Working Assumption

The study's purpose: Determine to what extent the female entrepreneurs of America are in fact carrying out a big part of the original feminist dream: Economic autonomy and self-fulfillment, along with the diffusion of new management models into commercial life in ways that -- by definition -- end discrimination against women. If this is predominantly the case, Washington policymakers should be bracing for a new coalition for entrepreneurship, preparing to deliver something never before achieved on a grand scale: Equal-Opportunity Capitalism.

After 42 audiotaped interviews, project manager Gregorsky comes to two conclusions: "Yes, the typical female entrepreneur is something of a social and economic pioneer -- 'taking charge' in ways that earlier generations could hardly contemplate. On the other hand, because of the huge policy gaps between women business-owners and the established feminist groups, each side has yet to acknowledge the grand irony of the 1990s: Namely, the feminization of ownership."

Mega-Facts, Major Ironies

Super Growth: In only 15 years, the number of women-owned enterprises in the U.S. has quadrupled -- racing from 2 to 8 million. For most of the past decade, according to the SBFA, women have been starting new businesses at greater rates than men have.

Jobs Galore: In 1994, for the first time ever, women-owned businesses employed more people than did the Fortune 500 firms. Since half of all Fortune 500 employees are located in other countries, women-owned businesses employ twice as many people within the U.S..

Their Core Demand: "The greatest challenge women business-owners face, in their own words, is being taken seriously -- proving their personal capability and the credibility of their businesses. The greatest rewards they derive from entrepreneurship are strongly related to the empowerment they derive from being the mistress of their own fate" -- National Foundation For Women Business-Owners (NFWBO) Research Highlights(1995).

Personal: Women who are business-owners are somewhat more likely to be married: 70% of them are, as compared with 57% of all women 15 or older. An even greater proportion -- 79% -- of this study's participants are currently married.

Financial Sources: A 1995 survey by Duquesne University's Small Business Development Center of 757 women-owned business mainly in Allegheny County (PA) found: "The most common source of start-up funds was personal savings... One-half (50%) used personal savings as the only source of start-up funds... Venture-capital provided funding for less than 0.5% of the women-owned businesses."

Why So Low a Profile? Even though engaged in profound and pervasive "cultural change," America's female entrepreneurs have little political presence and absolutely no media profile. Of what other group of 8 million decision-makers can this be said? Still more baffling: Neither side of the political spectrum knows what to do with them or for them, despite the chronic needs of conservatives supposedly worried about gender gaps, and liberals looking for a way to help business without appearing to be economic royalists or corporate shills.

What To Look For: Just as the issue agenda finally catches up with these new patterns of business-creation, U.S. gender dynamics could, once again, shift drastically. In fact, the big question -- demographically and economically -- is whether America's "X-Generation" females continue the high-stress, high-output lives of their mothers and older sisters (meaning women who have come into all phases of the workforce since 1970). Current indicators regarding this shift are analyzed in a companion essay to Women Business-Owners, building on the Generational Model put forth by Neil Howe and William Strauss.

Areas Of Exploration

A large part of Women Business-Owners consists of "virtual focus groups," which are simply mergers of the original person-by-person transcripts. Though the roster and flow of questions varied, these were the interviewer's major lines of inquiry:

Why and how did you start this company? What were the two or three ways you funded it in the early years?

Who are your mentors, and how did you find them? What about role models?

Everyone -- from the U.N. to presidential commissions -- concedes a "glass ceiling" facing women in American corporate life. The term has become universal shorthand. What does it mean to you?

How have family concerns affected your ability to start and grow a successful business? Has marital status been affected by your ownership?

What does the word "feminism" mean to you? And -- since 80% of the participants in this study turned out to be "baby boomers" -- can you view today's workforce, and your own life-trajectory, in generational terms?

How often are decisions made with an eye on federal agencies or other Washington factors? (Focus on: Health insurance, liability and lawsuit factors, employee training and pension-management, assorted tax burdens and reforms, along with virtually any other government-related topic a participant cared to put on the record.)

Recreate for us a time when the life of this enterprise was on the line, how you faced the crisis, and what you learned from it.

All of these questions are tackled in the report, yet with minimal use of statistics and surveys. Rather, the interviewees are allowed to explain at length their own stories (personal and business, money and motivation, parents and kids, more). Then, because of how the text-blocks are organized, and since the participants have a decent representation by industry and region, the reader is able to draw her or his own conclusions about economic trends and sociological forces.

Policy Enhancements and New Openings

(l) For purposes of attaining "Certification" as a woman-owned enterprise, begin using a definition more weighted toward "daily control and operation" by a woman or women. In addition, give higher weight to the presence of women as senior management and women employees generally. (At present, the definition of a "WBE" requires both ownership and control.)

