By
Melissa Harris Perry
updated 4/24/2013 6:18:55 PM ET 2013-04-24T22:18:55

The latest comprehensive data from the U.S. Census shows that between 1997 and 2007, companies owned by women grew at almost double the rate of their male counterparts.

The number of female CEOs heading Fortune 500 companies is at an all-time high, leading companies like Xerox, Kraft Foods, and PepsiCo. While women still only lead 4.2%—or 21 total–of the Fortune 500—the focus remains on the women at the top, there are millions of women who are taking a more entrepreneurial route and starting their own small businesses.

The latest comprehensive data from the U.S. Census shows that between 1997 and 2007, companies owned by women grew at almost double the rate of their male counterparts. That amounts to 7.8 million women-led businesses. But while the number of companies have grown, only 2% of women-owned firms are considered high-achieving earning more than $1 million in annual revenue.

On her April 14 program, host Melissa Harris-Perry spoke with her all-woman panel about the challenges and possibilities that women small business owners can face.

When it comes to finding capital to start a business, many new entrepreneurs rely not on government or bank loans but rather personal funding. “I self-funded Power Women TV for four years,” Amy Palmer, founder and CEO of PowerWomenTV.com said on the show. “I took my primary job and I said I believe so much in this mission and this network that I was living way below what I should be living at my age because I believed in it.”

According to the National Women’s Business Council, 55.5% of women-owned firms used personal funds to start their business versus government business loan (.4%) or a guaranteed government business loan from a bank (.5%).

Lisa Cook, assistant professor of Economics and International Relations at Michigan State University, told Harris-Perry that the reasons for this are two-fold. “The problem for start-ups is that women typically have lower credit scores…often they don’t have credit histories like men do.” Cook goes one step further with, “I think women are less informed about say small business loans and SBA policy.”

Is it a lack of knowledge by women or more so a lack of confidence by investors? Carmen Wong Ulrich, president of Alta Wealth Management, said it’s the latter. “Women encounter so much trouble getting that money, getting people to really believe and invest in them. That that’s a huge burden.”

Ulrich went on to note that it may be hard to get the initial investment capital but it may be worth it versus the alternative. “It gets to a point where women have so much trouble getting ahead, because the assumptions are you just be quiet now, you can be an assistant. That’s where you belong. So that they find a different way around it, but it’s a very different, very risky thing to do.”

It may be risky but worth it in the long run, since non-farm firms run by women generate $1.2 trillion to the economy. And women of color are among the fastest growing group of entrepreneurs in the country.

And when it comes to branding, “Reinventing You” author Dorie Clark said that the time has come where women can brand themselves however they like. “I think we’re entering an era where what really matters is what’s unique about you, what’s different. And so I don’t think that necessarily the women have to brand themselves as I’m a woman doing this but you need to ask yourself the question what about me uniquely as an individual can I bring?”

See the second half of the discussion below, where Harris-Perry discussed her favorite small-business owner in her hometown of New Orleans: Demo Diva‘s Simone Bruni.

Video: Challenges for women in small businesses

  1. Closed captioning of: Challenges for women in small businesses

    >> announcer: not rocket science . it's just common sense .

    >>> the lack of women ceos at fortune 500 companies is well-documented. record number of 20 women were heads of company like kraft, yahoo and others. we missed a growing number of women -owned small businesses that are being created and need support. kind of farther down the line. the most recent census data shows 7.8 million women -owned firms in '97. between 1997 and 2007 , companies owned by women grew at double the rate of their male counterparts. yet, despite those gains, the numbers could be better. women owned firms employ just 6% of the nation's workforce. they account for 4% of private sector business revenues and only 2% of women -owned firms are considered high achieving. in other words, earning 1 million or more in revenues. small businesses are responsible for the creation of 65% of new jobs. by supporting women entrepreneurs, we would in turn be supporting our economy. personal finance expert and litz a cook and also joining me are amy palmer, founder of her own small business and tycoonist entertainment and dore i clark, author of reinventing you. define your brand, imagine your future. thank you, ladies, for all being here. i want to start, carmen, you and i have talked a bit about this at various points. were there particular challenges facing women when it comes to beginning a small business ?

