Women are a powerful force — even in a recession.
According to preliminary data released by the U.S. Census Bureau last month as a part of their Survey of Business Owners (SBO), the number of businesses owned by women grew by 2.1 million to a total of 9.9 million firms between 2007 and 2012, a surge of 28%. Released every five years, the SBO provides the most detailed analysis available of America’s small-business landscape.
A lot happened during those five years. The U.S. suffered the greatest financial crisis and economic downturn since the Great Depression. Nevertheless, women found a way to navigate the downturn and even use it to their advantage.
According to Crystal Arredondo, chair of the National Association of Women Business Owners, the period between 2007 and 2012 saw a shift in the economy and business landscape that allowed women to seize entrepreneurial opportunities.
According to the data, the number of businesses owned by women of color saw extremely strong growth with an increase of 87% for Hispanics, 68% for Blacks and 44% for Asian-Americans.
The sharp gains for minority women likely reflect economic necessity, says Zulema Valdez, professor of sociology at University of California Merced. When the economy takes a nosedive, as it did in 2008 at the start of the recession, women of color tend to be hurt more. “In some ways entrepreneurship is a compensatory mechanism when you can’t find formal employment. Whether accidental or survival, people were looking for work in an unhealthy economy,” Valdez says.
But Erin Kelley, director of research and policy for the National Women’s Business Council, suspects women opened recession-borne businesses both out of necessity and desire.
According to Kelley, the recession provided a “perfect storm” of sorts for women looking to become entrepreneurs. Low inflation and interest rates, large amounts of available investment capital, and the rising number of women receiving bachelor’s and master’s degrees provided avenues for women to embark on paths they may have been considering for some time.
Following the recession, “people started to do things differently, and that provided an invitation for women to become entrepreneurs,” she says.
Despite the significant gains, businesses owned by women entrepreneurs remain quite small compared with those owned by their male counterparts. Nearly 90% of businesses owned by women have no employees other than the owner, up slightly from 88% in 2007. The remaining 10% of women-owned businesses employ close to 9 million people in addition to their owners. This may reflect women’s still unequal access to economic resources and social support that could help them grow their business.
Entrepreneurship, says Kelley, “is a way to build something and create value for people. Women are typically interested in creating value. [Business ownership] is a really great way to do that and make money.”
Valdez is concerned about the sustainability of the new businesses over the long term. Yes, women are starting businesses, but are they surviving? Even further, are they thriving?
Only time will tell. But one thing is clear: Women are gaining confidence in the entrepreneurial world. They’re pulling up a chair to the table, and it’s due time they take a seat.