Small, independent businesses could be major players in urban economies. Jamyla Bennu launched a natural-hair product business out of the basement of her house in Baltimore. (AP Photo/Gail Burton)

New research suggests that urban areas could benefit from stepping up to support female entrepreneurship.

If a new business were to open in one of the top 25 most populous cities in the United States, it’d be pretty reasonable to guess there was a woman behind it.

A new report from the Center for an Urban Future details the rates of growth for women-owned businesses between 2007 and 2012 in these cities, and the numbers are impressive. Nationally, the average rate of growth for women-owned businesses hit 27 percent, but 24 out of the 25 largest cities surpassed that number. Cities averaged a growth rate of 43 percent; Memphis topped the list with a 116 percent increase in female-owned firms.

Center for an Urban Future

This is indisputably positive, says Jonathan Bowles, the executive director of CUF and an author on the report. “The economic landscape is shifting,” he tells CityLab. “At a time when large companies are decentralizing their operations or moving overseas or going to cheaper locales, what’s driving the growth in cities? Small-business entrepreneurs. And many of them are women.”

By the sheer numbers, men are still founding more companies, but the rate at which women are doing so is pulling the statistic ever more equal.

What remains decidedly unequal, however, are two things: funding and size. Though the businesses surveyed in the report range from successful startups like One Kings Lane in San Francisco to Etsy shops, on the whole, women tend to start smaller businesses, Bowles says. As such, they often aren’t eligible for larger loans from banks. Because of what Bowles describes as this “funding gap,” women-owned businesses struggle with expansion; 90 percent of all companies started by women have no paid employees.

But the report concludes that if each one of those businesses added a single employee in the next three years, they would add over 2.2 million jobs to the economy.

Center for an Urban Future

For urban areas, this is huge. “Mayors and cities across the country don’t really know where the next wave of jobs will come from,” Bowles says. The data in the report suggest that women-owned businesses could be a major source—if cities step up to support them. How, exactly, that will happen is still a work in progress.

In March of 2015, Women Entrepreneurs New York City (WE NYC) launched to “address the entrepreneurship gender gap” through a program designed to train and facilitate connections for female business owners, says Alicia Glen, the deputy mayor for housing and economic development. While private nonprofits like the Kauffman Foundation in Kansas City have long supported female business owners, WE NYC is the first city-run program to do so.

Women-owned businesses often struggle to
secure big-bank loans and venture capital dollars.
(Center for an Urban Future)

The initiative, says the Department of Small Business Services assistant commissioner Rachel Van Tosh, sets up the city government as a “convener of public groups and private entities,” whose goal is to provide female business owners with the tools necessary to grow their operations. Through WE NYC, the City of New York plans to serve more than 5,000 women from underserved communities, working with partners like Citi Community Development, Babson College, and Grameen America, a women’s microfinance organization, to run free classes on capital access and securing microloans—an alternative to the big-bank loans women often struggle to obtain.

WE NYC is not, says Van Tosh, a program conceived by government officials sitting in an office, creating something that doesn’t really address the needs of the intended community. It developed out of on-the-ground research; planners went out into the community and conducted interviews with 1,500 local female business owners, whose feedback and challenges shaped the resulting program.

There is a clear economic benefit for cities to invest in women entrepreneurs, Van Tosh adds. Especially in the years during and following the recession, many women established their own businesses—often in healthcare, food services, beauty, and retail—to ensure their own financial security and to meet community needs. These ventures could take the form of a day care center run out of one’s living room, or an independent financial consulting service.

Perhaps more intangible are the benefits of having a strong group of female business owners at the center of a city’s financial landscape. “They have a very strong and vibrant community, and they want to help each other,” Van Tosh says. The WE NYC Facebook group numbers nearly 2,500 users, who use the platform to share resources and tips. Facilitating mentors for budding entrepreneurs, Bowles adds, is another area in which cities can step in to assist; once that groundwork is laid, the community will grow around it.

Good Saturday! Networking and meeting awesome #smallbizowners #entrepreneurswag never stops. #Brandyou #powerup #WEnyc

A photo posted by Karen Taylor Bass (@thebrandnewmommy) on

There is a tendency to think of entrepreneurship as centered mainly the major metropolises—New York City, San Francisco. But the WE NYC model, Van Tosh says, has the potential to foster business growth in cities across the country. Boston has already followed suit; Women Entrepreneurs Boston launched in September of 2015 as a similar platform for networking, education, and technical assistance; the Women’s Entrepreneurship Initiative for the City of Atlanta is working toward the same end.

What WE NYC and the CUF report drive home is that with the support of cities, these small businesses, often begun out of necessity, can become driving forces in economies nationwide.

Correction: This post has been updated to reflect the involvement of Citi Community Development and Babson College in WE NYC.

About the Author

Most Popular

  1. A self-driving Volvo SUV in Scottsdale, Arizona. The company has halted testing of its autonomous vehicle program in the wake of a fatal crash on Sunday.

    How the Self-Driving Dream Might Become a Nightmare

    What will happen if we just accept that a certain number of pedestrian deaths are an inevitable part of adopting autonomous vehicles?

  2. A woman at a homeless encampment in Anaheim, California

    The Unhappy States of America

    Even with the economy humming, Americans are feeling more anxious, depressed, and dissatisfied with their lives than they did in 2009.

  3. Equity

    The Austin Bombings Were Terrifying. But Were They 'Terrorism'?

    Absent a motive, the serial bombing attacks in Texas hadn’t been labeled with the term. Now, police say the suspect has been killed.

  4. A young refugee from Kosovo stands in front of a map of Hungary with her teacher.

    Who Maps the World?

    Too often, men. And money. But a team of OpenStreetMap users is working to draw new cartographic lines, making maps that more accurately—and equitably—reflect our space.

  5. Life

    Amazon Go Might Kill More Than Just Supermarkets

    Supermarkets are community anchors. Amazon’s “just walk out” version embodies a disconcerting social transformation.