Many of today’s women-owned businesses (WOB) are led by recession-tested entrepreneurs whose experiences provide valuable insight into the challenges that may await aspiring small-business owners, according to a new study looking at how women small business owners faired during the “Great Recession.”
Small Business: Lessons of the Recession, the first in-depth look at how women-owned businesses responded to and weathered the recent economic fallout, found that 45 percent of women-owned businesses concentrated primarily on cutting business costs while 31 percent sought to increase sales. Regardless of which strategy they chose, women business owners indicate that their real volume sales remain lower than when the recession started in 2007.
“During the recession, women-owned small businesses did the best they could with the few choices they had available to remain open for business, and they’re stronger today for it,” said Patricia Greene, Chairwoman of the Center for Women’s Business Research. “The real silver lining is that their resiliency provides valuable lessons on how today’s business owners can adapt to challenges.”
The study was released by Chase Card Services, a division of JPMorgan Chase & Co., the National Federation of Independent Business (NFIB) and the Center for Women’s Business Research.
According to the survey, the resiliency of these women business owners should provide help for the economy. The study reveals that while many women reduced headcount to reduce costs during the recession, they are now starting to hire again. Compared to their worst quarters during the recession, nearly half of WOBs are now increasing headcount (45 percent) and only nine percent report that they are decreasing their staff sizes.
This is a significant improvement, given that 36 percent of women small-business owners reduced their payrolls during the recession, with women-owned businesses that have over ten employees more likely to reduce staff than those with fewer than ten employees. Another 40 percent of those surveyed reduced the number of hours worked by employees.
The study revealed important insights about how women-owned businesses (WOBs) are dealing with the recession, including:
• Focus on cost control: Forty-five percent of WOBs focused on controlling costs in response to economic challenges, while 31 percent concentrated on increasing sales. In retrospect, nearly 60 percent of women are confident in their business decision.
• Targeting the right customers: Although more than half of WOBs (54 percent) focused on new business among their existing customer base, approximately one in four (23 percent) say they are marketing to a customer base today that is different from their pre-recession targets.
• Social media as a business tool: Half of WOBs owners now use social media compared to four percent before the recession. Of those surveyed, 56 percent said social media is “very important” or “important” to their business.
• Finding outside help: The sales record of those who invested in outside help to control costs and/or increase sales (23 percent) proved somewhat better than those who did not. But always be mindful of what you’re paying for – a bad investment can cost you more in the long run.
• Promoting the business through community activities: Thirty-nine percent of WOBs increased their involvement in civic, social or school activities to increase their exposure during the recession and create value for their communities. Although these efforts often do not involve money, don’t lose sight of the value of your time.
• Working harder: Women business owners are working harder than they were during the height of the Great Recession (41 percent).
“The data indicates that many of women-owned businesses adjusted to the new, volatile circumstances, by making changes to their businesses,” said William Dennis, Senior Research Fellow at the NFIB. “What is encouraging is that many of these adjustments appear to have been institutionalized.”
The study was a telephone and online survey conducted between March 28 and April 11, 2012. The survey polled a total of 760 business owners, 559 women and 201 men.
Visit www.nfib.com/wobstudy.