(2) Encourage the SBA to use "cash-flow financing" for loans under $100,000, rather than requiring a 30% injection, standard collateral and life-insurance to cover everything. Project advisor Lindsey Johnson explains: "Our current financial system was created out of the industrial revolution and reflects an economic era where most businesses seeking financing had machines, buildings, inventory -- hard assets -- that were part of the results of production. The hard-asset lending model is still the norm today, despite dramatic shifts in the sources of economic growth." In sum, service businesses are now a lot bigger than the smokestacks, yet the financial system tends to treat the former under the latter's rules.

(3) Change the Fair Labor Standards Act (FLSA) to allow employees to choose compensatory time in lieu of overtime.

(4) Improve and make permanent federal support for the formation of business-assistance centers (BACs) for women, but also assure these centers have no incentive to take federal funding for granted.

(5) Several proposals to promote "microenterprise," after a call from interviewee Catherine Novak for "more help for micro-business [because] there's a TON of us out here. They -- SBA, federal government, state government -- define a 'small business' as under 500 people. Now give me a break! How many small businesses do you know that consider themselves 'small' with 489 people?"

(6) Thoroughgoing legal reform, especially on the tort front. Worth noting: A big surprise of the JEC interviews is the vehemence shown against irresponsible legal action. Even a lifelong Democrat like Ellen Wessel(whose company, Moving Comfort, safeguards "sexual orientation" in hiring and furthers "gender equity" in society) declares: "These juries forget that all these companies are made up of people. I'm not saying the companies are always right, by any means -- the courts should always offer a remedy. But if someone is playing sports in a playground, and they fall down and break something, does everybody have to be sued because the concrete was too hard?"

Mother's Work founder Rebecca Matthias adds: "You have lawyer-shops set up, where they have 100 documents and they just send them out as soon as any stock comes way down. Why can't they be stopped?" Like Wessel, Matthias favors a "loser pays" formula. "So much money is spent in this country on frivolous lawsuits -- because people can." In terms of the burden on companies, "It's not the kind of thing you can put your finger on, and maybe it's harder to stop -- but it's as big of a problem as high taxes... It's a drain of money and energy. And it is so random -- it's [a matter of] anytime, against anybody."

Both Wessel and Matthias are in the apparel business (which would not seem a high-risk sector for product-liability). They happen to be opposites when it comes to political outlook. But to hear them talk is to suddenly see litigation reform as a "women's economic issue." Have any of the activists sought to market litigation clean-up in this manner? Could this be the one place where (for example) NOW makes common cause with its usual conservative opponents?

(7) "It's time to lighten up on the home office, which means encouraging the regulators to stop approaching it like a toxic-waste dump." The big picture is conveyed by Charmaine Yoest, in her recent book with Deborah Shaw Lewis: "As we enter a new millennium, our generation has a historic opportunity to change our wage-labor system," itself the legacy of an industrial revolution that "brought us the modern separation of home and work." Before 1880, "when work, home and child-rearing were more integrated, children were also more integrated into the society [and] all of life was more seamless... Perhaps technology can bring us back full circle. It's time to start a real revolution."

Yes, and that makes the home office most of the answer, rather than part of the problem.

(8) Finally, author Gregorsky encourages "women's business advocates to avoid thinking of their part of the economy as a fragile subculture petitioning government for tactical support. Instead, their more visionary spokespeople need to be emphatically on the side of small and new business, period -- a leap which will include using the popular culture and media to fire the imagination of the whole nation." The final section of the full report offers ways to make this leap that go beyond the normal policy route.

About the Author

With publication by the Joint Economic Committee, Frank Gregorsky completed 16 years in Washington as a congressional researcher, newsletter editor and unstoppable interviewer. His essays have appeared in the New York Times, Wall Street Journal, Washington Post, Christian Science Monitor, San Francisco Chronicle and Seattle Times. East-coast mentors include George Gilder, Ladonna Lee and Eddie Mahe Jr., Mort and Milly Kondracke, and Van Wishard.

Gregorsky now works at The Discovery Institute; 1201 Third Avenue, 39th Floor; Seattle WA 98101. Anyone interested in being interviewed for, or otherwise helping shape, the follow-up to WOMEN BUSINESS-OWNERS is encouraged to contact him there: Phone (206) 287-3144, fax (206) 850-4989, e-mail druckerite@discovery.org.

Finally, the author would like to thank the Bionomics Institute for this special digital portrait of his work on Capitalism's New Look.

Related Links:

• Discovery Institute
• Joint Economic Committee
• Women Business-Owners in Post-Corporate America