First, the good news. Women are starting businesses at 1.5 times the national average. This trend has been growing for a while; between 2002 and 2007, the number of women who own businesses increased by 20.1 percent, representing about 28 percent of all businesses. Nor are women stuck in traditionally “female” fields: Their industries vary widely, with the greatest representation in real estate, administrative and support, waste management and remediation, professional and technical services, retail, healthcare and other services.

Then there’s the “Hmm, well, OK” news. When it comes to the corporate world, 40 percent of large public companies have no women on their boards of directors. However, among S&P 500 companies ranked in the top 10 by Governance Metrics International, the figure is more promising; about 22 percent of their board members are women. In the U.S., about 16 percent of companies have women board members. These numbers are better than they used to be, but there’s certainly room for improvement.

Of course, one reason women start businesses is precisely to get out of the corporate world. But when they do, they’re still not dealing with a level playing field. Only 3 to 5 percent of women-owned businesses get venture capital; just 10 percent of venture-funded startups are women-owned. About 10 percent of VCs are women, and 13 percent angel investors are women.

Now there’s the downright bad news. When it comes to technology—the hottest area for new startups and the most promising industry for business growth—women are woefully behind. Fewer than 5 percent of tech startups are women-owned, and even among employees, only 25 percent of the tech industry is female. Businesses owned by men get 95 percent of the VC money.

There’s no good reason for this. In fact, there are good reasons women should be getting more VC funding—not less. When women do get VC, their revenues average 12 percent higher than those of VC-backed companies owned by men. And when companies have more equal gender representation in their leadership and management, their IPOs get 30 percent better results.

What needs to change? Well, some things are already changing. Women now earn 68 percent more bachelor’s degrees than men and earn one-third of all MBAs.

But there needs to be more change if women are to gain more success, more funding and more representation, particularly in the technology industry. What can we as women—and men—do to help?

Be a role model. Mentor a school-age, teenage or young woman entrepreneur; take a leadership role in organizations for youth entrepreneurship like Junior Achievement; talk to girls and young women you know about the joys of being your own boss.

Put your money where your mouth is. Consider investing in a woman-owned startup or existing business as a private or angel investor, or donating time to help a woman-owned company grow. Pipeline Fellowship is one organization working to encourage and train women angels.

Speak up. When you hear people being condescending about women entrepreneurs, spreading stereotypes or otherwise putting us down, say something. Comment on offensive blog posts; correct misinformation.

Work together. Get involved with networking groups where you can support and learn from other women in business. Check out Women in Technology International, for example. There’s strength in numbers.

From Small Business Trends

We’ve Come a Long Way, Baby…or Have We?

However, whether or not small businesses recognize these and other official declarations, there are two critical observations decision-makers need to make about their employees today, and consider year-round, because of their potential to directly impact business productivity and turnover costs.

First, U.S. workers are in denial about the likelihood of accidents and serious illnesses. In addition, they are not prepared to handle the financial consequences of unexpected health issues.

Workers’ Unrealistic Health Optimism

When it comes to anticipating a serious illness or accident, Americans may be overly optimistic. According to the American Cancer Society’s Cancer Facts & Figures 2012, one in three women and one in two men will be diagnosed with cancer at some point in their lives. The American Heart Association’s Heart Disease & Stroke Statistics 2012 shows that one in six U.S. deaths in 2008, was caused by coronary heart disease.

Despite these findings, the 2012 Aflac WorkForces Report revealed six out of 10 workers (62 percent) think it’s not very or not at all likely they or a family member will be diagnosed with a serious illness like cancer, and more than half (55 percent) said they were not very or not at all likely to be diagnosed with a chronic illness, such as heart disease or diabetes.

In addition, despite optimism about their physical health, the study reveals that American workers also are concerned about their financial health, and many admit they are unprepared to handle the financial consequences of a serious illness or accident in their family.

Financial Strain & Productivity Drain

Half of American workers (51 percent) are trying to reduce debt, according to the Aflac study, and nearly six in 10 (58 percent) don’t have a financial plan to handle the unexpected. In addition, only eight percent of U.S. workers strongly agree their family will be financially prepared in the event of an unexpected emergency, and 28 percent have less than $500 (51 percent have less than $1,000) in savings for emergency expenses.

