Austin Ranked 2nd Best In Nation For Women Entrepreneurs

AUSTIN, TX — Austin is the second-best city in the nation for women entrepreneurs, according to a new study.

While assembling the list of places where women entrepreneurs thrive, the MagnifyMoney report also bears sobering data: While women have steadily made strides in the landscape of business leadership in the past decade, only 30 percent of incorporated businesses in the top 50 metropolitan areas are led by women.

Researchers at MagnifyMoney took the disappointing datum to explore where women entrepreneurs — those wanting to be their own boss, launch a business or both — are most represented. The list reflects cities already conducive to helping women achieve their entrepreneurial dreams.

To achieve the rankings, MagnifyMoney examined data related to women entrepreneurs across four different categories — the first two related to raw income double weighted in the analysis and the last two tied to the number of women entrepreneurs and business owners in the metro area examined.

Given that reckoning, Austin scored highly in the second position among the 50 cities assessed. Women's business earning in Austin were on the higher end in terms of dollars, with the median at $8,262 and the average at $25,345.

At first blush, that may not seem like a lot. But they’re among the highest when comparing women’s business income with the women’s earnings through wages, researchers noted. The average self-employed woman or business owner in Austin, for instance, makes nearly half (48.1%) what the average income for women in the city.

The figures speak to the struggles faced by women entrepreneurs. Most self-employed women are not getting by on their business income, researchers conceded. The highest median income uncovered for women-led businesses in San Francisco is just over $10,000 and the lowest is zero. And across the 50 metros reviewed, median business incomes amount to just 10% of the local median wages for women, according to the report.

“This is not surprising as self-employment could mean anything from having an Etsy store or offering a few hours of labor on TaskRabbit, to owning a bed-and-breakfast or gas station, to being a high-dollar commercial realtor or blockbuster novelist,” Kali McFadden, senior research analyst at MagnifyMoney, said.

In their report, MagnifyMoney not only list the top 10 places for women entrepreneurs, but the ten worst as well. Additionally, a section is devoted on how women business owners can beat the odds.

Cities were ranked on both median and mean business income of self-employed women. By including both metrics, the rankings “...capture both the more common experience of self-employed women as well as monetary success overall,” McFadden said.

Ideally, McFadden observed, both numbers would be in the higher end. A wide range between the two, however, could indicate a broader range of potential earnings for self-employed women in that area.

Researchers also ranked metro areas on the difference in earnings between self-employed women and those working for wages (both median and mean). In general, self-employed women do earn less median and average incomes than people with earned income. “But a smaller gap between each group’s income implies better a potential upside for those going into business for themselves,” McFadden said.

The parity (or, more appropriately, disparity) of business ownership between men and woman was studied. Researchers looked at the percentage of total self-employed workers and incorporated business owners who are women. Cities with higher percentages of self-employed women and women business owners could indicate a more even playing field, one “...where women are seeing the opportunities and conditions to break out on their own,” McFadden said.

Some key findings:

• San Francisco is the best metro for women entrepreneurs by a wide margin. After Austin, San Jose, Calif. (Silicon Valley) was third. Cleveland, Pittsburgh, and Philadelphia came in last for women entrepreneurs.

• Women entrepreneurs are set up for success on the West Coast. Five out of the top 10 metros are in California, with another in Washington. Tennessee is also hospitable to women entrepreneurs, with two metros in the Volunteer State landing on our list at the 4th and 5th spots.
• There is a long way to go before we reach entrepreneurial parity — meaning an equal number of women and men starting and heading up young businesses. The average percentage of self-employed people on our list of metros who are women is a scant 37 percent, and the number is even lower among people with incorporated businesses: 30 percent.

TOP PLACES FOR WOMEN ENTREPRENEURS

In the best cities for women entrepreneurs, women who work for themselves are more likely to earn a decent living by doing so, researchers concluded. These cities also tend to have higher rates of women who are self-employed, analysts said, a sign that the conditions could be favorable to workers ready to go at it alone.

Here’s a deeper look at the other best U.S. cities for women entrepreneurs.

1. San Francisco

At No.1, San Francisco ranked at the top largely due to having the highest business incomes earned by women working there. The median business income is $10,378 among women in this city, and women’s average business income is $31,880.

3. San Jose, Calif.

A neighbor to San Francisco, San Jose is a similarly ideal place for women entrepreneurs. The city has one of the highest average business incomes for women, at $30,344 per year.

San Jose also has higher rates of women who are self-employed (41.1%) as well as incorporated businesses owned by women (32.2%).

4. Memphis, Tenn.

Memphis stands out for the higher median business incomes; most women entrepreneurs make around $9,068 in business income, second only to San Francisco. Plus, Memphis women have the highest business incomes when compared with local women’s earned income, earning about 25% of a typical woman’s wage in this city. However, the average business income for women in Memphis is just twice as high as the median, “suggesting that the range of income isn’t that great,” McFadden said.

