NWBC Offers Insight for Minority Women Entrepreneurs

Measured over a three-year period, minority women-owned businesses had similar survival rates and employment growth compared to all women-owned firms, according to a recent series of federal reports. However, when measured against other minority women-owned firms, African American women-owned businesses showed greater job loss and lower survival rates.

The National Women’s Business Council (NWBC) released last month five Issues in Brief, providing a state-by-state analysis of trends in survival rates and employment growth among minority women. The briefs are separate reports focusing on African American, Asian American, Latina, and Native American women, along with a minority summary report that provides detailed tables by both state and industry. The reports accompany an earlier brief that examined 923,000 women-owned firms between 1997 and 2000.

Overall, 75.1 percent of all women-owned companies were still operating after the three-year period, compared to 75.5 percent of all employer business locations in existence, the report indicated. Therefore, according to NWBC, women-owned businesses exhibited the same tenacity and survival rates as the average U.S. employer firm. Asian American women-owned businesses showed the strongest survival rate, with 77 percent of companies still in operation while African American women-owned businesses fared the worst with 68 percent still in business.

In terms of employment growth, Native American women-owned companies experienced the strongest workforce expansion, with a 36 percent increase. According to NWBC, much of the group's increase was due in part to significant employment growth in Texas and California. The other three groups each experienced a decline in employment, with African American women-owned businesses treading far above the rest at a 21.8 percent decline, followed by Latina women-owned businesses reporting a 4.6 percent decline and Asian American women-owned businesses showing the lowest employment decline of 1.7 percent.

States varied substantially among the four minority groups and across the two measures in terms of stability and growth of minority women-owned firms, according to NWBC. However, Maryland, Nebraska, and Washington were most likely to appear among the top 10 across all four minority groups. Alaska, Massachusetts, and Oregon appeared most frequently among the bottom 10.

Michigan ranked in the top 10 states for survival rates among African American, Asian American, and Latina women-owned businesses, while Kentucky and New Jersey showed above average survival rates across all four groups. Colorado and Iowa were among the bottom 10 states for survival rates of African American, Latina, and Native American women-owned businesses. States that ranked highest in employment growth for three of the four groups include Iowa, Minnesota, Virginia and Wisconsin. California was the only state that showed above average growth among all four groups.

Understanding differences in business survival and growth among segments of the women-owned business population is vital to making informed policy and program decisions, according to NWBC, and the reports provide useful information to the women’s business community and to public policymakers. In order to provide a better understanding of establishment dynamics and sources of employment gains and losses, NWBC recommends that new firm creation should be examined between census years.

The National Women's Business Council (NWBC) is a bipartisan federal advisory serving as an independent source of advice and policy recommendations to the President, Congress, and the U.S. Small Business Administration on economic issues of importance to women business owners. The Issues in Brief are available in full from NWBC at http://www.nwbc.gov.