Women-Owned Businesses Are Less Likely to Exceed $1M in Sales. So What?

Business.com / Entrepreneurship / Last Modified: February 22, 2017

More women are starting businesses than ever before. Statistics say that they're less likely to hit $1 million in sales, but does it matter?

We all know about glass ceilings and the predominant boys club of Silicon Valley (a few high profile women notwithstanding). Sheryl Sandberg (speaking of one of those exceptions) wrote Lean In and started a related nonprofit organization to encourage women to take charge of their careers, develop the same confidence as men and overcome gender bias.

While generally it remains tougher for women than men to step up to the top rungs of the corporate ladder, female entrepreneurs are in some respects outpacing men. The question is whether these alternative measures matter more than traditional measures of success.

According to a study by the North American EY Entrepreneurial Winning Women™ Program, women start businesses at 1.5 times the rate of men and play some ownership role in almost half of all privately owned firms. '

By 2015, women-owned enterprises will account for nearly $2.967 trillion, representing 18 percent of projected GDP in 100 countries. BNP Paribas reports that women launch slightly more businesses compared to men worldwide, and that women entrepreneurs tend to be more successful. Female entrepreneurs report average annual sales of $9.1 million, compared to $8.4 million of male entrepreneurs.

That said, U.S. businesses owned by men are 3.5 times more likely to exceed a million dollars in sales, with women having only a 2 percent chance of ever hitting that mark. That single number may not be a meaningful measurement of women’s entrepreneurial talents and capabilities, however.

Related Article: Ladies Take the Wheel: How Women are Driving Business Innovation

The Benefits of Small

The American Sustainable Business Council reports that while women-owned businesses span a variety of industries and sizes, many of them are small, home-based ventures and that women make up more than half of all self-employed workers. Nevertheless, the 8.6 million women-owned businesses in the U.S. create 7.8 million jobs and $1.3 trillion in revenues.

It’s frequently the case that women start their own businesses to attain a better work/life balance and/or to supplement overall family income. In an odd way, the lack of opportunity and flexibility with traditional employment is a driving factor for women to become entrepreneurs. Women also tend to delegate less than men, which limits their ability to expand their business scope.

As Business2Community notes, women are more likely to start a business to gain financial independence, and are less interested in having thousands of employees or growing a multimillion dollar enterprise. But a woman who runs a scrapbooking store is equally competent and visionary as the man who starts a manufacturing company. The difference is a question of scale, not inherent capability. Indeed, a Kaufmann Foundation Study found no difference between the personalities and education levels of male and female entrepreneurs. They just in many cases have different goals and aspirations for their endeavors.

Related Article: How the White House is Addressing the Shortage of Women in Science & Engineering

Share the Wealth

The one key factor that differentiates men from women entrepreneurs may be a lower “buddy-factor.” The Huffington Post reports the comments of Carla Harris, the chairperson of the National Women’s Business Council (NWBC), that women historically lack the platforms to share success stories and lessons learned from starting a business. They also have fewer female role models. Consequently, budding female entrepreneurs may feel more like they are reinventing the wheel than male entrepreneurs. The Lean In Foundation and the NWBC aim to correct this by providing forums on how women can start their own businesses and how women can help their fellow female entrepreneurs. It’s therefore likely that the growth of women-owned businesses will further outpace those for men, even while continuing to lag behind in overall revenue generation. Given the opportunities for women to break the glass ceiling on their own terms, however, this may be beside the point.

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