Women Demonstrate They Have What It Takes to Build Million Dollar Firms

A new study, The Leading Edge: Women-Owned Million Dollar Firms , shows that women are demonstrating their business savvy and financial sophistication by building substantial and growing businesses that generate one million dollars or more in annual revenues. The study, conducted by the Center for Women's Business Research and underwritten by AT&T and KeyBank, specifically explores the characteristics, experiences and business practices of women-owned firms with one million dollars or more in revenues. These businesses distinguish themselves through their use of multiple funding sources, sophisticated financial management practices and utilization of technology.

“This study confirms that women can and do play in the big leagues. The vast majority (73.0%) of these million-dollar firms are owned and operated by the founder and many (14.5%) achieved that level of success in five years or less,” said Myra M. Hart, Chair, Center for Women's Business Research and Professor, Harvard Business School. Hart continued, “These businesses contribute significantly to our economy in terms of revenues and employment. Most are on their way to becoming even bigger with more than half (55.3%) reporting sales growth over the past three years, in spite of the economic downturn."

“These leading-edge businesses typically are different from other women-owned businesses,” said Maria Coyne, senior vice president, Women-Owned Business Initiatives, KeyBank. They use a greater number of funding sources and vendor credit. In addition, they are more likely to utilize a greater array of financial products available to them, including commercial business loans or lines of credit and business credit cards.”

Women owners of million-dollar firms are also more likely than owners of smaller women-owned firms to use a variety of “bootstrapping” strategies to reduce the need for outside capital, including negotiating better terms for their accounts payable, speeding up customer payments and leasing equipment. Their financial sophistication extends to financial reporting. They are more likely than the smaller women-owned businesses to produce financial reports such as balance sheets, income statements, cash statements, sales forecasts and break-even analyses. They also produce many of these documents more frequently.

Their financial sophistication is also evident when they address technology issues. “In technology, these leading-edge women business owners are setting the pace for all other businesses,” said Don Herring, who leads the AT&T mid-sized markets division. “They are more likely than the women owners of smaller businesses to say that the Internet and e-commerce play an important role in their business's growth strategy (57.7% of women owners of million-dollar firms vs. 31.2% of other women owners). Furthermore, more than half (56%) of the women-owned million-dollar firms use their Website for e-commerce.”

Other factors that distinguish the million-dollar women-owned businesses from smaller women-owned businesses include:

• More likely use of formal advisors, such as accountants, lawyers and boards of directors, and less likely use of informal financial advisors such as family or friends.
• More likely membership in formal business organizations.
• Less likely service firms (26.9% vs. 51.0%) and more likely in wholesale trade, construction and manufacturing (12.3 vs. 4.8%).
• More likely with customers that include corporations, other businesses and government contracts at the local, state and federal level.
• Almost 2.5 times as likely to be certified as a woman-owned business than other women-owned businesses.

“There is no single ‘formula' for reaching and surpassing the million-dollar revenue mark, but the experiences of these women who have already done so provides guidance for the next generation of up-and-coming women entrepreneurs,” said Hart.

For further information, contact: Center for Women's Business Research, 1411 K Street, NW, Suite 1350, Washington, DC 20005-3407. Phone: 202-638-3060, ext. 10.

Email: info@womensbusinessresearch.org, Web site: www.womensbusinessresearch.org .

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