Drive through any neighborhood in America and you’ll find the invisible woman: self-employed; single or married; running a business from her home that supports herself, her family, and her employees’ families.
Look around your block. There’s the woman providing child-care services. Her house is the one with all the Big Wheels® in the driveway and a steady stream of visitors at the beginning and end of each workday. The woman next door owns a housekeeping service, employing a handful of unskilled workers.
Then there’s the woman providing highly skilled professional services as a free-lance court reporter. Or maybe she’s a writer, Web designer, information technology consultant, marketer, or provider of administrative support to other businesses. The list is as long as the day.
I know of two networks of entrepreneurial women who work at home, because my self-employed wife works with both of them. One provides focus group transcription services to large research companies. The other provides video services to law firms recording depositions. My wife is an independent contractor with her own client base, but she’s also a subcontractor for the other women.
Female-owned businesses, including small, home-based ones, are vital to the financial security of millions of households and to our nation’s future economic prosperity.
Between 1977 and 2002, the number of businesses started by female entrepreneurs skyrocketed 824%, to 6,489,259 from 701,957, according to the Center for Women’s Business Research, McLean, Va. The center reports 40% of all privately held firms now are majority-owned by women. These businesses create 13 million jobs and generate almost $2 trillion in revenue annually. You read about them in the business section of your local newspaper and, if they’re large enough, in The Wall Street Journal.
It’s harder to get a handle on the number of small, home-based businesses women run, but the U.S. Census Bureau reports half of all businesses now are home-based. Our transition from a manufacturing economy to a service economy, combined with the rise of the Internet, has spurred this phenomenon.
Two-thirds of these businesses are self-financed. People dig into their own pockets or rely on family contributions to get a business going. One of 10 new business owners uses personal credit cards to get started, notes the Census Bureau.
Women with home-based businesses often are invisible—overlooked or dismissed by financial institutions, despite representing a potentially lucrative marketplace with long-term opportunities. This especially is true now because female business owners are more likely than male business owners to be hit hard by tightening credit standards.
Historically, women have had less access to capital than their male counterparts. This is “a crippling barrier for female entrepreneurs,” says a study by the research and consulting firm National Economic Research Associates Inc., White Plains, N.Y. The study found women are rejected by lenders more frequently or pay higher interest rates when they're approved.
This unfortunate reality discourages many credit-worthy women from even applying for loans. Adverse experiences with lenders are especially pronounced among minority women owning businesses, notes the Center for Women’s Business Research. Yet the growth of minority female-owned businesses will outpace all other small-business growth during the next five years, reports The Insight Research Corp., Boonton, N.J.
There’s an opening here for credit unions. Their already stellar reputation of looking out for the average Jane only has been enhanced by the recent economic turbulence. If you don’t know how many of your female members are running a successful business, a membership survey may be in order.
You’ll probably uncover some fascinating stories, and the invisible women can move out from the shadows.
MARK CONDON is senior vice president, research and advisory services, for the Credit Union National Association. Contact him at 608-231-4078.