Women & Minority-Owned Businesses

Women Have What it Takes for Successful Business Ownership

Women Have What it Takes for Successful Business Ownership

Survey Reveals Keys to Success of Women-Owned Small Businesses
The annual MasterCard Worldwide Women in Small Business survey was conducted by Ipsos to gain insight into the reasons why women are starting their own businesses, how they pay for business-related expenses and the challenges they face in trying to establish and run successful businesses.

Segment Overview: Women-Owned Businesses Growing at Unprecedented Rates
As of 2006, there are estimated to be 7.7 million majority women-owned firms (firms at least 51 percent owned by a woman or women). Between 1997 and 2006 the number of majority women-owned firms grew from 5.4 to 7.7 million, up 42 percent—almost double that of all firms (23 percent).

In 2006, majority women-owned firms are expected to generate more than $1 trillion in revenues and employ 7.2 million workers.

2006 MasterCard Women in Small Business Survey Results

Payment card usage

  • Payment cards are prevalent among women small business owners with a majority holding either a credit card (52 percent) or a debit card (30 percent), while 19 percent hold both. In 2005, 56 percent held a business credit card and 28 percent held a business debit card.
    Forty-two percent of women entrepreneurs make more than half of their purchases with a credit or debit card. Only 11 percent say that fewer than 5 percent of their business purchases are made this way.
  • More than half of women (53 percent) say they completely separate personal and business finances. However, 34 percent say they do overlap to some degree. In 2005, 45 percent of women reported some overlap or no separation at all between personal and business finances.

Funding a Business

  • Two out of three respondents (63 percent) used personal savings to finance the start-up of their companies. This is unchanged from 2005.
  • A large majority of women (86 percent) did not seek external funding from a financial institution to start their business, just 14 percent did. Of those seeking external funding, 79 percent were successful in receiving the amount they were looking for.
  • Two out of three respondents (63 percent) used personal savings to finance the start-up of their companies. This is unchanged from 2005.

Managing Finances

  • One-third of women small business owners (33 percent) use a money management software application to handle their finances, up from 27 percent reported in 2005. In fact, the use of money management software has replaced an accountant as the No.1 method for financial management.

Motivations & Challenges

  • The primary motivator for women to start their own business is the opportunity to be their own boss (33 percent). This is followed by the opportunity to generate household income (21 percent), have more schedule flexibility (19 percent) and more time for family and personal interests (17 percent). These top reasons are relatively unchanged from 2005.
  • Women working full-time are more motivated by a desire to be their own boss (41 percent), while key motivators for women working part-time include a desire for flexibility in their schedule (29 percent) and having more time for family and personal interests (24 percent).
  • The main challenges women entrepreneurs said they face are stretching themselves across multiple roles and projects (25 percent), health cares costs (18 percent), balancing family and work (14 percent) and effectively managing cash flow (7 percent).

The Benefits of MasterCard Payment Solutions for Small Business Owners

Zero Liability Protection for Small Business
On September 1, 2006 MasterCard launched zero liability protection for small business cardholders.  With this protection, U.S. small business owners and their employees may not be held liable by card issuers in the event of an unauthorized use of their U.S.-issued MasterCard BusinessCard or Debit MasterCard BusinessCard in a store, over the telephone or online. More information about the terms associated with zero liability protection is available at www.mastercardbusiness.com/zeroliability.

Rewards programs—Small business cards often offer flexible and valuable rewards, including reward air travel with no blackout periods, discounts at retail locations and even cash back on purchases.

Financial organization—With a business card, business owners keep their business and personal expenses separate, while receiving additional accounting advantages, including itemized quarterly and annual purchase summaries.

Establishing a business credit history—By establishing business credit history that is separate from their personal credit history, entrepreneurs are more likely to qualify for business lending sources when the need arises.

Distribute purchasing responsibilities—Business owners can provide certain employees with their own business cards, while dictating specific spending controls and restrictions. The business owner can then track and manage these additional accounts via the Internet with a number of Web-based reporting tools that can be accessed at virtually any time.

Cash/money management—Detailed, timely and accurate reporting tools accompany business payment cards. In addition to managing and tracking employee spending online, business owners can receive comprehensive daily, weekly or monthly financial reports.