The age of the woman entrepreneur

Nation's Business, May, 1989 by Sharon Nelton

The Age Of The Woman Enterpreneur

The business plan for S. Diane Graham's chemical-engineering company, Stratco Inc., in Kansas City, Mo., forecasts $15 million in 1990 sales and $25 million in 1992, up from $10 million this year.

By 1992, Boston exporter Patti Rubin expects to have an office in Europe, positioning her to compete in the European Community when its trade barriers go down. By that time, she also expects her company, Ortho USA Inc., to increase annual revenues from its current $3 million to $8 million. The company sells orthodontic materials and already does business in four countries.

In suburban Chicago, Sandra Pernick's company, The Direct Response Corp., has enjoyed substantial growth since she started the firm in her home seven years ago. The business-to-business telemarketing company now employs 125 people and takes in over $2 million yearly.

Nearly one-third of the small businesses in the U.S. today belong to women, and as these examples suggest, women's business ownership is coming of age.

The numbers alone are staggering. From 1980 to 1986, sole proprietorships owned by women rose from 2.5 million to 4.1 million--a 62.5 percent jump during a period when the number of male-owned businesses increased 33.4 percent. also during that period, women-owned businesses' receipts nearly doubled, from $36 billion to $71.5 billion. Add the 433,000 sole proprietorships that are jointly owned by husbands and wives and the yet-unknown numbers of women-owned partnerships and corporations, and the figures on women-owned companies would be even higher.

Many women's businesses are beginning to mature, and their owners, having gained experience, are becoming more sophisticated managers.

Diane Graham of Stratco is one of them. Her company's basic business is providing equipment and technology to refineries making high-octane gasoline. She had no intention of joining the firm while her father was running it as majority owner, but she took over after his death because, she recalls, she wanted to keep alive his vision for the company. It wasn't entirely smooth. At one point, she had to buy out nonfamily shareholders and two brothers in order to avoid being ousted as chief executive officer.

Graham has nurtured Stratco from $1 million in annual revenues when she started running it in 1981 to its current $10 million and the expectations of continued fast but controlled growth.

Her strategy included a diversification program to reduce dependency on the oil industry, and Stratco has been using its equipment to serve the food, cosmetics, and pharmaceutical industries. Half of the company's staff members, including engineers, are women. "We stick out in the oil industry," says Graham, 35. "It definitely helps us be remembered." But she's quick to point out that being remembered is not enough; it's the performance of the company that counts.

Stratco's impressive expansion could be a model for many other women-owned businesses, particularly those that are now 5 to 10 years old. These companies "are really poised for growth," says Carol M. Crockett, director of the Office of Women's Business Ownership at the U.S. Small Business Administration. "We're going to see some of those become major players in the marketplace in the next decade."

Many of those major players will emerge from businesses now being formed. Women's business ownership is "obviously the fastest-growing segment of entrepreneurship," says Fran Jabara, director of the Center for Entrepreneurship at Wichita State University, in Wichita, Kan. "The thing I'm seeing is that the level of enthusiasm is seemingly accelerating."

In 1972, women owned less than 5 percent of American businesses. The rapid increase to ownership of 30 percent of the country's sole proprietorships by 1986, the last year for which figures are available, has prompted some predictions that by the turn of the century, women will own 50 percent of the small businesses in America.

"If this growth continues at the same rate," SBA's Carol Crockett said last year, "it is anticipated that women will comprise half of all self-employed people by the year 2000." And in "New Economic Realities: The Rise of Women Enterpreneurs," a report of the Committee on Small Business of the U.S. House of Representatives, Rep. John J. LaFalce, committee chairman, stated that women "could well own and operate 50 percent of the nation's businesses by the year 2000."

"That wouldn't surprise me," says Peggy Leonard, president of the National Association of Women Business Owners (NAWBO). She cites the trend toward "coordinating work life with family life" as one of the factors that spur women to start their own companies.

Bruce D. Phillips, chief of the Data Base Branch of the SBA's Office of Advocacy, expects women to own closer to 40 percent of the country's small businesses by 2000. While women's business ownership as a share of the total is expected to continue to rise, he believes the unusually high rate of growth of the 1970s and early 1980s will slow down somewhat. Women's business ownership, he suggests, will follow the pattern of women's participation in the labor force, where increases have already begun to slow down.