Taking the Pulse of Women Entrepreneurs

The manager of Wells Fargo's lending program targeted at women-owned businesses talks about the latest trends

Women-owned businesses are on the rise. Consider the following figures: According to the Washington-based Center for Women's Business Research, 48% of all privately held U.S. firms are 50% or more women-owned -- for a total of 10.6 million firms. They generate $2.5 trillion in sales and employ 19.1 million people across the country. Moreover, between 1997 and 2004 the number of women-owned companies grew 28.1% -- nearly three times the rate of all privately held businesses with employees.

Ten years ago, San Francisco-based Wells Fargo Bank noticed the growth trend among women entrepreneurs; however, it was also apparent that women did not have the same level of access to capital as their male counterparts. As a result, Wells Fargo launched its Women's Services program, becoming the first financial institution to establish a lending program targeted at the owners of women's businesses.

The program began with a lending goal of $1 billion over a 10-year period, which it surpassed during its first year in operation. It increased the goal amount to $3 billion and then to $10 billion. To date, Wells Fargo has loaned more than $19 billion to women business owners nationwide through this program. In 2003 the program revised its lending goal to $20 billion over a 10-year period.

BusinessWeek Online staff writer Stacy Perman spoke with Rebecca Macieira-Kaufmann, Wells Fargo's executive vice-president and small business manager, about the strides women entrepreneurs have made, the challenges they still face, and where they are heading next. Edited excerpts of their conversation follow:

From a variety of standpoints and surveys, women-owned businesses are increasing. How do you account for this?

The whole small-business market is growing, and women-owned businesses are growing at a faster rate. My guess is that women are making strides in all [segments] of society and are increasing their small business presence. Women are getting a more equal share in Corporate America and in ownership.

What areas do you see women going into?

Women tend to be dominant in the services industry, dwarfing all other segments. [Next] they have a strong presence in retail, trade, real estate, insurance, and finance.

What remains the basic fundamental challenges for women?

This the eleventh year that we [have run] this outreach program, and we continue to see that while it has increased, women do not access capital at the same level as male business owners.

[That said], women owners face many of the same challenges as men -- for instance the cost of insurance, prices for industry, hiring and retaining employees -- that we see as mature issues. Men have had a longer history in business. Now we are seeing women come up against such things as exit strategies, how to pass on or sell a business, or how to monetize it.

Where have women made gains?

We've seen gains in pure ownership by women and we are seeing gains in ownership in sub-segments like Latino, Asian, and black women. Also, we see women moving into new industries like construction and agriculture and diversifying out of the service industry. They are employing huge numbers of people and have one of the highest rates of employment, revenue, and profitability -- all key health drivers.

Compared with male-owned businesses, where do women stand?

Right now, women-owned businesses are increasing their rate of ownership faster than male [ones]. If small businesses represent 50% of our GDP, they are our economy. If you think that women are making strides in all areas of society, it makes sense.

In the 1950s, women in medical and law schools were only 2% of the population; now they are 50 to 55%. We are now seeing the same thing in small-business ownership. First women went into the professions, and now they are entering small business.

Recently Wells Fargo, along with the Center for Women's Business Research, released a study, Women-Owned Firms Doing Business Without Employees: A Growing Economic Force, reporting that between 1992 and 2004 the number of women-owned companies without employees were growing at twice the rate of all U.S. non-employer companies. Is this indicative of a specific trend or issue?

Starting a business as a sole service provider is a common way to enter with greater flexibility and less responsibility. It is indicative of where women are lagging in business ownership. If this stayed this way, it would be of concern because if you don't hire people, you limit growth. It is something we will watch carefully. It is the first time that we've seen that, and I'm not alarmed by it.

What's next for women and business?

Diversification out of [traditional] services. It will be interesting to watch and see how women are growing their businesses -- through networks or [by] hiring their own teams.

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