WIPP Featured in Forbes
Friday, October 16, 2015
Women-Owned Small Businesses Secure Less Than 5% Of Federal Contracts, And How We Change That
Recent headlines have celebrated the success of women chief executives at Facebook, IBM, General Motors and other corporate giants. But this misses a much bigger story: women-owned small businesses—already numbering nearly 10 million—are starting up at twice the rate of men-owned businesses, and they are succeeding despite an all too real gender barrier against them. At the same time, women in Congress are leading the legislative fight to level the playing field for women-owned businesses.
As the lead Democrat on the Senate’s Small Business Committee, I’ve had countless conversations with businesswomen from across the US. They are proud to be successful business owners and job creators, but they tell disturbing stories of the hurdles female entrepreneurs confront that aren’t encountered by their male counterparts. They face longer odds in getting access to credit and capital, winning government contracts, and accessing the business counseling they need to succeed.
In a Harvard Business School study, potential investors watched two videotaped entrepreneurial pitches, one with a voice-over using a man’s voice and the other using a woman’s. The content of the pitch was identical; the only difference was the gender of the person delivering it. Sixty-eight percent of the investors chose to fund the venture pitched by the man’s voice, and only 32% chose to fund the one pitched by the woman’s voice.
It is a shocking fact that, as recently as 1988, many states had laws requiring women to obtain the signature of a husband or other man in order to establish business credit.
, and why women-owned small businesses secure less than 5% of federal government contracts and account for less than 5% of the total value of all conventional business loans.
The good news is that big changes are underway, led by women in Congress in concert with organizations such as Women Impacting Public Policy and the Association of Women’s Business Centers.
In July 2014, women entrepreneurs from across the country packed a hearing of the Senate’s Small Business Committee to demand reforms aimed at increasing women-owned small businesses’ access to federal contracts, capital and business counseling. Soon after the hearing, I joined with Senators Maria Cantwell (D-WA) and Kirsten Gillibrand (D-NY) to pass key elements of the Women’s Small Business Procurement Parity Act. This law will give women-owned small businesses more opportunities to compete for federal contracts, on par with other traditionally disadvantaged groups.
Access to credit is another huge challenge facing women-owned businesses. Unable to obtain a traditional bank loan, many women rely on personal credit, loans from family and friends, credit cards, or even liquidating retirement accounts. These unstable and costly sources of financing put women-owned small businesses at a sharp competitive disadvantage.