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Best states for women-owned small businesses in 2024

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March 29, 2024 12:11 PM
Published 11:41 PM


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Best states for women-owned small businesses in 2024

sunset over seattle, washington with mountains in background

The number of small businesses has been increasing in the United States over the past several years. Last year, the White House announced that more than 10 million small businesses were created in 2021 and 2022. Along with its growth in the total number of businesses, the U.S. is also seeing growth in the number of women-owned businesses in the country.

Overall, the number of women-owned businesses in the U.S. increased 13.6% from 2019 to 2023, making up 39.1% of all of the country’s businesses, according to research from Wells Fargo. In total, women own 13.8 million businesses employing 10 million workers and generating $3.9 trillion in revenue across the U.S. While this growth may be encouraging for women small-business owners, it’s helpful to see in which states it’s more favorable to start and run those small businesses.

Lendio analyzed seven metrics to determine the best states for women small-business owners, including factors such as share of employer businesses (businesses that have employees) owned by women, percentage of female-owned businesses that earn a revenue of $1 million or more, percentage of patents filed by women, and women’s venture capital funding (deal count) per woman-owned businesses. See “methodology” for more information on how these rankings were calculated.

Key findings

  • Washington is the best state for women small-business owners. The percentage of women-owned businesses in Washington outpaces every other state at 42% and has the highest percentage of female-owned businesses that earn a revenue of $1 million or more (34%).
  • Delaware has the highest women’s VC funding deal count rate per women-owned businesses in the country. In Delaware, 6% of women-owned businesses receive VC funding. This is a much higher percentage than the rest of the states, averaging at 1.16% of women-owned businesses receiving VC funding. Many businesses around the United States are incorporated out of Delaware, which is a contributing factor to this high percentage.
  • Top states are mainly concentrated in the West. Delaware and Maryland are the only non-Western states that reached the top 10 states on this list. Top states typically had higher shares of employer businesses owned by women (ex: 39% in Montana and Oregon) and higher percentages of growth of women-owned businesses from 2012 to 2020 (ex: 22% in Utah).


Lendio

Top states

top 10 best states for women small business owners

1. Washington

Washington is a great state for women small-business owners, considering 42% of its small businesses are owned by women. Of those businesses, 34% make a revenue of $1 million or more. Washington’s employment rate among women (59%) is also high compared to other states. Other studies have also consistently ranked Washington as a great state for women’s overall economic and social well-being.

2. Colorado

Colorado scores high for percentage of employer businesses owned by women (36%), employment rate among women (63%), female-owned businesses that earn a revenue of $1 million or more (27%), and percent change of women-owned businesses from 2012 to 2020 (19%). Each of these high scores makes Colorado a well-rounded state for women small-business owners.

3. Delaware

With a high percentage of patents filed by women (13%) and the highest percentage of women’s VC funding per woman-owned businesses (6%), Delaware is a great state for women small- business owners to start and run their businesses.

4. Oregon

Scoring higher than the averages in most of the metrics measured, Oregon is an excellent state for women small-business owners. Some categories it scores exceptionally well in include percentage of employer businesses owned by women (39%), percentage of female-owned businesses that earned a revenue of $1 million or more (29%), and percentage of patents filed by women (15%).

5. California

As a powerhouse in share of employer businesses owned by women (38%), percentage of female-owned businesses that earned a revenue of $1 million or more (32%), and percentage of women’s VC funding per woman-owned businesses (4%), California can be a great state for women small-business owners.

6. Utah

With a high growth in the number of women small-business owners between 2012 and 2020 (22%) and a high employment rate among women (60%), Utah is a great place for women small-business owners to start and run their small businesses.

7. Maryland

With more and more women becoming small-business owners in Maryland (12% increase between 2012 and 2020), the state can be a fantastic option for women looking to start and run their own small businesses. The state also has a high percentage of women filing patents (14%), making it a great place for women inventors.

8. Arizona

Arizona has a high percent increase of women small-business owners between 2012-2020 (17%) and a high percentage of female-owned businesses making a revenue of $1 million or more (30%). These high rankings place Arizona eighth on the list, making it an outstanding state for women small-business owners.

9. Hawaii

Hawaii is an exceptional state for women small-business owners. The Aloha State scores higher than average in share of employer businesses owned by women (38%), percentage change of women-owned businesses between 2012 and 2020 (29%),  and percentage of female-owned businesses that made a revenue of $1 million or more (25%).

10. Wyoming

Much like Hawaii, Wyoming also scores higher than average in share of employer businesses owned by women (38%) and percentage of female-owned businesses that made a revenue of $1 million or more (31%). Landing at tenth place, Wyoming is a great state for women small-business owners.


Lendio

Runners-up

The runner-up best states for women small business owners

The runner-up states tend to more broadly excel in their share of employer businesses owned by women (34% average) and in their employment rates among women (58% average). For example, Montana has a 39% share of employer businesses owned by women, and 61% of its women are employed.

Few other runner-up states scored lower percentages in the categories stated above. However, those states make up for lower-than-average percentages in these categories with higher-than-average percentages in other categories. For example, Vermont ranks at 32% in its share of employer businesses owned by women (lower than the average of 34%), but 13% of its patents are filed by women (11% average), and 2% of its women-owned businesses received VC funding (1.16% average).

5 tips for women to start businesses

Women have valuable experiences and skills they can contribute when building their own businesses. While it can be exciting to run your own business, getting your new gig up and running takes a great deal of effort. These tips will help you get going with your startup:

  1. Develop a robust business plan – Start with a well-researched business idea, focusing on your unique value in the industry or niche that you’ve chosen. Consider finances, marketing tools, and your operations plan.
  2. Research loan and grant opportunities for women – The Small Business Administration offers programs, grants, and loan aid for women small-business owners. One example of aid the SBA provides is through the Office of Women’s Business Ownership, which helps advocate for, educate, and support women small-business owners. Various organizations and nonprofits also offer financial support and programs for women small-business owners.
  3. Set up strong legal and financial foundations – Research the differences between LLCs, sole proprietorships, and corporations and choose what type of business structure makes the most sense for your business. Also, separate your personal and professional finances and make sure you are complying with federal and local regulations.
  4. Network – Connect with other small-business owners, women, and mentors who can help in the small-business ownership journey. Spread the word about your business by joining groups specific to your industry and getting involved with the local business community.
  5. Practice patience – Starting and running a business takes time and patience. By putting the right tools in place, you’ll be able to stay tenacious while establishing your business.

Women still face startup challenges

Women’s contributions to the American economy continue to grow and become more pronounced. While women-run businesses are becoming more common, they still come across hurdles that aren’t as common for male-run businesses to face. For example, as of Feb. 26, women-owned businesses received just 32.6% of the approvals and 28.4% of the dollars offered in SBA 7(a) and 504 loans in the 2023 fiscal year.

This fact, along with these findings, emphasizes the importance of empowering and acknowledging the importance of women small-business owners, encouraging their continual success in business.

Methodology

This analysis used the most recent data for the seven metrics listed below to determine the best states for women small-business owners. It used a Z-score distribution to scale each metric relative to the mean across all 50 states and Washington, D.C., and capped outliers at 3. A state’s overall ranking was calculated using its average Z-score across the seven metrics. In cases where states were missing data due to a low sample size, the remaining metrics were averaged to determine their overall scores. Here’s a closer look at the metrics used:

This story was produced by Lendio and reviewed and distributed by Stacker Media.

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