These are among the personal challenges weighing on workers’ minds daily and impacting individual productivity through absenteeism and distracted work. Decision-makers are keenly aware. In fact, 63 percent of leaders at small businesses believe that productivity is lost because employees are concerned about personal issues, according to the study.

The fact that American workers aren’t aware of their medical risks and the potential financial impact of those risks is a very real concern that is only compounded when workers don’t take full advantage of available benefits options or adjust their savings strategies to be more prepared.

For example, when asked how they would pay for out-of-pocket expenses due to an unexpected illness, the study found that more than half (57 percent) of respondents said they would have to tap into savings, 30 percent would use a credit card and 19 percent—nearly one out of five people—would have to withdraw funds from their 401(k) plans to cover the costs.

Now, more than ever, American workers need to understand that well-being means more than just good health—it’s being prepared for the reality of whatever life may bring and taking the necessary measures to protect themselves and their families. A very real connection exists between health and finances—a worker’s financial stability and employment security can be threatened by an unexpected illness or accident, and conversely, the ability to obtain adequate medical care can be influenced by finances.

Many Benefits of Employer Action

Most individuals are looking to their employers to educate them about all available benefits options, not just traditional benefits changes or choices, to better understand how they can have a more secure safety net.

The Aflac study revealed that 58 percent of employees at small businesses would be likely to purchase voluntary health insurance plans if offered by their employer. Yet, small businesses are least likely to offer voluntary insurance policies (just 19 percent, compared to 41 percent of medium-sized and large companies) for various reasons, including the common misconception that these policies will increase their health care costs. Workers’ perceived lack of benefits understanding also is a limiting factor.

For example, only 19 percent of HR decision-makers at small businesses believe their employees are extremely/very knowledgeable about voluntary benefits.

However, despite these low figures, small businesses excel at putting employees’ benefits interests first. The study found that small businesses are more likely than medium-sized and large businesses to rank taking care of employees as their top objective, with 23 percent ranking it first. More small businesses are realizing that making group voluntary insurance policies available to employees has no direct cost and may reduce corporate taxes by cutting FICA tax contributions.

Additionally, savvy decision-makers are seeing the value of voluntary plans to not only enhance a company’s benefits package and competitive status versus larger organizations’ benefits programs, but they can demonstrate to employees that they matter and ultimately help avoid the high cost of turnover.

Conclusion

Once benefit options are added or expanded, it’s critical for employers to effectively communicate year-round about how new benefit options like voluntary insurance can help with high out-of-pocket expenses associated with a serious illness or accident. By doing so, businesses can not only help their workers have a better understanding of the options that are right for them, but also help reduce common mistakes made during the enrollment process, generate stronger retention, and build greater appreciation for their total compensation packages.

Health Photo via Shutterstock

From Small Business Trends

Heightened Awareness: Small Businesses Address Today’s Worker Vulnerabilities

The survey also asked entrepreneurs to name the most difficult part of being a small business owner. “Covering multiple jobs” (sales, shipping, receptionist, customer service, business development, etc.) is the top answer, cited by 53 percent of entrepreneurs. With this many roles to fill, it’s no wonder that 50 percent say that “not enough time to get everything done” is their number-two challenge.

Rounding out the top five challenges: “making a profit” (35 percent), 22 percent say its “staying ahead of the competition,” and 12 percent struggle with “managing employees.”

When asked how many roles they fill in a given day, the most common answer is “3 or 4” followed closely by “5 or 6.” Out of all those roles, which do entrepreneurs enjoy the least? No surprise to me that “accountant” leads the pack at 41 percent. We don’t much like being salespeople, (23 percent), and we aren’t crazy about the office manager/receptionist role (22 percent) either. Least disliked was marketing (12 percent)—maybe because these days, social media makes marketing kind of fun.

I’m surprised that being your own IT person didn’t make the list of least-liked roles. For me, staying on top of IT issues with no in-house help has been the biggest change from being a corporate employee to an entrepreneur.

Seems I’m not alone: “Keep up with technology changes” (30 percent) was the most challenging IT issue facing small business owners in the survey, ahead of “no IT support” (16 percent) and “being more mobile” (15 percent).

With so many things to do and so little time to do them, it’s hardly surprising that entrepreneurs would pay money to squeeze just one more hour into the day. Asked how much they’d pay for an extra, productive hour, 25 percent say they’d give more than $500, 24 percent would give $200 and 30 percent would pay $100.

