SBA Study Finds Men And Women Entrepreneurs Have Different Motivations

The verdict is in: Men and women are, in fact, different, an SBA study has found--at least in terms of entrepreneurship.

The study found that gender does not affect the performance of any particular new venture, but that several other factors do. "Differing expectations, reasons for starting a business, motivations, opportunities sought and types of businesses…vary between the genders, and these result in differing outcomes," according to the study.

Below are excerpted the highlights of the study:

• Men had more business experience prior to opening the business and higher expectations.
• Women entrepreneurs had a larger average household size.
• The educational backgrounds of male and female entrepreneurs were similar.
• Women were less likely than men to purchase their business.
• Women were more likely to have positive revenues, but men were more likely to own an employer firm.
• Female owners were more likely to prefer low risk/return businesses.
• Men spent slightly more time on their new ventures than women.
• Male owners were more likely to start a business to make money, had higher expectations for their business, and did more research to identify business opportunities.
• Male entrepreneurs were more likely to found technologically intensive businesses, businesses that lose their competitive advantage more quickly, and businesses that have a less geographically localized customer base.
• Male owners spent more effort searching for business opportunities and this held up when other factors were controlled for.
• Differences between women and men concerning venture size and hours are explained by control variables such as prior start-up and industry experience.
• Researchers and policymakers need to understand that studies which do not take into account the differing nature of men- and women-owned firms could result in misleading results.

Small Business Ownership And Black Women

In my previous post, I mentioned the hardships that many black women suffer because of the high rate at which they are given subprime loans, which lead them to be among the minorities who suffer foreclosures at higher rates. I cited some essays published in the 2008 edition of The State Of Black America, an annual report published by the National Urban League (NUL) since 1976.

The report also focused on black women in small business, the sectors in which most small businesses owned by black women are concentrated, the amount of revenue these businesses generate and how they might generate more.

"Businesses owned by black females employed more than 23 percent of workers at black-owned businesses," Lucy J. Reuben, a visiting professor at Duke University, wrote in an essay published in The State Of Black America. "More than 45 percent of BWBEs [black women-owned enterprises] concentrate in health/social services and retail trade industries. The health/social services sector alone accounts for more than 30 percent and the retail trade sector accounts for nearly 10 percent of BWBEs."

"Although BWBEs are concentrated in sectors generating low revenues, they paid
their employees more than $3.9 billion, which is an amount that could provide the
median U.S. household income for more than 75 thousand families. At the lower level of
median black household income, BWBEs provide payroll dollars that would be adequate
to support more than 110 thousand families," Reuben wrote. "As such, businesses owned by black females provide a source of revenue for household stability as well as increases in the tax bases of numerous states and municipalities."

Reuben also noted that businesses owned by black women employ one worker for every $74,000 of revenue the business generates. In contrast, all black-owned businesses employ one worker for every $87,000 of revenue and all female-owned businesses employ one worker for every $109,000 of revenue.

So, since businesses owned by black women employ more workers with less revenue, how do businesses owned by black women start generating more revenue, leading to more jobs and boosts to the economies of their communities?

"Recommendations for building upon the strength and success of BWBEs include
increasing the share of black women-owned business in higher skilled, higher
technology sub-segments of industries in order to increase revenue streams and profit
margins and increasing microfinancing opportunities for small start-up businesses," Reuben wrote.