By Ed Teixeira
From Franchise Know How
Women Owned Businesses Growing at Fast Rate
The U.S. Census Bureau reports that the number of women owned businesses in the United States increased by 20.1 percent from 2002 to 2007 for a total of 7.8 million businesses. This represents an increase of almost four times the increase for male owned businesses, which increased 5.5 percent for the same time period. Women owned businesses represented 45.2 percent of all U.S. businesses in the health care, social services, repair, maintenance, personal and laundry services sectors.
In terms of the future, The Guardian Life Small business Research Institute predicts that women small business owners will generate more than fifty percent of the 9.72 million new small business jobs the Bureau of Labor Statistics expects to be created by 2018.
According to a report from the SBA, from 1985 to 2000 female owned sole proprietorships grew at a faster rate than those owned by men. The increase for women was 4.1% on an annual basis versus 2.2% for men. This data indicates the growing role of women in business. These trends reveal an increased numbers of women making the choice to operate their own business.
There have been various reports regarding the advantages that women bring to small businesses. These advantages include:
• Women are more likely to be involved in the community and marketplace
• Because most women are responsible for managing their household, they are considered to be more organized and financially responsible.
• They can operate a home based business and still tend to family affairs
• My own observation based upon years in business is that women are more intuitive than men, especially when it comes to evaluating employees.
Franchising Provides Great Opportunities for Women
Since franchises comprise a significant number of small businesses it follows that women will continue to migrate to franchise businesses in greater numbers. Although there is limited data on the number of women owned franchises, a 2005 report from the International Franchise Association stated that women owned approximately 25% of franchises up from 8.5% in 1995. Franchising offers a significant opportunity for women ranging from starting franchise companies to becoming successful franchisees.
The fastest growing franchise segments include the senior or home care sector and children’s services. These are also the industries that women play a major role in according to the U.S. Census Bureau.
Look for women to become dominant players from a franchisor and franchisee perspective in these franchise segments.
Also, since 32 % of women owned firms in the U.S. are in the repair, maintenance, personal and laundry service industries, franchises that operate in these areas can be a good fit for prospective franchisees that are female.
A number of financial institutions in the U.S. continue to actively assist women in starting a franchise. For example, the Small Business Administration is reaching out to women in an attempt to increase the number of female franchisees. The SBA has more than tripled the number of loans to women business owners since 1992 and is a popular source of revenue for women franchisee start-ups.
Some of the steps taken by the SBA include executing partnership agreements with leading professional women’s organizations, including:
• The National Association of Women Business Owners (NAWBO)
• Women’s Business Centers
• The National Federation of Black Women Business Owners
For women that want to start their own business there is a choice between an independent or franchise business. An independent or start up business requires capital and the need to build a brand. Some women may choose to pursue this course of action.
For those that decide to pursue a franchise there are a number of options ranging from the size of the business to the type of product and servicers to be sold.
Following are franchise categories that should be of interest to women. Some are home based which don’t require a significant investment:
• Children’s businesses
• Advertising services
• Retail food specialties
• Health products and services
• Massage therapy
• Personal care including hair care and home care
• Decorating Services
• Windows and floor coverings
When Pursuing a Franchise Follow Key Steps
Women that decide to a purchase a franchise need to consider a number of factors. Making the right decision from a business and investment standpoint is important.
Here are some key tips to help make the right decision:
• Consider businesses that would interest you and that you’d enjoy operating
• If you have a family, especially with young children, be careful that the business doesn’t place added stress on your family
• Have the talent and skills to operate the franchise
• Write a business plan that includes projected income and cash flow statements
• Consider a home based business if it will be more compatible with family responsibilities
• Look for funding sources in advance in order to know what’s available
Be sure to use professionals to provide the advice and assistance you need. This includes a qualified franchise attorney and an accountant or financial advisor.
Another option to consider is having a partner in the franchise. I’ve dealt with a number of women owned franchises that were partnerships. However, as is the case with any business partnership the partners must be compatible from a personal as well as business standpoint. I’ve seen partnerships work well in the home care sector where one partner had a marketing role and the other partner a clinical or operational role.
Women owned businesses continue to grow in size and numbers. A number of business experts believe that women possess certain skills that lend itself to owning and operating a business. The choice of franchises especially among those businesses that women are adept at operating provides a good deal of choices.
As women continue to own more franchises look for more women owned franchise companies especially in the personal care sector that includes the fastest growing sector home care.
About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. Ed operates FranchiseKnowHow which provides information and advice to prospective and existing franchisees and franchisors and he publishes weekly newsletters for the franchise community.