Of course, this isn’t just a hypothetical when it comes to our businesses. How many times have you found yourself struggling to complete some task that’s not really in your wheelhouse (wrangling a printer, trying to do your own SEO, calculating your taxes…I could go on) because “it’s easier to do it myself?”

But is it really? How much would it cost you to hire someone to handle what you hate? How much time would you gain—and what could you spend it on? With 79 percent of us saying we’d willingly pay to gain some time for our business, are we putting our money where our mouths are?

What would you do with an extra hour in the day?

Money Where Your Mouth Is Photo via Shutterstock

From Small Business Trends

What’s Your Biggest Small Business Challenge?

All of which becomes extraordinarily clear when you look at the newly released firm size class numbers for 2009, our big research story for February 2012.

Details From the New Nose Count

The firm size class numbers are a snapshot of what the business population was doing in March 2009, so technically, the recession wasn’t over yet when these data were in effect. Under those circumstances, I guess you won’t be surprised to learn that the numbers are mostly heading south.

You may recall from last year that the nonemployer numbers fell 1.2%, from 21.4 million to 21.1 million. At the same time, employer dropped 162,826 firms, losing 2.7% of their population. Overall, we’re down by more than 420,000 firms (1.6%), from 27.3 million to 26.9 million. No surprises there.

As usual, the devil is in the details and these details are a pretty clear indication of where most of the pain fell during the recession. Every firm size category lost establishments but some lost more than others. Nonemployers only fell to their 2006 levels, and microbusiness employers fell to 2004 levels. On the other hand, small businesses with between 10 and 99 employees saw their population dwindle to levels we haven’t seen in 13-14 years. Ouch!

When the dust settled, the nation’s 24.6 million microbusinesses comprised 91.8% of the firm population in 2009, non-micro small businesses were 8.2%, and large firms amounted to less than 1/10 of 1%. Interestingly, all the nation’s small businesses (micro and non-micro combined) earned about 61.4% of what that tiny number of large firms did in receipts that year ($11.4 trillion versus $18.4 trillion, excluding nonemployers).

Look for the numbers to start climbing again in 2010; we’ll see those numbers next year.

Nation’s Job Creators? Maybe Not.

A recent article from the New York Times reports on a different set of numbers contained within that data release, which challenges the notion that small firms are responsible for most net new jobs.

This is an example of suspect mathematical reasoning. The punchline here is that small firms, which are said here to have less than 49 employees, only had a net change of 10.5% in employment, while large firms with over 500 employees, saw a 29.2% increase in net employment.

You see the problem with this, don’t you?

For starters, if you have 1000 widgets and you increase your widget collection by 10%, you’ve added 100 widgets to your collection. But if you only have 100 widgets and you add another 100 widgets to your collection, you’ve increased your collection by 50%! Besides that, firms with between 50 and 499 employees — which are usually included in everybody’s count of small businesses — were excluded here. If you add them back in, you get back up to 23.6% increase in employment.

And, if you add the nonemployers, which essentially create a job for each of their owners as soon as they come into being, you’d likely see that small firms really do create more net new jobs than large firms.

You have to wonder why that idea seems so repugnant to some people?

Vision Photo via Shutterstock

From Small Business Trends

Small Business Research: 20/20 Hindsight and the New Firm Size Numbers

For what seems like eons, there’s been little change in small businesses’ intent to hire. But now, it looks like we can finally see some light at the end of the tunnel. A recent Gallup/Wells Fargo poll pegs small businesses’ plans to hire as the best they’ve been since January 2008—that is, back before the recession began.

Nearly one-fourth (22 percent) of the small business owners told Gallup they plan to increase the total number of jobs at their companies over the next 12 months; only 8 percent expect that number to decrease.

More good news: Small businesses have shown great reluctance to commit to full time employees during the recession. But in this latest poll, preferences have shifted back to where they were pre-recession. Slightly more than one-fourth (26 percent) of small-business owners say they would prefer to hire full time employees, 36 percent say they would prefer part-time employees and 36 percent said they would prefer to add temporary or contract workers. Those are the same preferences as in January 2008.

Gallup’s positive findings are echoed by the latest Citibank small business survey, which shows small business owners’ hiring intentions at the highest they’ve been in two years. Over 25 percent of the small businesses surveyed intend to increase their permanent full time employees this year. That’s a 12 percent increase from January 2011 and a 9 percent increase in the last six months. In addition, 22 percent plan to bring on full time workers on a seasonal basis.

