May, 2003
Feature
Inspection News and Views from the American Society of Home Inspectors



Dynamics of Women-Operated Sole Proprietorships, 1990-1998

SMALL BUSINESS ADMINISTRATION

Women are a significant and growing part of the American business community. Recent data on sole proprietorships provide a look at the recent trends in women’s share of this large segment of America’s business sector. Most U.S. firms – 72.6 percent – and an even larger share of those operated by women – 84.8 percent – operate as sole proprietorships. These are the smallest of businesses that file tax returns – the average dollar value of their receipts was $58,000 in 1997; for women, it was $31,000.

The women-operated share is growing. Sole proprietorships operated by women in the United States increased dramatically from 1990 to 1998 in numbers, gross receipts, and net income. The number increased from 5.6 million in 1990 (33.5 percent of the total) to 7.1 million (36.8 percent) eight years later. Women’s sole proprietorship receipts increased over the period from 15.2 percent of the total to 18.0 percent; their net income increased from 16.9 percent to 21.5 percent.

Most of women’s sole proprietorships – 87 percent – are quite small, with receipts less than $50,000. But a significant share – 13 percent – were in the larger-than-$50,000 receipts size that accounted for two-thirds of women-operated sole proprietorships’ receipts and about 55 percent of the net income. The largest women-operated sole proprietorships—the 2.7 percent with gross receipts of at least $200,000—generated one-third of women-operated business receipts, and their number is growing.

About 53 percent of women-operated sole proprietorships were concentrated in 10 major business activities. The top two were sales door-to-door and child day care. Between 1990 and 1998, women sole proprietors earned nearly 70 percent of their total net income in the services industries, 18 percent in finance, insurance and real estate, and a small fraction in other industries.

In a comparison among the 10 most populous states, the number of women-operated sole proprietorships grew most in North Carolina, Florida, and Ohio.

Women-operated sole proprietorships in California earned the most per proprietorship, on average, in net income and gross receipts. In 1998, New York had the highest net income as a percentage of gross receipts.