a rate 1-1/2 times that of all U.S. firms, and the growth in employment and revenues of women-owned firms is exceeding that of all other privately-held businesses in the economy – up 9% and 58%, respectively.
However, we also know that the vast majority of women-owned firms – a far greater proportion than men-owned firms – remain small. Fully 81% of men-owned firms have no employees other
than the owner, but that number rises to 90% among women-owned firms. Just 2% of women-owned firms employ 10 or more workers, compared to 5% of men-owned firms. And just 2% of women-owned firms have crossed the million-dollar revenue threshold, compared to 6% of men-owned firms.
As small business advocates and economic policymakers, we all know that the key question is how to move more businesses from self-employers to job creators, and from small firms to medium-sized and even larger. And I would suggest that the answer to that key question may well be different for women-owned businesses than it is for men-owned firms.
In my view, and in the view of many other women’s business advocates, issues surrounding the growth continuum are the “next big thing” for women’s enterprise development in the United States (and globally, for that matter). And by growth continuum I mean recognizing that “growth” is not either-or, not sitting still versus going 100 miles an hour. We are doing many small businesses a disservice by ignoring moderately paced growth in foundational small firms in favor of chasing after the shiny object of the “fast-growth” or “high growth potential” firm. It is not only easier to pave the way for 100 five-employee firms to hire two workers each than to get one high-potential firm to grow from zero to 200, it is likely to be more sustainable and healthier in the long term for the communities in which those 100 small businesses are located.
Further, in grappling with the issue of supporting growth all along the growth continuum, I believe that where we as supporters of enterprise development are still falling short is in the recognition, acceptance and, indeed, celebration of the fact that many women start and grow their enterprises for different reasons than their male counterparts, may take a less linear path to business achievement, and define success by different metrics.
Looking forward at the activities of this Committee for the remainder of this year, and into the next Congress with respect to the women’s business community, I would offer policy recommendations in three key areas: 1) greater access to the federal marketplace for women-owned small businesses; 2) a more complete measurement of the impact of women’s business centers; and 3) continued support for the Census’ Survey of Business Owners, and a more nuanced investigation of women-owned and -led businesses.
1. Federal Procurement and WOSBs
One key avenue for growth for many small businesses is the federal marketplace. The U.S. government spent over $535 billion in FY2011 on contracts and grants, and we know there is a goal to spend 23% of that with small businesses in general, and 5% with women-owned small businesses. (In FY2011, they spent 21.65% and 3.98%, respectively.)
Once small businesses become active federal contractors, the playing field is remarkably level. While among women-owned firms overall are just 40% as likely as the average small business to cross the million-dollar revenue threshold, among active federal contractors there is no significant difference by gender in the level of sales achievement nor in the value of federal contracts over the lifetime of their involvement in federal contracting.
However, opening the doors to more equal access to the federal marketplace for women-owned small businesses has been more problematic. Federal procurement assistance for women-owned small businesses was originally included in H.R.5050/S.2733 back in 1988, but was removed in order to pass the bill. Indeed, it was not until 1994 that the 5% goal was established, and we all know that the Women-Owned Small Business procurement program, passed by Congress in 1999, was not implemented until 2009, and an office to manage the program was not established until 2011. Senators Landrieu and Snowe have been vocal and stalwart supporters of this issue, and S.2172 (the Fairness in Women-Owned Small Business Contracting Act of 2012) and the subsequently introduced S.3442 (the SUCCESS Act) and S.3572 (the RESTART Act) all would make very positive improvements to the program. In particular, it is critically important that the dollar threshold on WOSB contracts be eliminated and that reserved procurements be explicitly allowed. All major women’s business groups, including NAWBO and WIPP, have spoken out in favor of these actions, and as a member of both organizations, I heartily concur.
2. Women’s Business Centers
Federal support for entrepreneurship education and technical assistance for women-owned businesses has had a checkered past, and even now there are some in the U.S. Congress who feel that one size should fit all with respect to enterprise development. Women’s business advocates, including Senators Snowe and Landrieu, know better, and have been strong supporters of women’s business centers.
