Why Women-Owned Businesses Succeed

A survey conducted by Guardian Small Business Research Institute projects that women-owned businesses will generate 5 million new jobs by the year 2018.

"As a result of the increasing influence and business leadership of women small business owners, the workplace of tomorrow will be far less hierarchical," said Mark Wolf, director, The Guardian Life Small Business Research Institute. "This distinctive approach strongly counteracts the top-down, command-and-control style of management long practiced by their male counterparts."

In a report by Biz2Credit, more evidence underscores the rapid advance of women in the business world, with average earnings of companies owned by females increasing an astounding 54% in a year-to-year comparison. According to the research, average earnings for women-owned businesses shot up to $54,114 in 2013, from $35,135 in 2012.

Why are women-owned businesses thriving?

  1. Costs of launching a business have improved.  Thanks to laptop computers, tablets, and smartphones, companies no longer need big mainframes and large servers. Cloud data storage has proved a big plus.
  1. Working from home has advantages.  Today women can conduct their business from home and reduce overhead. It adds a new work/life balance to the equation. In decades past, having your own business meant a significant expense in office space, equipment and such.
  1. Thanks to digital marketing and social media, promotional costs are better. Rather than spending on costly traditional media that may or may not reach the target audience, digital marketers can connect with their targets via social media channels.
  1. Technology in small business lending has accelerated the process and lowered cost. Competition in the marketplace among banks and other financiers in the small business lending space has been a great benefit to women business owners.
  1. More women graduate from college these days than men. As women gain experience running their own business, they are better negotiators, marketers and CEOs. Women are running their businesses more efficiently than ever and expand their companies at earlier stages of the business life cycle.

Still, there are obstacles women owned businesses must overcome. The good news is small business loan approvals from female-owned companies have jumped to 31 percent from 2.5 percent. Yet, the success rate for funding female-owned firms is 8 percent lower than the 39 percent rate of a business owned by a male.

Some banks tend to shy from doing business with a company that has been in operation less than two years. So women who are just starting their companies have been able to connect with non-banking lenders, which are more open to loaning to younger firms. Unfortunately, these lenders frequently provide capital at much higher interest rates than banks do.

Women business owners are determined and remain confident. They know that the more a company applies for small-business funding in the early stages, the better the rewards. Those efforts will help construct a strong business-credit history.

The more their businesses grow, the more women will be empowered to compete. After all, 5 million new jobs by the year 2018 is not a bad projection with which to identify.

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