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Only 2% of Women-Owned Businesses Break US$1M in Revenue

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Only 2% of Women-Owned Businesses Break US$1M in Revenue

But professional services firm EY thinks that potential abounds.

According to a new study by professional services firm EY, female entrepreneurs can take three steps to significantly accelerate their companies' growth:  define a purpose, build a community and adapt their leadership style.

Although recent data shows that women start businesses at twice the rate of men, only two percent of female-owned businesses break US$1 million in revenue.  Conversely, businesses owned by men are 3.5 times more likely to break US$1 million. 

"Women-led businesses are key economic drivers."

EY has identified three advantages that contribute significantly to the accelerated growth of women-owned companies: an authentic purpose, a strong community and a flexible, adaptive leadership style.

"Women-led businesses are key economic drivers. They employ 18 million people and generate US$2 to US$3 trillion in the US economy alone. Yet their companies rarely scale as large as they could. We believe, however, that is possible to shift this pattern," said Kerrie McPherson, Principal and North American Entrepreneurial Winning Women Executive Sponsor, Ernst & Young LLP. "In the program's seven years, we've helped nearly 60 participants grow their companies — these women average approximately 20% revenue growth annually in the first year with the program, and as high as 50% in the second."

Authentic Purpose

Defining a business's purpose - why do you do what you do – is key to long-term success.  It serves as the guiding principle for a company, ensuring that a business can continue to expand while keeping the core values and culture that made it successful. Having an authentic purpose helps build trust and strong relationships between brands and their customers, employees, and shareholders.

In addition, studies show that a strong purpose drives growth and profitability.  To illustrate this point: an investment in the Stengel 50 (the world's 50 highest-performing companies that have a strong purpose) over the past 10 years would have been 400% more profitable than an investment in the S&P 500.

Strong Community of Peers

The women studied by EY say that being part of a community of like-minded peers inspires confidence (86% report very high or high confidence), which leads them to think bigger and bolder. In fact, 92% of participants report an increase in their desire to scale their companies, while 40% are actively seeking outside funding to grow.

Enlightened Leadership Style

Most successful entrepreneurs share similar characteristics: grit, perseverance and curiosity. But how leaders express these qualities evolves as a company grows, and successful leaders must learn to work on the business, not in the business.  Becoming more removed from day-to-day operations and sharing responsibilities allows entrepreneurs to become the leader their business needs as it scales, while also encouraging growth, innovation, and job creation. More than 80% of the women studied said they take a collaborative approach to strategic decision-making, enabling the teams they hire to help them operate their companies while they focus on what's next.

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