5. Nashville, Tenn.

Next is another Tennessee metro, Nashville, which is a standout when it comes to average business incomes for women. At $23,373, self-employed women in this city make just under half a typical women worker’s earned income. This is a sign that striking out on their own is a viable way for women to earn a decent living in Nashville. That’s great news, given that Nashville has fewer women working for themselves and incorporating. Seven percent of women workers are self-employed, but just one in five of self-employed women have an incorporated business.

6. Los Angeles

Then there’s Los Angeles, which has the highest portion of self-employed women workers of any city on this list — 10.9%. Women entrepreneurs in LA can also expect a business income on the higher end, with the median at $7,758 and an average of $20,945.

7. San Diego

The next major California city to make the list is San Diego, which offers women a similarly attractive business landscape. Among women earning a business income in San Diego, the median is $8,060 and the average is $20,949 (both slightly higher than what LA’s women entrepreneurs bring in). San Diego also has high rates of self-employment among women. One in 10 women workers in the city is self-employed, and 39.3% of self-employed workers are women.

8. Sacramento, Calif.

Sacramento lands at No. 8 by faring above average in most ranking factors, showing it’s a solid place for women entrepreneurs to take the leap into starting a business. Take women’s business incomes as proof; the median at $7,053 and the average at $23,596 show Sacramento’s women entrepreneurs are able to outearn similar cohorts in other major U.S. cities.

9. Seattle

In Seattle, the average income for self-employed women is five times higher than the median — $22,713 to $4,534, respectively. “[This] suggests that while most self-employed women aren’t making much money, those who are are doing well are doing very well,” McFadden said.

Another factor backs up this insight: Among the top 10, Seattle has the highest rate (30.6%) of self-employed women who are incorporated. Plus, the city has high rates of parity in women business ownership: 42.1% of self-employed workers are women, as are nearly one-third of incorporated businesses owners.

10. Cincinnati

Rounding out the list of the best cities for women entrepreneurs is Cincinnati. Self-employed women earn decent business incomes in this Ohio city, with the median at $7,556 and an average of $21,432.

These earnings are high enough to compensate for lackluster rates of women working for themselves. Just 5.4% of Cincinnati’s women workers are self-employed, and these women account for 35.4% of all self-employed workers in the city.

BOTTOM TEN PLACES FOR WOMEN ENTREPRENEURS

In the 10 cities that ranked last on our list, self-employed women are earning far less than their counterparts in other cities. Just take a look at the worst city, Cleveland, where women’s median business income is $0 — meaning at least half of self-employed women there don’t make anything at all, researchers said.

The worst cities also have fewer women who have incorporated a business or taken the plunge into self-employment, according to the report. This might make it harder for entrepreneurial women in these metro areas to find women mentors and women-centered entrepreneurial networks that can provide support vital to a new and developing business, researchers said.

"Placement at the bottom of this list could also signal that these cities are inhospitable to self-employed workers or new business owners in general — for both men and women alike," the report reads. "That’s not to say it’s impossible for women entrepreneurs to start and build successful businesses in these cities.

"Women living in these worst cities shouldn’t assume that their business endeavor will be doomed before it even begins. But they would be wise to practice extra caution in their plans to transition to self-employment or business ownership."

HOW WOMEN BUSINESS OWNERS CAN BEAT THE ODDS

Living in one of the best cities won’t guarantee automatic success any more than a woman starting a business in one of the worst cities will fail, researchers cautioned. Wherever they live, women entrepreneurs must overcome obstacles and chart their own path to self-employment, officials added.

For women ready to take their first steps toward entrepreneurship, these steps can help them get further faster.

• Start small but dream big. Even if you’re not ready to quit your job and hustle full time, don’t put your entrepreneurial goals on the back burner. Build out a timeline to get you closer to self-employment or starting a business, filled with small and actionable steps you can start taking now. A side hustle can be the perfect way to get a feel for being your own boss without giving up your main source of income.
• Explore the business landscape of your specific city. Research local regulations and bylaws that could be pertinent to your business idea. For example, you can start checking out everything from business licensing laws to local small business tax breaks to help build out your business plan. You can also research local small businesses to see which are doing well and why, to get insights into how to set your own venture up for success.
• Seek out local resources for women entrepreneurs. Many cities recognize the important role small businesses, startups and self-employed workers play in fueling local economies. And some have responded with support systems designed to foster growing businesses — and women entrepreneurs who lead them. One example is San Francisco-based Girls in Tech, a nonprofit founded by Adriana Gascoigne,which seeks to empower and educate women (including entrepreneurs) in the tech industry. Even the bottom-ranked city, Cleveland, has local organizations focused on supporting women entrepreneurs, such as women -focused business development courses from Aviatra Accelerators and an annual Female Entrepreneur Summit.
• Network with other self-employed women. Don’t underestimate the power of meeting, working with and learning from like-minded, entrepreneurial women. The local organizations mentioned above can be the perfect way to connect with other women entrepreneurs in your area and find a new friend, mentor or even a future business partner. You can also look for co-working spaces, entrepreneurship-centered meetups or social events for local businesswomen to grow your network.

To read the full report, click here.

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