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Iowa Ranks Last in Women's Firms

Iowa is the worst state in the nation for female-owned businesses, a new study says, and state officials say it will take time before efforts aimed at fixing that show results.

Iowa ranked dead last in a study by American Express that looked at the economic impact of female-owned businesses. Among the reasons: Iowa lacks mentors for women, and entrepreneurs in general, and the state’s largest industries are highly concentrated in male-dominated areas such as finance, manufacturing and farming, experts say.

“The deck is still stacked against women. Businesses are still largely founded and run by men, with a couple of exceptions,” said Tom Swartwood, assistant director of Drake University’s Buchanan Center for Entrepreneurial Leadership.

State officials say they’re concerned about the study results but admit Iowa offers only one program that provides targeted assistance to female business owners. The Targeted Small Business program, which also reaches out to minority-owned businesses, received no new funding this fiscal year but has about $180,000 available from previous years.

The state, however, is pushing a broad slate of initiatives to help all entrepreneurs that officials believe will help women. For example, the state has a new loan program for small businesses and chose an agency with a good track record of helping women to administer it. Officials also say they regularly promote entrepreneurial programs to women, and some women have started to reach out and help mentor others interested in owning businesses.

“It’s concerning and it’s unacceptable. We have to do better,” said Debi Durham, who leads the state’s economic development efforts. “The problem is that it’s a big issue and it’s not something we can solve in the short term. It’s not just giving lip service. What we are doing, it will make a difference.”

The study commissioned by American Express’ small-business arm ranked Iowa last in an index that measured the growth of women’s firms. Researchers studied a decade of U.S. Census data, looking at the growth of female-owned firms, revenue generated and workers employed. The group also factored in the state’s gross domestic product to come up with 2012 state estimates.

Iowa ranked at the bottom or near it in all categories. The state beat only Alaska in growth in the number of firms. Only Rhode Island fared worse than Iowa in employment growth, and Iowa was the only state in the country that saw a decrease in overall revenue from female-owned businesses.

After a weak showing in the inaugural American Express study last year, Durham said state officials invited female entrepreneurs from across the state to a summit to discuss the challenges they face.

“We have to strengthen that network and give women the confidence that you can be successful,” Durham said. “We have to have women of leadership who have walked the walk” be more visible.

In May, the state launched Central Iowa SourceLink, a resource database aimed at business owners and prospective entrepreneurs. Also, the state contracted with the Iowa Foundation for Microenterprise and Community Vitality to distribute a portion of $13.2 million available in federal financing for small businesses development. The Boone nonprofit has given 56 percent of its small business loans to women.

Business owner Anna Woodcock said being a woman might have helped her when she started Brown Dog Bakery in Ankeny seven years ago.

It was a time “when (lenders) were looking to loan more to women. But that was 2005, before the loaning of money went (downhill),” she said. “Things are different now. Lending is so much tighter.”

Amelia Lobo, director of the Women’s Business Center at Iowans for Social and Economic Development, said tightened lending affects all entrepreneurs. However, she said, many women tend to begin businesses that are slow to grow and do not attract partners or lenders.

That’s why microloan programs, which usually lend up to $50,000 to businesses with less than $1 million in revenue and fewer than five or 10 employees, are so important, she said.

“I don’t think banks are discriminating against women in terms of capital,” said Lobo, whose center provides classes and one-on-one counseling for prospective business owners. “But it’s possible women are congregating in industries that are lower growth. That may make it more difficult for women to access venture capital.”

A concentration of female-owned businesses in “small, lifestyle shops” creates issues nationally as well. Many of those businesses tend not to scale well, said Julie Weeks, lead researcher at Womenable, the Michigan-based group that conducted the study.

The study estimates about 8.3 million women own businesses nationally this year and generate around $1.3 trillion in revenue and employ about 7.7 million people. The number of firms is up 54 percent, while employment rose 9 percent and revenues increased by roughly 58 percent nationwide.

Finding sustainable and fast-growing businesses is the “next professional frontier for women,” said Weeks, who has studied female entrepreneurship issues for nearly 20 years.

Drake’s Swartwood said that frontier may be tough to crack, especially in Iowa. “It’s very hard for women to catch up and break through,” he said. “Women still start at least one or two steps behind” because of the nature of Iowa’s industries.

But a long-term fix could come through early education. The University of Iowa’s John Pappajohn Entrepreneurial Center conducts summer camps every year that target students from fourth grade on. While the camps are not targeted toward girls, they do expose children to entrepreneurship at a younger age.

Lynn Allendorf, the director of the center’s Bedell Entrepreneurship Learning Laboratory, questions the study because it did not include factors such as population growth, a metric in which Iowa generally shows poorly. She said the numbers can still be useful in that they “raise a red flag” for state agencies and female entrepreneurs.

She also said the numbers reflect a trend that sees more entrepreneurial role models in New York and Silicon Valley than in the Midwest.

“Even male entrepreneurs have fewer role models to look at here because, more than likely, their parents worked for a large company rather than started their own,” she said.

The U of I center regularly invites female executives like Genova Technologies CEO Dawn Ainger to talk with college entrepreneurship classes. Ainger is a member of the Iowa Economic Development Authority board.

Last year, she was on the panel of female entrepreneurs at a summit to address Iowa’s poor showing in the American Express study. She said events like those help introduce successful women to those just starting out, offering them someone to talk to about situations that may arise.

“Just being able to network and help people not make the mistakes I made” is valuable, she said. “Who you know (in business) is incredibly important, especially if those people are willing to talk and help when you need it.”

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