Janet Zahn founded the Camden Music School in Minneapolis seven years ago. Banks weren’t interested in financing her start-up, but she was able to get started thanks to WomenVenture of St. Paul.
Renée Jones Schneider , Star Tribune
Pace for women-owned firms slows
- Article by: STEVE ALEXANDER
- Star Tribune
- March 23, 2012 - 1:07 PM
A new study suggests that it's tougher for a woman to start a Twin Cities company than it was five years ago.
The study, sponsored by American Express, says that while the number of women-owned businesses continues to grow nationwide, the rate of growth has slowed. To make matters worse, the study ranks Minnesota near the bottom of the nation in increasing the number of women-owned companies over the last 15 years.
There is some local evidence that times have changed for women entrepreneurs.
When Janet Zahn founded the Camden Music School in Minneapolis seven years ago, it was the start of a second career. While not easy, her pathway to business ownership wasn't overwhelmingly difficult. Banks weren't interested in her idea, but small-business lender WomenVenture of St. Paul was.
"It took a good year to become self-sustaining," said Zahn, 56, whose school now has 16 part-time instructors and 224 students. "But nothing stopped me."
But that's not how it is now for Charlotte Matis, 29, who plans to open her Minneapolis music and instrument repair store, Blackbird Music, in May.
"When I started four years ago, no one wanted to trust that I had what it took to get a store open until I had the business plan done and the financing secured," Matis said.
In addition, she knows women who'd like to start a business, "but they don't feel comfortable leaving their day jobs right now" because of the poor economy.
Even though there has been a slowdown in the rate at which women-owned firms are created, the American Express study says there are quite a few of them: about 142,000 in Minnesota, including nearly 96,000 in the Twin Cities, that employ about 146,000 people. Most have only a few employees.
The concern is that the bulk of the Twin Cities women-owned companies were created between 1997 and 2007, while only about 5,000 were created from 2007 to 2012, the study said.
Although no one knows for sure, the reason may be demographics. Alice Bredin, a small-business adviser at American Express Open, the firm's small-business arm in Cambridge, Mass., said the key motivators for women to start their own companies are a need to make money and a desire to do something different.
If women in the Twin Cities are motivated by economic need, but have other job options, they may elect to keep their current jobs rather than take a chance on starting a new firm in a rough-and-tumble economy, Bredin said.
By contrast, the study found, many states where the economic need may be greater have led in the creation of women-owned businesses over the last 15 years: Georgia, Nevada, North Carolina, Mississippi and Texas.
Zahn's decision to start a company represents the other motivation: a desire for something different.
"I didn't start a company because of economic need," Zahn said. "I had a dream of starting a music school while still working in the corporate world [in video production]. I could have gotten another job."
American Express concedes that its statistics on women-owned businesses may not be precise, because they are based on 2007 census data that have been extrapolated out to 2012. If the dynamics of creating women-owned companies have changed since 2007, they won't be reflected in the 2012 estimates the study uses. But American Express argues that the same market forces at work in 2007 are pushing the creation of women-owned businesses today.
"Every day I hear that the money women are earning is more important to family finances," Bredin said. "And there's support in place for women who want to be business owners -- information, access to capital and help in making business connections and getting training."
Steve Alexander 612-673-4553
© 2014 Star Tribune