Where does Utah rank nationally for female business owners?

SALT LAKE CITY — Utah's economy and business environment have consistently been ranked among the best in the nation, but a new analysis reveals there may be room for improvement when it comes to women-owned businesses in the state.

Women-owned businesses play a large role in the U.S. economy, employing 10.1 million workers and accumulating $1.8 trillion in receipts, according to U.S. Small Business Association data. Yet, despite numbering 1.1 million in 2019, women-owned businesses only made up about 20% of all employer firms across the nation.

A recent analysis of the U.S. Census Bureau's Annual Business Survey by backgroundchecks.org determined locations with the most female-owned businesses by metro and state.

Where does Utah rank — and which metros were included?

Overall, Utah ranked No. 45 among states, with 16% of women-owned businesses. States following Utah included New Hampshire, Iowa, Idaho, North Dakota and South Dakota.

Of the 100 largest metropolitan areas with data available, Salt Lake City ranked 85th, at 16.5%. Other Utah metros that made the list include Provo-Orem, with 15.9% and Ogden-Clearfield, with 13.7%.

Hawaii has the highest share of women-owned businesses at 24.5%, with Virginia 23.9% and Colorado 23.8% falling just behind.

The recent report is just one of several that have highlighted inequities minority groups may face in the state. After Utah was ranked by WalletHub as the worst state for women's equality for the fourth consecutive year, prompting Utah leaders to call for collective action. The Utah Women's Leadership Project analyzed 17 key indicators in the areas of workplace environment, education and health and political empowerment and next steps for advancement.

The nonprofit's analysis had similar findings as previous reports but also highlighted key differences. The data, when broken down, can be more nuanced than it appears, said Susan Madsen, director of the Utah Women and Leadership Project at Utah State University.

A closer look at Utah's data

In the analysis, backgroundchecks.org recorded 11,054 women-owned businesses in the state while SBA Utah District Office data indicates that over 101,000 businesses are owned by women.

Why the contradiction?

The difference in numbers represents how data is collected and counted can significantly change an outcome. The 11,054 women-owned businesses indicated by the analysis only represent a fraction of businesses by using data that represented employer firms, excluding firms without employees.

The exclusion disqualifies 90% of women-owned businesses across the nation who have no employees, according to U.S. Small Business Association data. Of Utah women-owned businesses, 90,500 are without employees.

And while widening the scope might elevate Utah's rank, the data still may not fully encompass the full picture.

"There's a few different measures of women's entrepreneurship and they contradict each other a little bit," said Madsen. "It's really challenging to find really good data so that's one of the things that we're working on to change."

While business owners in Utah can indicate female ownership while registering, that box is rarely checked. Business owners' race or gender aren't directly recorded by the state in the process, which can make it hard to access complete data.

"We can't get the message to all these women who are starting their businesses because we're not collecting gender (information), and therefore, there's a lot of businesses in Utah that start and fail," said Madsen. "We can't find the people to help them."

Barriers to female entrepreneurship

Fair access to capital

Women receive only 16% of conventional small business loans and 17% of SBA loans, despite 30% of firms being women-owned. Studies also indicate that women may be more hesitant to take out loans or incur debt than male counterparts, according to Madsen.

Insufficient federal contracting jobs

The U.S. federal government, the largest purchaser in the world, awards fewer than 5% of federal contracts to women-owned firms, according to a previous Utah Women's Leadership Project report.

Access to specialized business counseling and training

Despite the host of resources available through the Utah Women's Business Center, many Utah women-business owners are unaware the center exists. Lack of representation in industries across the state can also contribute to lack of mentorship for women looking to enter the workforce in those areas, said Madsen.

Advancing higher education for women in male-dominated industries may also improve access, she added.

"We still have a lot of businesses that start and don't move forward and fail but there's really a formula in terms of companies that that tend to be more successful and that is they have more education around it," said Madsen.

COVID-19

Not only were women in the workforce harder hit by the COVID-19 pandemic, but 64% of women-owned businesses saw a decrease in revenue and approximately 25% — 5% more than male-owned — closed entirely, according to a study conducted by Inc.com.

"Women tend to gravitate toward certain types of businesses and those are the type of businesses that were hit the hardest," said Ann Marie Wallace, Utah Women's Business Center.

The top employment industries include health care, accommodation and food services, and administrative and support. Those three sectors account for 47% of total industry employment by women-owned businesses, according to the U.S. Small Business Bureau.

Other barriers identified by the U.S. Small Business Bureau include:

• Women are more likely than men to run home-based businesses.
• Women with children were more likely to have a home-based business.
• Men with children were less likely to operate their businesses from home.
• Women with children at home were less likely to operate in high-growth industries, while the opposite was true for men.
• Women with college degrees were more likely to be in high-growth industries like construction and accounting/booking services; while men in high-growth industries tended to have proportionately fewer college degrees.

What can be done?

Solutions include increased education for women business owners, increasing awareness and access to resources such as the Women's Business Center, creating incentives for contact work with women-owned businesses, mentorship, advocacy and networking opportunities.

"If a woman wants to start a business, she should not have barriers in front of her just because she's a woman. There are still barriers there and some of them are unconscious bias and other things are flat-out wrong and people can make changes to it," said Wallace.

To learn about resources available for women-owned businesses, visit SBA.gov's Women Business Centers webpage.

Related topics