Minnesota Small Business Successes
Small businesses in Minnesota are thriving. Just recently, the state was ranked number one nationally for rate of small business ownership. Women are enjoying the healthy business climate as well. The same report, ranked Minnesota number two nationally for the rate of businesses owned by women.
The statistics are impressive. Minnesota has approximately 20% more women-owned than it did ten years ago. In several sectors (healthcare, social services, and educational services) the majority of business are women-owned. The state now has 157,821 women-owned businesses with an aggregate annual revenue of $24.6 billion. These businesses employ 182,229 people for an annual payroll of well over $5 billion.
Women-Owned Businesses Lag Behind
But these numbers lose a bit of their luster when placed in context. Despite successes, Minnesotan women-owned business lag far behind their male-owned counterparts. Over half of Minnesota’s adult population is female but they own only 32 percent of the state’s businesses, generating just 4 percent of Minnesota’s overall business revenue.
Key Public Policy Issues
So while Minnesota’s women-owned businesses have strengthened, they still have a long way to achieve full gender equity. Thus public policies are of supreme import to underrepresented Minnesotan business women. Areas of particular concern to women business owners include:
- Access to commercial loans – Only 4 percent of commercial loan dollars are granted to women
- Access to government contracts – Only 5 percent of government contracts are granted to women
- Access to venture capital – Only 3 percent of venture capital goes to women
Women business owners are hoping the incoming Trump administration will implement policy initiatives to address some of these concerns. Women Impacting Public Policy (WIPP), a national nonpartisan organization, developed a list for the incoming Trump administration of ten critical facts and issues affecting women entrepreneurs:
1. Women entrepreneurs are an economic powerhouse.
Making up 1/3rd of all businesses, women-owned firms are growing at four times the rate of men-owned firms and contribute $1.6 trillion to the American economy. This growth not only survived the Great Recession, but has propelled recovery in communities nationwide.
2. Women business owners are not getting the capital they need.
Only 4% of all commercial loan dollars go to women. The cumulative regulatory burden on community banks – a traditional source of capital for women entrepreneurs – has increased costs and made it difficult for these institutions to rationalize smaller loans. The unmet needs of women entrepreneurs total billions of dollars each year.
3. Healthcare costs continue to rise for employers.
Congress and the Administration must bring competitively priced and accessible health options to women business owners. Reinstating Health Reimbursement Arrangements (HRAs) is a key step in providing simple and flexible healthcare options to women entrepreneurs.
4. Despite significant barriers, women-owned firms compete for and win government contracts.
Reaching the goal of awarding 5% of contracts to women-owned firms in 2015 effectively set the floor for the federal market. To ensure women have access and can bring innovative solutions to government problems, more needs to be done. Parity in federal procurement opportunities is essential for women-owned businesses.
5. Women businesses are a good investment.
The track record of growth for women business owners is proven, yet only three percent of all venture capital goes to companies run by women. The limited number of women fund managers is a factor in this statistic. A study from the Diana Project, found that “venture capital firms with women partners are three times more likely to invest in companies with women CEOs.” The next Administration can use the Small Business Investment Company (SBIC) Program among other tools to ensure more women fund managers have the experience needed.
6. Women business owners seek markets beyond US borders.
With 95% of consumers living outside of the U.S. representing 2/3 of the world’s purchasing power, women’s growth must be fueled by access to international markets. Strengthening the existing support of the Federal government for small firms should complement non-profit and private export assistance to small businesses. Our government must continue its efforts strengthening intellectual property (IP) rights and protections at home and abroad to encourage more entrepreneurship and the global expansion of women-owned firms.
7. The burden of regulation can be crushing.
We need a regulatory system that is inclusive, transparent and flexible. Firms with fewer than 20 employees, which make up the bulk of women-owned businesses, pay an average of 30% more per employee in regulatory costs. For manufacturers, this burden is even greater. One estimate by the National Association of Manufacturers estimated annual regulatory costs to be $34, 671 for firms with fewer than 50 employees. Smarter regulations and a more transparent regulatory process will produce more efficient regulations.
8. Women entrepreneurs embrace technology.
Women business owners are important consumers of technology and incredible innovators driving technological advancement. Stifling innovation by moving away from light touch regulation that has helped the broadband Internet and technology sector flourish means less investment and less access to the technologies and platforms that help women business owners compete and succeed.
9. Women business owners have unique policy goals and insights.
The one-size-fits-all approach to policymaking paints with too broad of a brush. Supporting an entrepreneurial ecosystem will require women business owners to have advocates within institutions such as the SEC, CFPB and other agencies. While, women business owners have a seat at the policy table, they are woefully underrepresented within the regulatory environment
10. Women business owners, like all business owners, seek certainty, simplicity and fairness from the American tax system.
The outdated and non-competitive nature of the tax code impacts – and effectively restricts – the plans of women business owners and potential growth of their firms. It is the responsibility of the next Administration to work with Congress to modernize the tax structure in a comprehensive manner.