When New Jersey entrepreneur Avis Yates Rivers started her first business more than 20 years ago, she ran it part time out of the basement of her home and still worked a full-time job. After a series of setbacks and comebacks, Rivers managed to parlay her business acumen into a successful multimillion-dollar technology business.
Technology Concepts Group Inc. (TCGI) in Somerset, N.J., has been up and running since 1996. Among other operations, the company leases equipment to small and midsized businesses. TCGI Capital, another arm of Technology Concepts, offers financing options and loans to small businesses and individuals. Yates says revenues for 2008 topped $10 million, but the same cannot be said for 2009. “All I will say about 2009 is that it was an extremely dry year,” she says.
Jeanne Achille, owner of The Devon Group, a marketing and public relations firm based in Middletown, N.J., echoes similar sentiments about the year just passed. “I’ve been in business for sixteen years and 2009 was the worst I’ve ever seen as a businessowner,” she says. “More than a few strategic initiatives were put on hold with the hopes of reinvigorating them as the economy improves.”
Rivers and Achille represent thousands of female entrepreneurs overall who have seen big highs and extreme lows in revenues and sales in the economic turbulence of the past two years. While the harsh economic environment could exacerbate the decades-old gap in entrepreneurship rates for women and men in general, entrepreneurship rates for minority women likely will continue to outpace those for all firms in general.
According to statistics from the Center for Women’s Business Research, a Washington, D.C., think tank and advocacy group, women in the United States own more than 10.4 million firms, which employ nearly 13 million people and generate some $2 trillion annually in sales. Of these 10.4 million women-owned firms, women of color own about 2.4 million, which employ 1.6 million people and generate about $230 billion in annual sales. As of 2004, African-American women owned an estimated 414,472 firms (29 percent of all minority women-owned firms and 6 percent of all women-owned firms), employing nearly 254,000 people and generating $19.5 billion in sales, according to the National Women’s Business Council’s most current figures. A federal body based in Washington, the council serves as an independent source of advice and policy recommendations to the president, Congress, and the U.S. Small Business Administration on economic issues of importance to women businessowners.
Despite these seemingly impressive numbers and President Barack Obama’s assurances during his recent State of the Union address that the economy is on the rebound, many entrepreneurs are reluctant to spend their hard-to-come-by capital on business expansion until they see evidence of a full economic recovery. “Ultimately, access to capital remains the single biggest obstacle to small-business job growth,” says Rep. Nydia M. Velázquez (D-NY), who chairs the House Small Business Committee. She adds that the Small Business Administration annually provides small businesses, especially minority and women-owned business enterprises (MWBEs), with more than $28 billion in capital.
However, that’s little comfort to women businessowners, especially to risk-averse early stage entrepreneurs and women transitioning to full-time entrepreneurship after losing their job. In the National Women’s Business Council’s study of African-American women entrepreneurs, nearly half (47 percent) of African-American women businessowners say they have encountered obstacles or difficulties when trying to obtain business financing in the past, compared to 28 percent of white women businessowners, 27 percent of Latina businessowners and 22 percent of Asian women businessowners.
Pamela M. Turner, owner of TurneRound Fitness, a personal-training business in Pennsylvania, is a case in point. She launched TurneRound with her own financing in 2005 and the part-time, home-based enterprise quickly developed a regular group of clients. “I was able to run the business during my spare time and make some investments in the business, including purchasing equipment and marketing, because I had the security of a regular paycheck from my full-time job. Once that ended and I had more time to develop the fitness business, I had to be careful and creative in how I invested in the business,” Turner says.
Turner is proceeding but with caution. “In July, I was awarded ‘preferred vendor [status]’ at GE Healthcare. I am pursuing various entities — schools, senior corporations and even the government — to develop much-needed health and wellness programs in our communities.” She’s also awaiting a response on a proposal she submitted to the state to build a wellness program for ex-offenders.
Many MWBEs rely almost exclusively on the SBA’s 8(a) program, which grants their businesses special consideration for federal procurement contract awards. Under to federal mandate, MWBEs are eligible to bid on federal and state contracts as disadvantaged businesses and all federal agencies are required to allocate a specified percentage of contracts to MWBEs. However, some small businesses have found greater success in pursuing contracts outside of the government marketplace. Rivers, for example, opted not to register her company with the SBA as an 8(a) business. “We’ve attempted to participate in state contract opportunities over the years [but] that market was fraught with bureaucracy, delays and poor decision making,” Rivers says.
The bulk of her firm’s contracts have come from work secured as a subcontractor to local, regional and out-of-state prime contractors. “I have enjoyed greater success, unfortunately, in other states than my own,” she says.
Beginning with bad credit
Entrepreneur Traci Lynn regularly tells people that the power of positive thinking, along with a lot of hard work, a little money and prayer, will make you a success. She contends that her adherence to this belief catapulted her into the realm of multimillionaire businesswomen after she launched Traci Lynn Fashion Jewelry in Philadelphia in 1989.
The company is a conglomerate of several small businesses she owns, including one that offers financial empowerment and motivational speaking seminars. She travels across the country to promote her seminar series, which she titled “The Mind of a Millionaire.” With business interests that stretch from Delaware to Philadelphia, her revenues range between $2 million and $5 million annually.
Despite the gloomy economic environment of late, Lynn says, by keeping faith and following her dream she has managed to keep her 20-year business on solid, albeit sometimes shaky, ground. “I had bad credit, couldn’t get a loan from anyone and owed everyone money,” she says, reflecting on her decision to establish her jewelry business. Eventually, she purchased several pieces of fashion jewelry from a wholesale outlet in New York and sold them out of Tupperware containers to friends, family, beauty shop customers and members of the local church.
“I reinvested my initial investment of two hundred dollars back into the business and continued to purchase more items from a wholesaler,” she says. That initial investment doubled and then tripled, until she had enough money to buy a store.
A long-standing trend
To date, the growing number of success stories like Yates’s, Turner’s and Lynn’s has had little impact on a long-standing trend, however. According to a Feb. 9, 2009, study titled “Self-Employed Women and Time Use,” entrepreneurship rates for women in general remain about half of those for men, despite a steady increase in the number of self-employed women over the past three decades. In 2003, 6.8 percent of women in the labor force were self-employed, compared with 12.4 percent of men, the study says. “These trends persist despite widespread policies to encourage business ownership among women,” it says.
Still, minority women-owned businesses are a growing force in the U.S. economy, with a growth rate at six times the rate of all U.S. firms. Between 1997 and 2004 alone, for example, the number of African-American, women-owned firms increased by 33 percent, employment grew by 50 percent and sales rose by 44 percent, the National Women’s Business Council says.