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Three Ideas to Help Women's Businesses Grow

Last Updated Aug 9, 2010 1:38 PM EDT

Women own 29% of all U.S. businesses. So what would happen if those firms claimed 29% of the loan volume backed by the Small Business Administration -- plus 29% of all Federal contracts?

For one thing, unemployment would be wiped out, because those firms would have funds to staff up and grow, says Margot Dorfman, CEO of the U.S. Women's Chamber of Commerce.

Of course, it's unlikely that women-owned firms will make that kind of leap in the near future. But with Federal policy realigning to better support women-owned businesses, the USWCC is pushing for a few key changes that could nudge the numbers quickly and make a big difference for the families that are supported by women-owned businesses. I'm with them -- to a point.

In a new analysis of the most recent Census data, the USWCC found that women-owned businesses are growing in number, but not in size. Between 1997 and 2007, the country gained 44% more women-owned businesses, but their aggregate revenue-based market share actually dropped, from 4.41% to 3.95%. In other words, women own 28.8% of all American companies, but capture only 4% of corporate revenue. Here are the USWCC's strongest recommendations for changing that:

1. Align lending volume with firm ownership. That means directing 29% of Small Business Adminstration-backed loans to women-owned firms. Currently, minority-owned firms account for 21% of all U.S. companies, but get 31% of SBA-backed loan funds. Dorfman goes as far as asking the Feds to loan directly, just like they did in the infamous TARP bailouts. Direct lending also is pivotal to student loan reform, so she's got a point. I'd rather see much more transparency and accountability for banks. They should be required to keep a public, running tally of the amount and proportion of SBA loans they grant to women and minority owned firms. That's what web sites are for.

2. Certification consensus. The USWCC takes issue with the headlock on corporate certification acceptance claimed by the Women's Business Enterprise Council (WBENC). That's the point: to have a universal certification. But some Federal departments and some states offer very sturdy certifications that WBENC doesn't accept. That needs to change. if it's good enough for major Federal agencies, it should be good enough for private companies and municipalities. A short menu of certifications still keeps the process streamlined without forcing costly duplication on women-owned businesses -- which, as noted above, don't have resources to spare.

3. Replicate what's right. As I've noted before, the feds actually achieved their goals for spending with women-owned businesses with stimulus funds. The SBA has told me that they're cross-pollinating those winning ways to other federal agencies. The USWCC wants the feds to raise the goals for contracting with women-owned businesses from 5% to to 10%.

It's always good to have a stretch goal, but let's also find out more about what's going right. Overall, an anemic 3.4% of federal contracts go to women-owned businesses. But the Dept. of Housing and Urban Development hits 16.9%, and FEMA 14.6%. What are they doing right that other departments and private companies can emulate?

Photo courtesy Flickr user Mattsip, CC 2.0