Connecting state and local government leaders
A new report shows which cities have created a culture that encourages women to start their own small businesses.
Small businesses have been called the “engine of cities,” contributing to economic growth, boosting employment opportunities, and sparking innovation. There are 30.2 million small businesses in the U.S., and they employ a whopping 47.5% of the private workforce.
More than 12 million of those companies in the U.S. are owned by women—and that number has risen dramatically in the past decade. But while the number of female entrepreneurs has increased, many cities could be doing more to create a better culture for women in business, according to a new report from Dell Technologies that ranked the cities with the best climate for female entrepreneurship.
Although the report looked at 50 cities globally, six of the top ten were found in the U.S., including San Francisco (#1), New York (#2), Boston (#4), Los Angeles (#5), Washington, D.C. (#6), and Seattle (#7). Fourteen U.S. cities made the list overall.
The cities were ranked on their ability to attract and support “high-potential women entrepreneurs,” defined as those who want to grow and scale their businesses. There were several factors considered, including the operating environment, which factored in things like access to capital and talent, and the enabling environment, which considered whether cities had a culture that celebrates female entrepreneurship.
Cris Turner, the vice president of the Americas Government Affairs Office at Dell, said that rankings have been done for a decade, and were first introduced following the Great Recession, when “women entrepreneurs were establishing businesses at a fast clip, but were struggling to find capital and scale.” Now, cities have made a concerted effort to help those women achieve their business goals, he said.
Turner said that governments can think of themselves in three ways: as a customer of women-owned small businesses, as a policy maker to set rules around their operation and growth, and as a culture creator to build an environment in which they can succeed. It might be easiest for many local governments to begin with their role as a customer.
“If governments want to make it easier for women-owned businesses to work with them, they can start with modernizing the procurement process,” Turner said. “It can take months, if not years, to be able to actually make a sale to the government after you get through all the red tape. Streamlining that can be incredibly helpful to entrepreneurs.”
Focusing on procedures can allow for several other relatively painless changes, such as instituting diversity requirements for vendors, and shortening the typical vendor payment cycle from 90 days to 30 days, which helps small businesses with their cash flow.
If governments want to look outside their internal regulations into the broader community, they have some clear examples to look to. Dayton, Ohio, has hosted meetups for women entrepreneurs in their community, and so has Las Cruces, New Mexico. For cities with fewer resources, this presents a relatively easy first step to take, Turner explained. “It also helps women see people like them who have been able to succeed. It’s not enough to see the celebrity CEO, folks also need to see that person that is a step or two ahead of them in the process, because then goals seem more accessible,” Turner said.
Local governments can also work to change the culture within city hall. The report suggests appointing women to positions of authority in the economics and commerce space. “Promoting women to these positions is important because you can’t be it if you can’t see it,” Turner said. But it’s not just about aesthetics—it’s also about diversity of thought. New York City, for example, was intentional about appointing women to positions that oversaw economic development and small business, because they wanted to make sure that their outreach programming was particularly effective for under-represented entrepreneurs, he said.
But, in the end, these changes may not go far without solving for the most critical element of new business success: access to capital. “This is a tough problem, and probably the hardest to fix,” Turner said. “Access to capital is partly a private sector problem, but government plays a role too.”
That’s where city government’s role as a policy maker comes in. Turner suggested that cities look to build new capital sources for women entrepreneurs, even helping them tap into crowdfunding. (New York took this approach in 2017, promising $1,000 in zero-interest loans for women entrepreneurs who launched crowdfunding campaigns). Cities can also streamline loan and grant programs to make them easier for women to access. “Governments have a whole lot of awesome programs, but let alone being able to access them, a lot of entrepreneurs don’t even know they exist,” Turner said. “Being intentional about promoting them is a low hanging fruit for governments.”
Even though many U.S. cities have improved their access to capital since the last ranking, there are still major steps to be made towards an equitable business environment for women. Many cities still lack paid maternity or paternity policies. Only one city in the U.S., Portland, Oregon, had an average higher than 25% for the representation of women on corporate boards, another indicator of how women have stalled in the workplace.
Out of the 100 possible points that a city could score, San Francisco, which ranked number one, still only scored a 63.7. “That’s evidence that there is still much work to do to level the field for women,” the report notes.
Emma Coleman is the assistant editor for Route Fifty.