What’s in a Name? Investors, Lenders and Contracts

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Julie Weeks

(WOMENSENEWS)–The U.S. Census Bureau in its latest Survey of Women-Owned Business Enterprises, reports that the total number of women-owned businesses increased 16 percent between 1992 and 1997, almost triple the rate of increase of 6 percent for all firms, excluding publicly held corporations.

And receipts from women-owned businesses increased 33 percent, compared with a 24 percent increase for all firms.

That’s good news, but there could be a downside because of the way the Census Bureau defines its terms:

The bureau has changed its definition of a woman-owned business, making it more restrictive and leaving out firms that had been counted in the previous survey. The definition has been changed from at least 50 percent to 51 percent ownership, and it now applies only to privately held firms.

In other words, the bureau went back to its 1992 data and cleaned out firms that had 50 percent female ownership and were publicly held and then calculated the 1997 numbers in comparison to the 1992 figures. If they had not adjusted the figures in this manner, the actual number of women-owned businesses would apparently have contracted from 6.4 million to 5.4 million, since the last survey in 1992, according to the Census Bureau.

Advocates for women’s business ownership are concerned that this new method–even though it shows an increase in women’s businesses–could mislead analysts in understating the number of businesses owned and influenced by women because of the new limitations on what is considered a woman-owned business. They add that the survey results, if their limitations are not understood, could cause confusion about identifying business trends.

The fear is that experts, such as lenders, investors, politicians, government officials, corporations and others, might decide that the women’s entrepreneurial movement is weaker and less significant than it actually is. This misunderstanding, advocates say, might affect their decisions on granting loans, providing access to credit, giving sponsorships or other means of supporting women business owners.

Change May Mean Some Businesses Disappear from Radar Screen

Julie R. Weeks, managing director and director of research for the National Foundation of Women Business Owners said:

“We were disappointed in the Census Bureau’s survey and its new definition of women-owned businesses because we believe it gives an incomplete picture of women’s business ownership in the U.S.”

Weeks pointed out that the definition of at least 51 percent women’s ownership does not take into account the reality that as a successful women-owned company grows and becomes more successful, it will no longer be 51 percent owned by women; new investors or owners might join and the company might go public. So women-owned business, according to the census definition “disappear off the census radar screen.”

Susan WalthallThe Survey of Women-Owned Business Enterprises is part of the U.S. Census Bureau’s Economic Census, which the bureau is required by law to conduct every five years. The survey is a key government source of data tracking the growth of specific segments of women’s business ownership since it was first incorporated into the census in 1972.

The National Women’s Business Council also criticized the 1997 Survey of Women-Owned Business Enterprises, saying it did not reflect the much larger universe of women’s entrepreneurship. It said future surveys should include information on jointly held, or half-and-half, female-male ownership, and publicly traded businesses.

Why, then, did the Census survey’s actual number of women-owned businesses conflict with others’ totals, like those of the National Foundation of Women Business Owners, whose latest estimate of total women-owned businesses was 9.1 million?

New Definition Required to Conform With Government Contract Rules

The 1997 definition was changed in order to conform to government contract procurement rules that stipulates a certified woman-owned business must have 51 percent or a majority, more than half, ownership in order to qualify to be eligible for federal contracts available to women-owned businesses.

The implications and ramifications of the definition change–and how to accurately represent the significance of women’s entrepreneurship in the U.S. economy–have prompted discussions among government agencies, women’s business organizations, entrepreneurs and other small-business advocates.

Although the Census Bureau is not expected to change its definition again, it appears willing to ask questions in the next survey that could illuminate the nature and scope of women’s entrepreneurship. Other agencies and organizations aim to develop common guidelines in order to ensure the full representation of and benefits for all women-owned enterprises.

Census: Next Survey Could Include More Questions on Women’s Influence

The National Women’s Business Council in May assembled a task force of experts in economics, research and business ownership to discuss ways to improve the next Census Bureau’s Survey of Women-Owned Business Enterprises in 2002 and attempt to determine exactly what is a women-owned business.

The task force includes representatives of the Census Bureau, the Small Business Administration’s Office of Advocacy, the Federal Reserve and other entrepreneurs and small business advocates. They decided to work with the Census Bureau and propose new questions for the next survey. Susan Walthall, acting chief counsel for the Office of Advocacy at the Small Business Administration, said: “The U. S. Census conducts important studies every five years. In future economic censuses, we would like to see those statistics broken down into more categories so that the information about current, women-owned businesses can be better understood by all who read them.”

Walthall added: “A better understanding of just who women-business owners are, where they are located, and what they need, will enable them to access all the services available to them for stability and growth.”

Ruth Runyan of the Census Bureau said, “We will not change the guidelines for defining ownership but we will collect other information that will provide information on other forms of women-influenced businesses and their impact on the economy.”

Priscilla Y. Huff is a free-lance business writer and author, specializing on the topics of women’s entrepreneurship.

For more information, visit:

National Women’s Business Council:
http://www.nwbc.gov/

National Foundation for Women Business Owners:
http://www.nfwbo.org/
(Note: The NFWBO will issue a more detailed analysis of the Census Bureau’s new report, and will release its 2001 estimates of the number and growth of women-owned businesses.)

Small Business Administration Office of Advocacy:
http://www.sba.gov/ADVO/

U.S. Census Bureau:
http://www.census.gov/
http://www.census.gov/csd/mwb/ (the survey)


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