    >> oh, many, many, taking care of the kids. that's the reason why they have their own business. you need flexible hours, they're not the big earners,s 2%. most of them working from home, supporting their families, because they need that. we've got the web, access to people all around the world. access to capital. that's just the phrase that just means no one is going to lend to me. so we have a lot of women and i met many, many of them who have fantastic small businesses , they just need, whether it's $10,000, a thousand, $10,000 and some even $100,000 to get to the next level. all the talk this talk is about having access to capital and getting to a point where you're scaleable. meaning you can get -- women encounter so much trouble getting the money and getting people to believe and invest in them. that's a huge burden.

    >> this is part of your personal story. we were looking at women business owners and we're looking at how they started or acquired their businesses. more than 55% of them are starting with either personal or family savings, 6% coming from personal or family assets other than savings, about 11% from a business or personal credit card . and under 1% either getting business loans from the federal or state governments or from the banks. in other words, women are absolutely boot strapping these businesses on their own.

    >> they're boot strapping their businesses and for me, i sell funded power women tv for four years. i took my primary job and i said, i believe so much in this mission and this network that i was living way below what i should be living at my age because i believed in it. my passion, determination and the integrity for my bland is what attracted an a investor to me. it took me four years to find that investor.

    >> do you think that is in part based on gender dore i. is part of what's going on is that banks are seeing women and particularly young women who will go offnd have kids as bad investments?

    >> i think that's part of it, melissa. another key issue is that the venture capital industry is traditionally extremely male. if you look at the high watermark of the vc industry from '95 to '99. during that period, only 6% of the funds -- of the firms funded by venture capitalists had women management on their teams. the one optimistic trend is the rise in angel investing , that is investing done at a lower level. smaller amounts of money than venture capital . more women are involved as investors and more women are getting funded.

    >> right. but this isn't -- the other thing i think lisa, that was surprising to me just looking and .5% from government guarantee loans and from federal state and local governments . should we have a different perspective on loan making, government loan making?

    >> she should and shouldn't. the data that you showed are true for all businesses. all new businesses. that's true. the point where women differ is in the last statistic that you just raised. the problem for start-ups is that women typically have lower credit scores . so this is what we have to address. why do they have --

    >> right.

    >> so often they don't have credit histories. they don't have credit histories like men do. and we're still trying to figure out why. economists are still trying to figure out why. sometimes it's that women are more reliant on their parents and college for example or they don't have jobs as early. they don't have the credit histories. we're also trying to change that. some experiments that are happening with including different kinds of bills, for example in one's credit scores , like utility bills and not just credit cards .

    >> responsible bill payer but you weren't carrying a visa card .

    >> that's right. had that's one thing. another thing is that i think women are less informed about, say, small business loans and sba policy and so on. how do you find out this information? you find this information out through networks. through country club memberships, through basketball games that are all men. so i think that this is one of the informal ways, that --

    >> that's a big part. this last part here is about who you know. you mentioned vcs and angels. that's very much who do you know. who is going to connect you with un. for example, i will do it for friends and there are female focused angel funds who understand that women -owned businesses, investing in them is a great bargain. they're priced differently than the men because all the money is flowing in this direction. they're going to get dedication, women that are really dedicated to what they want to do and get i better return. possibly less of a risk.

    >> is there a risk aversion or -- willingness to take risk different among women ? obviously not all women are the same. but do you see a different kind of risk aversion related to this credit history ?

    >> i do. i think that women have so many wonderful ideas. i get e-mails from all over the world. they say i want to be you, i want to do what you're doing. how did you do it? there is no set formula. but i will tell you, it's so important to have the right team around you. i don't mean a business adviser and investor. your partner, your friends, your family, they need to support you. carmen and i have many friends in common who are amazing female entrepreneurs and the common factor is that they've always been told that's a bad idea. i don't think you can do that. we always say we're not listening to anybody. we're doing it. we're making it happen. at this level where i'm at, i have an investor and i'm almost launching this network, i still hear it. i have to say that my main supporters have been men.

    >> yes.

    >> we're going to ask a little bit about, once you make that decision, once you get over the risk aversion and you're in it, do you brand yourself as a woman doing it or a gender neutral . i want to talk about my favorite personal small woman business owner . i love what she has done when we come back. [

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