There are 13 million women-owned businesses in the U.S., representing 42% of all businesses, yet there is still a significant disparity in revenue and capital between these businesses and others, according to the Women’s Business Enterprise National Council (WBENC).
And now, a new study finds that while the number of women-owned businesses continues to rise, certain states are more fruitful than others for them.
Clarify Capital conducted a study to determine the best states to be a female business owner, defining “best” as the states that ranked highest after accounting for the following five variables: percentage of female-owned small businesses, women-to-men pay ratios, female unemployment rates, women-owned businesses with $1 million or more in annual revenue and female-owned companies per 10,000 residents in each state.
According to the study, California, Colorado, New York, Florida and Vermont are the best states for women-owned businesses.
In addition, Nevada has seen the largest increase, with 83%, in women-owned businesses in the past 20 years, while the largest decrease, -16%, was in West Virginia.
In terms of the most lucrative deals for female-founded startups, they are in Massachusetts, California and New Mexico.
As for the women-to-men pay ratio category, Vermont was number one, followed by New York and Nevada, the study noted. On the other hand, Wyoming, Utah and Louisiana ranked the worst for that metric.
Jeanniey Walden, Chief Innovation and Marketing Officer, DailyPay, told GOBankingRates that “it’s no coincidence that the states which proactively push to close the gender pay gap are more favorable toward women-owned businesses. Even so, there is still so much to be done when it comes to gender pay equity – especially now.”
Walden said that according to SHRM, gender pay gap improvement slowed during the pandemic.
“While nationwide gender pay equity laws don’t exist yet, employers have a responsibility to tackle pay inequality from within. There are a few things employers can do to improve pay equity,” she added. They include making sure the company is up to date with various state laws addressing pay equity, and that the company conducts periodic annual or bi-annual pay equity audits; assess and ensure hiring and promotion practices within your company are fair and don’t systematically favor men over women; and train people managers, hiring managers, and leadership to understand the existence and impact of gender bias.
The most female-owned businesses per 10,000 residents are in Colorado and women now make up nearly a quarter of all Colorado company boards, up 7% from a decade ago. Meanwhile, West Virginia, Tennessee and Alabama have the least.
Another key finding of the study is that there are 114% more female entrepreneurs than there were 20 years ago, with Nevada at the top of the list, with a whopping 83% increase in women-owned businesses since 2002.
Utah, ranked second at 77%, followed by Florida, with 55%, and Colorado, with 52%.
Finally, in terms of the most capital raised, according to the most recent data from Pitchbook, Massachusetts ranked number one for the most lucrative deals, with an average of $13 million per deal, with deals from this region primarily with software and pharmaceutical companies in the Boston area.
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California ranked second, with funding most often going to software companies, the study found.
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