"Among $1 million-plus firms, women are more likely to have started their businesses (73%) than the men (60%), rather than having purchased, inherited, or acquired them in some other way"
From study: The Leading Edge

Women- and men-owned businesses with revenues at or exceeding a million dollars have key differences despite sharing business goals and practices. Women are less likely than their men counterparts to use credit and equity financing and are more likely to rely on the Internet and e-commerce to grow their businesses. The study, entitled The Leading Edge: Women-Owned Million-Dollar Firms, was conducted by the Center for Women’s Business Research and underwritten by AT&T and KeyBank.

Among $1 million-plus firms, women are more likely to have started their businesses (73%) than the men (60%), rather than having purchased, inherited, or acquired them in some other way. “Clearly women are demonstrating their business savvy by starting and building such successful firms,” said Myra M. Hart, Chair, Center for Women’s Business Research and Professor, Harvard Business School. “And it is clear that continued growth is a priority. When asked about their goals, women leading $1 million-plus businesses are just as likely as their men counterparts to state that they want to expand their business and retain ownership (approximately 76% for both).”

Women owners of businesses with a $1 million or more in revenues exhibit a substantial degree of financial sophistication, and in most respects, their financial structure and practices are similar to those of men-owned $1 million-plus firms.

However, women-owned $1 million-plus firms do differ from their men-owned counterparts in their use of two critical sources of financing – commercial credit and equity.

Women-owned businesses with revenues at or exceeding a million dollars are less likely to utilize commercial loans or business lines of credit than their men counterparts (56% compared to 70%). It is very unusual for women or men to use equity financing. Nonetheless there are significant differences between the two groups. Only 4% of women owners of million-dollar-plus firms have raised private equity, compared to 11% of the men. However, women-owned $1 million-plus firms are just as likely as men-owned $1 million-plus firms to use business earnings as their primary source of financing and both groups use an average of four funding sources.

“It’s clear that women who own $1 million-plus businesses are on a par with men in their business skills, and, in some cases, ahead of the curve. However, from the study it’s important to note that women still lag behind their men counterparts in utilizing funding sources, which means they may be missing growth opportunities for lack of financial resources that are available to them,” said Maria Coyne, senior vice president, Women-Owned Business Initiatives, KeyBank.

The study found other differences between women and men that position women for future growth. “More than half (58%) of the women owners of million-dollar-plus firms indicated that the Internet and e-commerce play a moderately or extremely important role in their businesses’ growth strategy compared to 35% of men owners of $1 million-plus firms,” said Don Herring, who leads the AT&T Select Markets division. “This skill in using and understanding the power of the Internet may provide women business owners with a competitive advantage as we continue to become an increasingly e-commerce economy.”

Women are more likely than the men owners of $ 1 million-plus businesses to have a Web site that is capable of fulfilling online transactions (56% compared to 38%). Firms owned by women with a million or more in revenues were also more likely than their men counterparts to sell in the national market, 25% compared to 15% for men.

Despite these key differences, the business profile and practices of women and men owners of million-dollar-plus firms are very similar. When it comes to financing, women owners of $1 million-plus businesses resemble their men counterparts more than they do smaller women-owned firms. Both women and men owners of $ 1 million-plus businesses use a variety of “bootstrapping” strategies to reduce the need for outside capital. The most common methods cited include negotiation of better terms for accounts payable, and speeding up of customer payments. In addition, women owners of $ 1 million-plus firms are as likely as their men counterparts to use formal financial reporting practices. They are as likely as men to regularly produce and be knowledgeable regarding financial measurement documents such as cash and income statements, break-even analyses, sales forecasts, balance sheets and other financial reports.

The industry profile of women-owned $1 million-plus firms is very similar to that of men-owned $1 million-plus firms. A little more than a quarter of their firms (27% and 28% respectively) are in the service sector and other industry sectors, such as manufacturing, wholesale trade and construction, also closely track each other.

Women owners of $1 million-plus businesses are very similar to men owners of $1million- plus businesses in their likelihood of having a partner, but they are more likely to credit their partners for business contributions than their men counterparts. The women owners of $1 million-plus firms report a higher average number of contributions (4.8) made by their partners than the men-owned $1 million-plus firms (3.6).