Women Own 28% of U.S. Business--Study

The number of women-owned U.S. businesses is far higher than has been previously counted, and those firms employ nearly as many workers as firms in the Fortune 500, according to a pioneering economic study released Monday.

The study, said to be the first complete count of its kind, demonstrates that women-owned businesses are a powerful economic force and should be given greater consideration as business partners or recipients of capital investment, its sponsors said.

The study uncovered an additional 1.3 million women-owned businesses not counted by the 1987 U.S. Census of Business, previously considered the most complete tally. Women now own 5.4 million businesses, or about 28% of American firms, the research found.

The survey, sponsored by the National Foundation for Women Business Owners, also revealed that in 1990, women-owned businesses employed close to 11 million people, nearly as many as the 12.3 million employed by firms in the Fortune 500, which have actually lost 4 million jobs since 1980.

“It was like discovering a trout stream that no one has ever fished before,” said Dr. David Birch, president of Cambridge, Mass.-based Cognetics Inc., the economic research firm that spent 18 months on the project. “These businesses offer a whole new source of investment opportunity and job creation.”

“For corporations, this research provides important new information about one of the fastest-growing markets in the U.S. and introduces us to a viable source of new strategic partners in every area,” said Richard Falcone, a vice president of American Telephone & Telegraph, which helped pay for the study along with International Business Machines, Coopers & Lybrand, Avon and Pacer Systems.

Birch said women-owned businesses also tend to be more stable, with 40% of those polled being in business 12 years or more. Most small businesses fail within the first five years, according to studies by the Small Business Administration and others.

The study also dispels the myth that most women-owned business are in the service or retail sector or operate primarily out of their homes. “Women are in every industry and almost in the exact proportions as men,” Birch said, citing such industries as construction and agriculture, where significant numbers of women-owned firms were found.

Gillian Rudd, chair of the Washington-based National Foundation for Women Business Owners, said the research “is the first true measure of the extent of women-owned businesses in the U.S. economy.” Unlike the census, which counts sole proprietorships and subchapter S corporations, the study counted all corporations, large and small.

Using business data provided by Dun & Bradstreet, Cognetics tracked down hundreds of thousands of women-owned corporations missed by the 1987 Census of Business.

Cognetics’ Birch said he hopes financial institutions will take note of the new numbers and provide capital for women to grow their businesses. “I hope every banker in America sees that women who own businesses are less likely to go bankrupt and more likely to repay their loans.”