Should Carly Fiorina Know the Stats About Women Entrepreneurs?





A couple of weeks ago, on the CNBC show Kudlow and Company, Carly Fiorina said, “Women are also an economic force, because they start small businesses at twice the rate of men.”

She’s wrong. Women are much less likely than men to start or own their own businesses.

Perhaps getting these facts right only matters to someone who has his ego tied up in writing books about entrepreneurship. I’ll concede that might be the case.

But I think it’s important to correct Ms. Fiorina’s error. After all, she is an advisor to the presumptive Republican presidential nominee and is rumored to be a vice presidential candidate.

To formulate good policy, you need to have the facts right. What if Ms. Fiorina were to recommend to Senator McCain that we don’t need any policies to encourage women to start businesses because they already are more likely than men to do so? We might miss an opportunity to reduce the gender imbalance in entrepreneurship in this country.

So here are the facts about women entrepreneurs (all taken from my book Illusions of Entrepreneurship):
– Men are twice as likely as women to be involved in starting a new business at any point in time.
– In 2004, women made up 51 percent of the U.S. population and almost half (47 percent) of the non-military workforce, yet they composed only 27 percent of business owners.
– Women-owned businesses make up 25 percent of non-farm businesses in the United States.
– In 2003, only 34.2 percent of self-employed people in the United States were female.
– In 2004, 7.1 percent of women in the U.S. labor force were self-employed, as compared to 12.4 percent of men in the labor force.

If any of Ms. Fiorina’s staffers reads this article, send me an email. I’d be happy to send her a copy of my book…

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About the Author: Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of eight books, including Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By; Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Technology Strategy for Managers and Entrepreneurs; and From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company.

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Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

14 Reactions

  1. Carly has never let the facts get in the way of a good spin. She didn’t lose half the value of the company on her watch – she was just putting into place a long-term plan that would lead HP onto greatness. The PWC acquisition was a wonderful idea. And, then there was the Compaq deal. We all know how that is still paying dividends. Thanks for calling her on this, Scott.

  2. Found the below on the inc.com website.
    http://www.inc.com/news/articles/200608/women_Printer_Friendly.html

    Women Outpace National Start-Up Rate

    A new report shows that women are starting businesses more than twice as quickly as the general population.

    From: Inc.com | August 22, 2006 By: Leslie Taylor

    The number of women-owned businesses is growing more than twice as quickly as the national start-up average, according to a new report by the Small Business Administration’s Office of Advocacy.

    While the number of all U.S. businesses increased 7% between 1997 and 2002, the number of women-owned firms grew by 19.8%.

    In 2002, women owned 6.5 million businesses, accounting for 28.2% of all U.S. non-farm firms and 4.2% of the nation’s total receipts.

  3. Anita Campbell

    Following up on David’s point, I checked the Center for Women’s Business Research.

    The numbers quoted over there seem to support — in a general sense — Ms. Fiorina’s statement. The Fact Sheet says, “Between 1997 and 2006, the percent growth in the number of 51% or more women-owned firms was nearly twice that of all U.S. firms (42.3% vs. 23.3%).”

    Now, she may not have said precisely the same thing, but it was close and I’ve heard similar quotes from others about women-owned small businesses. And compared with some of the other stunning-bizarro statements I hear on TV almost every day, I think we should cut her some slack. IMHO 🙂

    But what bears looking into is why the numbers seem at odds with your numbers, Scott. It’s late and I can’t make sense of it all, but I wonder if we’re comparing apples and oranges?

    Anyway, here’s the citation for the Center for Women’s Business Research, Fact Sheet: http://www.cfwbr.org/national/index.php

  4. Scott Shane

    This is an example of how people mangle numbers.

    Carly Fiorina said, “Women are also an economic force, because they start small businesses at twice the rate of men.” Ths statement implies that women are more likely than men to start new businesses.

    The SBA study on which the Center for Business Research and others picked up says “The number of women-owned businesses is growing more than twice as quickly as the national start-up average, according to a new report by the Small Business Administration’s Office of Advocacy.”

    Twice the rate is not the same thing as growing twice as quickly. I’ve said this before in the context of other business statistics. If there are 100 male business owners and 1 female business owner in 2007 and then in 2008 there is 101 male business owners and two female business owners, the rate of growth of male business ownership was one percent while the rate of growth of female business ownership was 100 percent. That is, the rate of growth was 100 to 1 for women to men. However, you still only have two female business owners to 101 male business owners, which is less than two percent.