The majority (71 percent) of those surveyed in the Citibank report plan to keep their workforce the same size, but that doesn’t mean their outlook is negative. Forty-four percent say they’ll work longer hours themselves, and 40 percent expect their current employees to be more productive—all good signs that business is picking up, even if hiring plans haven’t yet kept pace.

But are small business hiring plans just pie in the sky? Small business owners in the Gallup poll were significantly more negative when asked to reflect on how much hiring they actually did in the past year. In 2011, about 22 percent decreased jobs while 13 percent increased them. The Gallup report says:

“Since the 2008 global economic collapse, the net percentage of small-business owners’ self-reported actual job growth versus job cuts has generally remained negative, even when small-business owners say they are more likely to grow than contract.”

I don’t think these plans are pipe dreams, but I do think small businesses are waiting for the right time to commit to hiring. The results of the Citibank survey back me up: Overall, small business owners are confident, with 87 percent saying they think 2012 will be better than or the same as 2011. Nearly half say they are “poised to grow when conditions are right.” And another 33 percent believe their businesses will be growing rapidly or moderately in 2012.

Are you as confident as the business owners in these surveys? Are you going to back up your optimism by hiring?

Thumbs Up Photo via Shutterstock

From Small Business Trends

Small Business Hiring: Things Are Finally Looking Up

Americans are less likely than people in many other countries to work in micro enterprises. As the figure below shows, only 11.1 percent of Americans worked for companies with fewer than ten employees in 2007 (the latest year for which the data are available).

With such different shares of their work forces in micro businesses, policy makers in different countries must take varying approaches to stimulating employment. In Greece and Italy, for instance, government officials need to concentrate on ways to help micro business owners, while in the Slovak Republic and Luxembourg, those in a similar positions need to employ other policies entirely.

Source: Created from data from the OECD Entrepreneurship at a Glance

From Small Business Trends

The Importance of Micro Enterprises

Entrepreneurship: Alive and Well

In 2011, GEM researchers estimate that 388 million individuals worldwide were actively engaged in starting and running new businesses. That’s fantastic because previous research from Kauffman tells us that most net new jobs come from new businesses. And that is borne out by GEM’s numbers: about 36% of these new entrepreneurs expect to create at least 5 new jobs over the next five years. In fact, 16.8% of them expect to create at least 20 new jobs over the next five years.

In the United States, the 2011 GEM entrepreneurship rate is estimated at 12% — this is not much different from what it was ten years ago and it’s a little less than twice the global average. On average, about 17% were necessity driven and 57% or so were opportunity driven, while in the United States, an estimated 21% were necessity driven and 59% were opportunity driven. This is interesting, because it’s not what you’d expect to find, given the job losses over the last couple of years.

I have a feeling that, when the nonemployer numbers for 2011 come out later this year, we’re going to see them starting to recover from the two disastrous years before.

Selling? Selling Online?

A couple of studies on retailing caught my eye this month and both of them offer some interesting possibilities for small businesses engaged in retail.

For starters, the National Retail Federation proclaimed to the world sometime around mid-month that they expect overall retail sales growth to hit 3.4% in 2012. Presumably, before the world comes to an end later this year, a lot of people are going to want to buy things.

According to a survey by The NDF Group Inc., almost half of online consumers have bought books, stationery and office supplies in the last 12 months, making this the most active category for online retail. Must be all those home offices out there. Apparel and consumer electronics tie for second place, each with 46% of respondents saying they had bought in that category within the last year.

This survey also found that 25% of respondents follow a retailer or brand on a social media site and 27% say they’ve bought something because of what they’ve seen there. But another study, this one conducted by Puneet Manchanda of the University of Michigan’s Ross School of Business, found that the best social media site for your business may be your own.

Manchanda took a look at company-sponsored social networking sites, “using data from an unnamed retailer of books, CDs, and DVDs,” and found that unnamed retailer experienced a 19% increase in incremental revenue from their customers who joined their branded online community. In the community, members can recommend and review products, share favorites lists, make suggestions, and socialize with each other. The researcher also found that customers who were more active in the community, with larger numbers of friends, tended to spend more.

