starting a women-owned business

DISCLAIMER: This article was written in 2020 and has not been updated. For more up to date information about small business funding products and options, please browse our recent articles.

Starting a Woman-Owned Business? Follow These Rules

Are you a woman with plans to begin an entrepreneurial journey? Then there are certain important 2022 rules for starting a women-owned business you need to know. Women in the business domain have certainly made strides and also have been successful in bridging the gap between them and their male counterparts to a certain extent. However, the women-owned businesses are still lagging behind the male entrepreneurs in terms of the total number of firms that they head, their annual revenues and also in terms of other important metrics that would be discussed in the below write-up.

Women entrepreneurs across the globe have made huge success over the past few decades. It is heartwarming to see women workforce, which was once considered to be below par the male entrepreneurs, breaking the glass ceiling. The gender stereotypes that once plagued the society are now being shattered. Today, gender dynamics are rapidly changing and we not only find women taking top positions in global business enterprises, but also women generating employment opportunities by donning the entrepreneurial hats. Women come better armed with much better life expectancy rates and also high literacy rates than what they enjoyed half-a-century back. Be it sports, politics or business- we find a greater representation of females in all domains. Though there is no denying the fact that women have been empowered enough to grab exciting business opportunities, a lot is left to be desired when it comes to women entrepreneurship.

Research findings indicating women-led businesses trailing behind

A recently conducted annual study of women-owned companies by Biz2Credit revealed that the average annual revenues of women-owned businesses have increased by 68% in 2019 as compared to the revenue figures of 2018. Although this jump of revenues from women-led companies certainly makes for an impressive story, it is way below the mark of average revenues as generated by male-owned businesses. The research surveyed 30,000 firms in the US, serving in more than 20 industries, including healthcare, hospitality, construction, retail and professional services and so on.

Another important finding thrown up by the research was the increase in the number of women-owned businesses that sought funding in 2019. Though more and more women entrepreneurs are approaching financiers for seeking working capital, the average loan amounts have shown a decline in 2019. As per the research figures, a slight increase has been witnessed in the average credit scores of women-owned businesses to 590 in 2019 from 588 in 2018. However, they still lag behind their male counterparts.

Major reasons for women-led companies lagging behind

Although there is no better time than now for women entrepreneurs in US history to embark on an entrepreneurial journey, still many women find it challenging to do so. Below we explore the factors that cause hurdles in realizing their dream. We also interviewed some successful small business women owners to get their thoughts on how they overcame them.