    The rate of growth from a small base is frequently large. So it is not surprising that the rate of growth from the smaller number is faster – there is a little catching up by women in the rate of business ownership.

    There is a big difference between the ratio of rates and the ratio of the change in change in rates.

  5. Scott,
    Agreed that numbers are mangled / distorted. Your example of different bases is an interesting and important one.

    Does anybody have the raw numbers for total small businesses started in a year [2005, 2006 or 2007]?

    The number of small businesses started by women in that same year?

    How will firms that are husband and wife be accounted for [or any firm that has a male and female as co founders]?

    Example… 2 million new small businesses started in XXXX year.

    1,245,401 were gender A and 754,599 were gender B.

  6. Anita Campbell

    Scott, thanks for that helpful explanation. I see the difference.

    Well, you know what they say about statistics being misused (intentionally or through ignorance):

    Lies, Damn Lies and Statistics

  7. Thank you Scott for clearing up all this confusion. David does make a great point, are women just counted if they are the sole owner of the business?

  8. I would second David’s question about husband and wife businesses since it is very likely that married men that start businesses don’t necessarily operate as a sole proprietorship. Also, I would want to know what classifies something as a “business.” Especially since it would rational to assume that most female entrepreneurs don’t jump right into the traditionally male dominated industries. It would also be rational to assume that there would be a similar number of women selling baskets, baked goods, baby products, etc… as there are men doing construction and landscaping jobs. I think a great deal of the disparity comes from an inability to track some of the businesses that women are more likely to own.

  9. Ben, that is so true. A few years ago I started my own hand made candle business, would I have been accounted for? And what about all of the Ebay businesses?

  10. Interesting and I see Scott’s point about the rate of growth vs. actual female business owners. But in light of all of the WAHM’s (work at home mom’s) out there now and eBay businesses as Amanda mentioned here . . . it is surprising to see that those gaps really aren’t coming nearer to one another yet. Which leads me to ask – are they included? To not include them would be erroneous in my opinion. Statistics really can’t be relied upon as they can be easily misconstrued as shown in this thread.

  11. Theron@ Schmoozii Business Networking Community

    I agree with Bob, it’s about Spin. She’s moving from the business world to the political world. Facts don’t matter in politics, only how you can spin them. When she made that statement she probably convinced half a million people to believe what she wants.

  12. Dawn R. Rivers

    Pardon me for coming into this conversation late but there is another point that needs to be made here.

    There is also a difference between saying that the growth rate is twice that of all U.S. firms versus saying that the growth rate is twice that of male-owned firms.

    If the number of women-owned firms increases by 50% in one year, that could just as easily mean that the number of women owned firms went from 100 to 200 (as Scott has already pointed out).

    If, meanwhile, the number of all U.S. firms (including those already-existing woman-owned firms) went from 10 million to 12 million, that is “only” a 20% increase.

    That is where that statistic came from. Also bear in mind that, during the ten years or so that people have been throwing that statistic around, the Census Bureau has changed the way they count women owned businesses — from at least 50% women owned to at least 51% woman owned. I don’t know how much different that makes to Carly but it does tend to muddy the waters.

    Also, you may be interested to know that the most recently released Kauffman Firm Survey (from the Ewing Marion Kauffman Foundation) found that the growth rate of women-owned startups has slowed over the past year or so.

  13. Martin Lindeskog

    Martin Lindeskog

    You have to watch this funny video with a “statistician”: http://www.ted.com/index.php/talks/peter_donnelly_shows_how_stats_fool_juries.html

  14. Scott makes a good point about statistics, but frankly unless we have both the source of his data along with the source of Carly’s and then dive into the methodologies of both, I think it is premature to say who is right and who is wrong.

    There’s even a chance neither are quite right, what with the way statistics can be manipulated, misunderstood, and misrepresented from the actual data collectors on up through a “telephone game”-like chain. IMHO, anyway.

    A good report with all sorts of data and a great bibliography was put out by the SBA in April, 2008. It’s titled “Human Capital and Women’s Business Ownership” and is available for download from: http://www.sba.gov/advo/research/rs323tot.pdf ; I would particularly call your attention to Table 5 in the Appendix on page 64.

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