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Women in Business

New Study Finds Women-Owned Businesses Less Likely to Win U.S. Contracts

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Despite having “come a long way, baby,” it seems that women still have a way to go, at least in the business world. A new study released by the Commerce Department finds that women-owned businesses are 21 percent less likely than other businesses to secure U.S. federal contracts.

What’s upsetting about this data is that five years ago, the Small Business Administration (SBA) set a goal of helping women-owned businesses secure at least 5 percent of government contract work. Those numbers have risen from 4 percent in 2011 to 4.7 percent in 2014, but we’re still not to that objective. And to many, 5 percent of all government contracts is still a paltry figure that shouldn’t be the end goal.

The Details

The Commerce Department’s study looked at data in 304 categories of industries and more than 600,000 companies, of which approximately 20 percent were identified as woman-owned. Analysis showed that the companies that did win federal contracts were more established and larger firms. The fact that most women-owned businesses are smaller and younger may explain the disparity in how few of those contracts were awarded to women-owned businesses, but even discounting the size and age of the businesses, there’s clearly an imbalance.

A woman-owned business is one that is 51 percent or more owned by one or more women. Approximately 30 percent of businesses in America qualify as women-owned, though significantly fewer go through the process of bidding on government contracts.

What Efforts Have Been Made?

In 2014, a law was passed to grant women-owned businesses equal footing with disadvantaged and minority-owned businesses by giving them access to no-bid “sole source” contracts. Previously, the SBA’s socio-economic small business contracting programs had focused on the latter groups, but with the disparity among contracts secured by women-owned businesses, many felt this was a step in the right direction.

The goal of this move was also to help women-owned businesses get their feet in the door to prove their value and increase the odds of being selected for future contracts. Experience is essential for these businesses to secure additional work, and this law set the intent to help them get it.

The Commerce Department’s report does not include data after this law was passed, so it remains to be seen whether it had the intended positive impact or not.

How to Swing the Odds in Our Favor

While the government could do more to award contracts to a greater number of women-owned businesses, we can’t put the onus solely on them. Becoming approved as a government contractor does require a bit of footwork, but the only way to see more women-owned businesses getting contracts is if more actually go through the process.

  • Resources

The SBA has a useful page on how women-run businesses can become government contractors, with details on how to apply and tips for selling to the government. The site also offers self-paced online courses to educate you on topics like how to qualify for the HUBZone Program and how to prepare proposals.

You may have women-centric resources close to home as well. Many business-focused organizations (Kansas’ Department of Commerce is an example) offer women and minority business development centers where you can get certified, obtain free advice and find educational programs to help you.

And the website GovernmentBids.com (subscription-based) provides useful articles on winning bids, as well as access to open bids.

  • Certification

Certifying your business as being woman-owned may also help you with the contracting process. While you may choose to self-certify, you also have the option to work with one of four SBA-approved organizations to get certified as a woman-owned business. These include:

Having the assistance of one of these organizations may make the certification process simpler, and they may be able to advise you on how to position your company for federal contracts.

Keep in mind that federal contracts aren’t your only option. State and even city governments also offer contract opportunities, and you may have less competition than with federal opportunities. It can pay off to spend some energy networking in your area to get to know the key decision makers in your local government.

The Potential of Women-Owned Firms

While women-owned firms added about 274,000 jobs to the US economy since 2007, that’s just a drop in the bucket. These firms employ only 6 percent of the country’s workforce, but the potential for growth is there. It’s opportunities like federal contracts that help women-owned businesses thrive, increase employee numbers and contribute more to the nation’s economy. But without more of a push from the decision makers in Washington, we can’t hope that we can break through that miniscule (and not-yet-attained) goal of 5 percent of federal contracts being won by women.

Have you become a woman-owned federal contractor? Do you have tips for others? Share them in the comment section below. If you’re interested in learning more about Kabbage, visit our business loans for women page.