As federal spending is tightened, as it must, programs need to show their impact and effectiveness. With respect to women’s business centers, it has been shown that the information collection and cross-program analysis undertaken by the SBA to evaluate WBCs, SBDCs and SCORE is inadequate, as it covers only the points of commonality across the programs (specifically one-on-one counseling) and not the full range of all of the support that is provided to clients by WBCs, including: training for start-up and growth, mentoring, peer counseling and support, WBE certification for government procurement and access to corporate purchasing, incubator space, loan packaging and even direct lending. Indeed, a survey conducted last year by the Association of Women’s Business Centers found that the WBC statistics provided by the SBA may be undercounting the performance of WBCs by as much as 24%. According to the AWBC, each WBC – on average – helped to launch 121 new businesses and create 333 new jobs per center in FY2010, and assisted businesses whose collective revenues totaled $12.2 million.
I would recommend that any analysis of performance data for women’s business centers (such as that proposed in S.3442 and S.3572) ensure that all activities that WBCs undertake to fulfill their mission are included in that analysis. To exclude the activities that differentiate WBCs from other entrepreneurial development efforts is to ignore the very qualities that make WBCs unique, customer-centric, location-specific, welcoming to women, and highly successful.
3. The Census Bureau’s Survey of Business Owners
Data from the U.S. Census Bureau has been critically important to women’s business advocates, which is why a more complete accounting of the economic contributions of women-owned firms was one of the cornerstones of the Women’s Business Ownership Act of 1988. In the first quinquennial census conducted after the passage of that act (the 1992 census, published in 1995), when the Census included women-owned C corporations for the first time, the number of enumerated women-owned firms in the US increased by just 9%, but the employment attributed to women-owned firms jumped by 111% and the measurement of the revenues generated by women-owned firms shot up by 145%. It was these numbers that made corporations wake up to the value of women-owned firms as customers and suppliers, led banks to begin targeting women-owned firms, and amplified the voice of women’s business associations.
The Census Bureau’s quinquennial Survey of Business Owners (SBO) has been an invaluable tool for mapping progress and uncovering gaps in the growth of the number, employment and revenues of women-owned businesses – and of minority-owned firms as well. Maintaining funding for the Census’ SBO program is, therefore, critically important.
Further, my recent analysis of the growth of women-owned businesses over the past 15 years, which has utilized the Census data, has highlighted two areas that I feel would be beneficial to learn more about:
1) Trends in the number and size of “women-led” firms. As businesses grow, many attract outside investors or share business ownership with senior managers in the company. Therefore, a firm that was women-founded and formerly majority women-owned may drop below the 51% majority ownership threshold. We need to learn more about how and when that happens, and what the size and economic contributions of this invisible population of women-led firms are.
2) There is growing discussion, here and elsewhere in the world, about social enterprises. These can be for-profit firms that consciously follow “triple bottom line” practices, one of a growing number of businesses that structure themselves as “B” (benefit) corporations, or non-profit organizations. Research suggests that women are more likely than average to follow these principles and lead non-profit organizations, but the Census Bureau currently combines non-profit organizations along with publicly-traded large corporations into the “publicly held and other firms not classifiable by gender, Hispanic or Latino origin, or race” category. The Census Bureau should study the feasibility of separating non-profit organizations from publicly traded firms, ensuring the addition of the “b” corporation legal form of organization, and testing whether gender of ownership can be measured among these firms.
I would recommend that the Economic Census Branch of the Company Statistics Division of the Census Bureau consider ways to address these issues, either by modifying the SBO survey tool or by analyzing existing data in greater depth. I would further suggest that this is a potential area of inquiry for the National Women’s Business Council.
Finally, if I might be so presumptuous to speak on behalf of the entire women’s enterprise development community, I would like to recognize that, ever since she came to the U.S. Congress in 1978, Senator Olympia Snowe has been a vocal supporter and forceful advocate for women’s entrepreneurship issues without equal in the U.S. Congress. Her support and thought leadership on behalf of the women’s business center program, on federal procurement issues, on SBA entrepreneurial development coordination and impact evaluation, on the National Women’s Business Council; her inclusiveness in calling advocates to the table to discuss challenges and solutions; and the collegial way she has led the Senate Committee on Small Business and Entrepreneurship as both Chair and Ranking Member is unparalleled and is a shining example of the best in national politics and policymaking. Her voice and leadership will be sorely missed by all of us.