  • Disparity in lending to male and female entrepreneurs – There seems to be a significant funding gap between male and female entrepreneurs. Companies backed by women applying for business loans are given approvals at much lower rates. The loan amounts also tend to be lower when credit is granted. Unfair disparity faced by female owners in getting loan amounts approved is a major problem for the growth of women-owned businesses. Although there has been a surge in women’s ownership, men are more likely to get funding than their female counterparts for fueling their business. In our interview with Adrienne Garland, co-founder of She Leads Media, a company to support women entrepreneurs, says, “Lack of funding support is one of the topmost hurdles for women-backed companies. Even though more and more women are approaching financing companies and banks for loans, they are failing to get desired loan amounts in comparison to male counterparts.” However, she also notes that lower credit scores of females are the major deficiency for which female funding applicants are more rejected than their male counterparts.
  • Psychological barriers and bias against women – Female entrepreneurs also experience sexism that often challenges their growth. Many women still struggle to get recognition for their leadership qualities. Most female founders agree that they are often not taken seriously by their investors or clients. Even though there is enough evidence to prove that females put as much effort to make their business successful as men do or sometimes even more, a lot of people are less likely to put women on the top of the management ladder. There is a misconceived notion that females are less dedicated and more sentimental and emotional when making important business decisions. Hence, this poses challenges for the growth of female business success.
  • Fear of failure – Women small business owners find it more difficult than their male counterparts to accept failure. This often holds them back to launch their small businesses. The backing of experienced people, big corporate funds and good marketing budgets often seems to make women business owners apprehensive about their business plans. Garland notes that women still lack a collective “voice” in addressing their fears and problems. She says in her interview, “Women need to know how to leverage the power of the media and use it for her business promotion and success as a top priority. Women don’t promote themselves as they should be doing”. Women lack confidence in many areas and she is also doing her best to help women founders in the areas of finance and technology. The fear of failure can be aggravated due to fewer female founders working in male-dominated industries for which they often feel excluded or patronized.
  • Lack of Proper Training & Skill Upgrading Programs For Women – A research study has shown that the majority of female entrepreneurs consider the lack of proper training as the major constraint in achieving desired business success. Many business women enlist access to proper skill up-gradation programs and business management training as their topmost priority to compete in the male-dominated industries. However, some female entrepreneurs feel that besides pursuing skill upgrading programs and essential management training, women need to rely on their existing skills to compete with their male counterparts. In this regard, Sarita Ekya, Owner of S’MAC Restaurant in New York City, says, “My training and education as an engineer came in handy when I was designing an oven for Mac and cheese and creating the operational plans for S’MAC. I just fell back on my training, educational experience and applied it to the task at hand to get success in my business” Hence, like Sarita, there is a need for other female entrepreneurs to adapt to new business challenges and take on risks head on with new skills and technical capabilities they have acquired through learning programs.
  • Lack of networks and mentors – With fewer women taking ownership, the pool of mentors and women’s advisors from whom female founders can take guidance is also smaller. Hence, it is difficult for women to learn from their peers and tap valuable information from industry insiders. Moreover, women are often reluctant to seek expert advice and this can have a damaging effect on their business success.
  • Juggling Between Family Life and Professional responsibilities – Most women owners complain that striking the right balance between personal and professional life is challenging. Although there is no evidence to suggest that marriage or motherhood bars a woman from showing complete dedication, most investors and clients find it risky to put their finances in a company headed by women of child-bearing age or those who have newly become mothers.

Things that Women entrepreneurs Need to Know

Although there are factors that pose serious challenges to the growth of women-backed companies, there are also ways in which female entrepreneurs can boost their growth. Taking the right steps and having knowledge of the right programs designed for them by various councils and resources backing women ownership can help stimulate their growth. Below are the certifications that women entrepreneurs need to obtain to access adequate funding help and also to receive adequate support – be it training help, promotional and marketing support or other business operational aid.

WOSB & EDWOSB certification – Women entrepreneurs have two options to qualify as a women-owned small business (WOSB) or economically-disadvantaged women-owned small business (EDWOSB). The Small Business Administration (SBA) conducts the WOSB certification program. It is designed to help women-owned businesses secure easier access to the resources needed to grow and flourish. Securing the Certification gives women owners a fair chance to compete with their male counterparts for the federal or other government contracts and get adequate support to promote their business.

Women business owners could also apply for the Economically Disadvantaged Woman-Owned Small Business (EDWOSB) certification, which is a subset of the WOSB program. Female business owners can either choose to self-certify or can apply for a certification process and secure it from one of the four approved third party certifiers as designated by the SBA. Though there are no charges for self-certification obtaining certification through a third-party certification may cause businesses to bear a certain amount of fee.

Advantages of Certification

Although for 20 years there has been a federal government proposed scheme for awarding 5% of government contracts to women-led small businesses, much of that goal was never achieved. However, this goal was finally met in 2015 when 5% of all federal contracting dollars that met the eligibility requirement for small businesses were awarded to WOSBs.

Besides achieving the contracting goal to WOSBs, federal contracts could also be “set aside” in domains where WOSBs do not have greater representation to provide them with fair opportunities and a level playing field with their male counterparts.

Businesses are classified in different sets by the federal government using the North American Industry Classification System (NAICS). Several new NAICS groups for WOSB and EDWOSB are also authorized by the SBA.

