Last week, the final data from the 2012 census were released. Among several interesting trends was one that has several economic developers taking note.
Women represented the largest growing demographic of business owners in the country. The number of women starting businesses was almost three times that of men. While many knew the growth percentage was going to be large, it was bigger than what some expected. As of 2012, women business owners (WBOs) now represent 36.2 percent of all businesses, numbering over 10 million, with 8.9 million employees and generating over $1.6 trillion in receipts.
The census confirmed that women starting their own businesses was a major contributor in our economy bouncing back from the recession. “During the economic recession, WBOs were the only group of entrepreneurs that added jobs consistently, proving their ability to serve as a critical asset to building a diverse, sustainable economy,” according to the American Express Open Report on the State of Women Business Owners 2015.
Why do these numbers matter?
Encouraging entrepreneurship and business ownership has been one of the key strategies that the public sector has used to build jobs in our local economies. As we continue to invest millions into incubators, innovation competitions and support resources, we must ensure that our investments align with the leverage points for creating the greatest return.
What do these numbers mean for Arizona?
Less than five years ago, Arizona regularly topped national rankings for women business owners. Our entrepreneurial ecosystem is robust with multiple resources and over 380 women business networking groups. The final numbers released last week show that Arizona has fallen behind on its growth of WBOs. Other states have increased the growth of WBOs and the jobs they create by staggering percentages–Texas (44 percent), Florida (26 percent), and Colorado (26 percent), while Arizona showed an 18.6 percent increase from 2007 to 2012.
Other states have recognized the economic development potential of WBOs and have evolved their entrepreneurial ecosystem by conducting in-depth local research, elevating WBOs’ public profile, and developing innovative economic development strategies reflective of the latest data and research on the unique challenges WBOs face. Arizona is missing out on a huge opportunity to leverage our local assets, strengthen our local communities and create higher caliber jobs.
While Arizona is currently trending the wrong direction, only a 10 percent shift in our current efforts are required to make us the top state in the country. To put a more concrete number on the potential impact that WBOs represent, that 10 percent increase represents an additional 91,000 jobs in the next three years.
As you dive further into the details of the census data, it reveals several reasons why, with a small change in strategy, Arizona is well positioned to be the top state for WBOs in the country.
3 Reasons Arizona Should be the Top State for Women Business Owners
Demographics: The demographics of our state align with the national data for the populations leading the rapid growth of female entrepreneurship. The largest population of women starting businesses are baby boomers closely followed by millennial women. According to the “Vision 2025: Arizona Comes of Age”, Arizonans are growing younger, older and more diverse. This growing diversity in our population is aligned with the fastest growing subset of female entrepreneurs, African Americans and Latinas.
While this stat represents a huge opportunity for Arizona to capitalize on the growth of women business ownership, it also highlights the biggest gap in our entrepreneurial ecosystem resources. Research shows that the diversity within business owners means that the resources and programs developed to support entrepreneurial innovation need to evolve to address the unique challenges and culture that these entrepreneurs represent.
Change in Culture: In many of the articles and panel discussions debating our economic growth strategies, Arizona leaders have cited a desire to change how we approach our economic growth strategy as a region. This strategy is fueled by our desire to not repeat the decisions that left Arizona as one of the hardest hit regions in the great recessions. Leaders like ASU President Michael Crow and Phoenix Chamber President Todd Sanders have discussed a more strategic approach that doesn’t rely on a “magic bullet” philosophy of investing in a single industry. Now more than ever people want to be strategic, they want to be good stewards and they are open to hearing what research and data show are effective ways to build communities.
In 2015, research study after research study showed that diversity fuels innovation. The 2012 census data has disproven the myth that women don’t want to start and grow businesses. The growth of WBOs is no longer a “woman thing”, it is an economic imperative that affects the bottom-line of our state. We now have a tipping point of WBOs being highlighted in local media and women leading local organizations and corporations that could make our local entrepreneurial ecosystem more inclusive and diverse.
Even on a national level, Arizona is already contributing many notable women business owners into leadership positions. Donna Davis, who currently serves as The Small Business Administration’s Deputy Director for the Western Region, is a former Phoenix Chapter President of the National Association of Women Business Owners (NAWBO). The Phoenix and Tucson chapters of NAWBO regularly compete for the fifth and sixth largest chapters in the country. We have women leading several of our major economic development agencies including the Arizona Commerce Authority’s Sandra Watson, the Maricopa Small Business Development Center’s Nancy Sanders and the City of Phoenix’s Chris McKay.
As a region, our culture is changing, while still built upon a foundation of self-determination that has always defined our state. This combination is the reason Arizona is positioned to take women entrepreneurship to new levels of economic impact.
Key Values: Arizona was founded on an independent spirit and has a strong history of female leadership. Female entrepreneurship is aligned with the values that continue to shape our state as we leave the adolescence of our statehood. Leaders in our community have defined the values of innovation, sustainability, entrepreneurial spirit and diversity as keys to a more vibrant future. Being a national leader in female entrepreneurship could uniquely define our state brand and position our economy as a desirable place to live, a goal established as a main priority by Gov. Doug Ducey. The top three industries for growth in women business ownership are also reflective of the industries that many of the organizations responsible for the strategic planning have outlined as critical to Arizona’s economic future: healthcare, education services and main street businesses.
What do the census numbers on female entrepreneurship mean to Arizona? Opportunity. The opportunity to leverage our state’s values, ecosystem and strength for a more vibrant economy.
Authors note: The U.S. Census data that was crucial to this article was generated by Melissa Kovacs with First Eval. To date she has worked pro bono to give Empowered PhXX this critical data. I was once told, “If you don’t have data, you don’t have a voice”. Thank you Melissa for giving women business owners in Phoenix a voice.
Arizona Hispanic Chamber of Commerce; AZ Women-Owned Business Enterprise Report; http://www.azhcc.com/; (December, 2015).
Global Entprenreship Monitor; GEM Women’s Special Report; http://www.babson.edu/Academics/centers/blank-center/global-research/gem/Documents/GEM%202015%20Womens%20Report.pdf (December, 2015).
National Women’s Business Council; 10 Million Strong- The Tipping Point for Women’s Entrepreneurship; www.nwbc.gov; (January, 2016).
The McKinsey Institute. How Advancing Women’s Equality Can Add $12 Trillion to Global Growth; http://www.mckinsey.com/insights/mgi/research; (December, 2015).
U.S. Census Bureau; American FactFinder, Survey of Business Owners, generated by Melissa Kovacs;http://factfinder2.census.gov/
Vision 2015: Arizona Comes of Age; Center for the Future of Arizona; (November, 2015).
Ewing Marion Kauffman Foundation; Women Entrepreneurs Are Key to Accelerating Growth, Entrepreneurship Policy Digest; (July,2015)