Women-Owned Businesses in Texas Striving and Thriving in Today’s Economy

by Joyce Jauer, Lauren Mulverhill and Bruce Wright Published May 2017

Texas appears at or near the top of most “best of” lists for its business friendliness. But it’s also a great location for an increasing number of women-owned enterprises.

Women play a huge role in the U.S. labor force, recently accounting for nearly 47 percent of the total. And they’re moving into ownership roles as well.

According to one recent study, women-owned businesses now account for 38 percent of all U.S. firms, employ 8 percent of the private-sector workforce and account for 4 percent of the nation’s business revenues. Between 2007 and 2016, the number of women-owned firms in the U.S. rose five times as fast as the total number of companies.

In its sixth annual study based on U.S. Census Bureau data, American Express OPEN reported impressive growth in women-owned businesses in Texas. According to its 2016 State of Women-Owned Businesses Report, which evaluated the nine-year period since the 2007 recession:

• Texas was second only to California in its number of women-owned firms.
• Texas ties for first in the nation for the economic “clout” of its women-owned businesses — a measure combining the growth in their number, employment and revenues from 2007 to 2016 (Exhibit 1).
• San Antonio, Dallas, Houston and Austin are among the top 10 U.S. metropolitan areas for economic clout (Exhibit 2).

But there’s still room for improvement. In the U.S. Census Bureau’s 2014 Survey of Entrepreneurs, Texas-based, women-owned firms with employees accounted for about 20 percent of the state total and a little more than 5 percent of annual payrolls. Male-owned firms, by contrast, represented around 60 percent of all firms and 30 percent of payrolls. (Companies owned by both men and women accounted for the remainder.)

Barriers to Entrepreneurship

“Women entrepreneurs are a major economic force in the U.S., Canada and around the globe,” says Claudia Mirza, CEO and co-founder of Akorbi, a translation and global enterprise solutions company in Plano. “But while they start businesses at nearly twice the rate of men, they typically face a number of limiting factors in their abilities to scale up.”

One of these is business education, a vital element in the success of many startups.

According to projections from the National Center for Education Statistics (NCES), women now represent the majority of U.S. students in post-secondary education, at an estimated 11.7 million female enrollees versus 8.8 million males in fall 2016. They’re also the majority in graduate school, earning 452,118 master’s degrees in 2014-15 versus 306,590 earned by men.

Yet men still hold the edge in business studies. In the 2014-15 school year, NCES reports U.S. universities conferred 191,310 bachelor’s degrees in business to males and 172,489 to females. A similar disparity applies to graduate programs in business; the Graduate Management Admission Council reports that women accounted for 47 percent of graduate business degrees awarded in 2013-14, including masters of business administration (MBAs) as well as degrees in fields such as management, accounting and marketing. The disparity is much greater for MBAs considered separately, at about 36 percent female versus 64 percent male in North America.

Breaking Down Barriers

Mirza says that as more women climb the corporate ladder and create their own businesses, they become role models.

“I believe that when you help a woman, you help future generations as well,” Mirza says. But she also notes the difficulty women face in connecting with business networks — clients, suppliers and peers who can act as mentors.

Debbie Hurst, president of the Women’s Business Council Southwest, says organizations such as hers connect entrepreneurial women so they can learn from one another, develop partnerships and gain access to decision-makers.

“Helping entrepreneurs get in front of the right mentors, the right advisors and investors is key to growth,” Jennings says. “When you look around and none of those mentors look like you, it’s hard to overcome that mental barrier of ‘Do I belong here? Can I do this?’”

Access to capital is another particularly important issue. “It can be a major hurdle in women-owned businesses’ ability to scale,” Hurst says. “They need education about financing and determining what options are right for their businesses.”

Specialized boot camps and accelerators can provide a community for women entrepreneurs to access resources they need, such as financial support, mentorship, business development, recruitment and co-working space. DivInc’s 12-week pre-accelerator program provides critical components women need to turn their ideas into high-growth, scalable businesses.

“We’re not just focused on emphasizing the need for more women in leadership roles, whether in a startup or at a large corporation, but for women business owners to be creating workplaces, creating ecosystems themselves,” says Jennings. “That’s how we truly move the needle.”

Texas Conference for Women board member Norine Yukon also offers advice for women entrepreneurs.

“Aside from taking advantage of every business opportunity offered through state programs for women-owned and minority-owned businesses, I recommend that women be very careful in building their teams,” she said. “Especially in startups and emerging companies, teamwork is essential, and it’s important that women entrepreneurs surround themselves with investors and team members with a common set of values.”

Access to Tools

In a September 2015 address to the National Association of Women Business Owners, Texas Governor Greg Abbott noted that many startups are finding the freedom to flourish in Texas, and said he intends to make Texas the top state for women-owned businesses. “Women business owners are a powerful economic force, and my goal is to make Texas the most welcoming home for them,” he said.

Abbott’s promise is reflected in small-business forums his office hosts around the state, offering expert advice on financing, networking and marketing, as well as his support for the Texas Governor’s Commission for Women. Originally established in 1983, the commission provides access to training in business creation and ownership and related topics, and also offers financial support, legal aid and business and employment assistance to hundreds of Texas women. The commission and Texas First Lady Cecilia Abbott cohost the annual Texas Conference for Women, the nation’s largest event of its kind, which provides opportunities for networking and professional and personal growth as well as workshops for entrepreneurs and small businesses.

Still another resource is the Center for Women in Business at Texas Woman’s University, which provides training, funding, coaching and networking opportunities for prospective business owners and students.

The Comptroller’s office manages perhaps the most important state program available to women-owned businesses — certification as a historically underutilized business (HUB). To qualify for HUB status, a business must be at least 51 percent owned by women, minority members or service-disabled veterans who reside in Texas and actively participate in the business.

Texas HUBs are listed as sources for state purchasing and public works contracts. The Comptroller’s HUB directory is regularly searched by vendors required to include certified HUBs in subcontracting plans for projects of $100,000 or more. In addition, the agency administers a mentorship program designed to foster relationships between prime contractors and HUBs.

The federal government also makes efforts to give women-owned businesses a competitive advantage. The Women’s Equity in Contracting Act of 2000 provides federal contracting assistance to small businesses owned and controlled by women. The Women-Owned Small Business Federal Contract Program, created in 2011, has designated industries in which women-owned small businesses are underrepresented and awarded 182,791 federal contracts worth $11.5 billion to such businesses.

Leveraging our Strengths

According to American Express OPEN, the number of women-owned firms in Texas has risen by more than 111 percent since 2002. But that growth has leveled off considerably in recent years: the count rose by 42 percent from 2007 through 2012 but by only 14 percent since then.

How can we keep that growth on track? One way is to leverage our existing strengths. For example, Dell Inc. and IHS, an information and analytics provider, have created a measure of cities’ ability to attract and support “high-potential” women entrepreneurs. Austin received a global ranking of 12th in 2016, scoring particularly well in markets — a measure including local policies, the size of the market and the costs of remaining profitable in that market — and technology, available connectivity and its costs.

Specific strengths in one’s own area can be used to attract and support growth. Much like launching a business, however, developing these strengths requires investment.

“When individuals, private industry and government do business with women-owned businesses, they invest in the diversity of our communities and our state,” Hurst says, “and that’s good for Texas.” FN