Eligibility Requirements for Certification

It is important to review the eligibility requirements for being categorized as a WOSB or EDWOSB before applying for these certification programs. Here is a checklist of all the requirements that a women entrepreneur needs to meet to qualify as a WOSB.

  • Review the size of your company to make sure that it meets the already defined SBA standards that are used to categorize any firm in the small business category. The standards for being called a small business are usually measured in terms of the annual revenues and the employee size. Small business size standards also vary as per the industry code.
  • Companies applying to get a WOSB certification program must ensure that they have 51% ownership by women who are U.S. citizens.
  • Companies with women managing the day-to-day operations and heading substantial departments are most eligible to get WOSB certification
  • To meet WOSB eligibility requirements, firms must ensure that women are in top spots to make long-term decisions for its development
  • To get the WOSB certification a company must have a woman holding the highest officer position in the company and she should work almost full-time for the company’s growth
  • However, there are no defined rules of how long the business has to be operating in the business to be considered fit for WOSB certification.

To be considered as an economically disadvantaged women-owned small business (EDWOSB), businesses are required to meet the minimum WOSB eligibility requirements, and also the owner of the business enterprise needs to prove its economic disadvantage. This can be done in the following ways:

  • Companies with women owners having personal net worth below the required mark of $750,000 with some exclusions
  • The economic disadvantage could also be demonstrated by showing an average adjusted gross income of $350,000 or less over three years with some exclusions
  • Applying for the EDWOSB certification also requires companies to show proof of the fair market value of all assets to be around $6 million or even less with no exclusions

Knowing the right ways to get Certified

Once you have decided on the kind of small business certification program you wish to apply for and have checked the eligibility requirements for them, find ways to get a certification. One can become certified in two ways –either through self-certification or through one of the organizations approved by the SBA.


Enterprises with plans to get WOSB or EDWOSB certification can register at After waiting for 24 hours of registering with, they can also register at to complete a self-certification process. Registration through these websites requires applicants to have a DUNS number, an EIN, and MPIN. An online application can provide one with an EIN but registration for free DUNS number might take up to a month.

Third-Party Certification

To be qualified as a WOSB or an EDWOSB, the U.S. SBA has currently approved four organizations as “TPCs,” or third-party certifiers:

  • El Paso Hispanic Chamber of Commerce
  • National Women Business Owners Corporation
  • U.S. Women’s Chamber of Commerce
  • Women’s Business Enterprise National Council (WBENC)

The third-party certifiers levy a certain charge to provide certification and annual recertification. It can currently range from approximately $200 to $400.

After getting certified as a WOSB, businesses can look out for federal contracting set-asides on Moreover, women-owned enterprises with the certification of WOSB would get the opportunity to qualify for grants as specified exclusively for the welfare of their businesses.

Getting a WOSB certification can certainly prove to be advantageous for businesses to help them grow in their domain. Small women-owned businesses certainly should consider getting a certification as a significant part of their business plan to achieve their business goals rapidly.

Resources on women-owned businesses

  • Association for Enterprise Opportunity (AEO)
  • Association of Women’s Business Centers (AWBC)
  • National Association of Women in Construction
  • National Association of Women’s Business Owners (NAWBO)
  • National Women’s Business Council (NWBC)
  • U.S. Women’s Chamber of Commerce (USWCC)
  • Women’s Business Enterprise National Council (WBENC)
  • Women Impacting Public Policy (WIPP)
  • Women’s Presidents’ Organization (WPO)

The above-mentioned councils and organizations are putting in efforts to provide adequate support to women-backed businesses. There is also a need to provide greater small business loans to women entrepreneurs and give them sound financial assistance. Starting a women-led company may seem challenging at the initial phase but being equipped with a good financial plan, strong business operational structure, right training methods, and powerful mentors can certainly make it easier for them to achieve the desired success and catch up with their male counterparts.

Learn about the Biz2Credit financing process

Find more blogs

Apply Online in Minutes

Applying does not impact your personal credit score.