And this survey finds that you get a better return on the investment with your own branded community that you do by simply using Facebook. That will give you something new for you to factor into your online marketing strategy for 2012.

Ecommerce Photo via Shutterstock

From Small Business Trends

Research Roundup: New Entrepreneurs and Online Consumers

To see why requires an understanding of the difference between the stock of entrepreneurs and the flow into entrepreneurship. Think of entrepreneurship like a bathtub of water. The stock of entrepreneurs is akin to the level of water the in the tub. The flow into entrepreneurship is similar to the amount of water coming through the faucet. Unmeasured in this analogy is the flow out of entrepreneurship, which is like the amount of water going down the drain.

The GEM report indicates that America opened up the entrepreneurship valve on the faucet. Inflow increased by 60 percent from 2010 to 2011. But the Bureau of Labor Statistics (BLS) data says the amount of entrepreneurship in the tub went down. The government agency reported a 2 percent decline in the share of the labor force working for themselves from 2010 to 2011, following an 8.5 percent drop in the self-employment rate between 2006 and 2010.

There’s only one way to reconcile a big jump in the number of people going into business for themselves with a continued decline in the number of people in business for themselves. That’s an increase in the number of people who ran their own companies leaving self-employment. Like the bathtub, we can’t have more water flowing out of the faucet, but a lower water level in the tub, unless more water is going down the drain.

I don’t think we should celebrate the increase in the number of people entering entrepreneurship in 2011. This rise must have been accompanied by an even greater rise in the number of people exiting entrepreneurship.

Drain Photo via Shutterstock

From Small Business Trends

Did the Entrepreneurship Exit Rate Surge in 2011?

His answer should have been: “They own businesses.”

The chart at the bottom of the page shows the probability that a taxpayer includes a partnership or S-Corp on his or her federal income tax return. As you can see, the odds of having business income increase substantially once adjusted gross income (AGI) exceeds $100,000. More than 40 percent percent of people with an AGI of $250,000 or more have one of these two types of businesses. More than 72 percent of the really wealthy – people who earn more than $1 million per year – have a partnership or S-Corp. And nine-in-ten of the super wealthy – people with an AGI in excess of $10 million – have one of these.

The correlation between AGI and the odds of having a partnership or S Corp isn’t just a curiosity. It also tells us something about who experiences collateral damage from recent criticism of the wealthy. Whether directed at business owners or not, any disparaging remarks made about the “top one percent” – people who earned more than $344,000 in 2009 – are negative statements about them. IRS data reveal that the majority of the “top one percent” has a partnership or S-Corp.

Source: Created from data from the IRS Statistics of Income

From Small Business Trends

The “Top One Percent” Own Businesses

Overall, business owners are feeling good. One in five (22.9 percent) say their businesses are very or extremely successful. Nearly half (46.8 percent) say their businesses are moderately successful. Just 30.3 percent say their businesses were “slightly” or “not at all” successful. Asked to project forward for the next two years, only 6 percent feel they won’t achieve success in that time frame.

The survey also asked small business owners to choose their top answer from among various definitions of success. The top three responses were:

• Make enough money to have a comfortable lifestyle: 24 percent
• Do something I enjoy or feel passionate about: 23 percent
• Increase the profitability of the business year to year: 18 percent

Other possible answers, including “have the free time to do whatever I wish,” “expand to new markets,” and “sell the business for a substantial profit,” were far below the top three, only garnering single-digit responses.

Based on how small business owners themselves define success, what type of small business owner is the most successful? The Hartford found that the entrepreneurs who feel most successful are those who have 10 to 20 employees and have been in business for more than 20 years.

This group was more likely than average to say their businesses are currently successful. They were also more confident about the future. And they were significantly more likely to admit they’re closer to “complete” success.

What’s enabled them to succeed? The study found two key steps these businesses took: they used professional advisers to prepare for future growth, and they realized that paying employees well attracts better workers and leads to greater success.

Of course, simply having stayed in business for 20-plus years was surely a contributing factor to feeling successful. But it seems to me that entrepreneurs who enjoy the greatest success have a realistic attitude toward their business. They don’t expect miracles, but they do have goals and plans. They’re optimistic and they enjoy what they’re doing. Sounds like most of the small business owners I know!

How do you define success?

Success Photo via Shutterstock

From Small Business Trends

How Do You Define Success?