Broadband: Empowering Women-Owned Businesses

February 2013

Broadband: Empowering Women-Owned Businesses

2 February 2013www.connectedtn.org

Among the findings from this survey:

• More than three-fourths of Tennessee’s women-owned businesses (76%) subscribe to broadband service, compared to the statewide average of 72% of businesses.

• Overall, 9% of Tennessee’s women-owned businesses subscribe to voice over Internet protocol (VoIP) service, 29% allow their employees to telework, and 55% have a business website.

• On average, women-owned businesses earn about one-third (31%) of their revenues from online transactions. Based on the businesses’ self-reported annual revenues, this equates to a median annual value of $240,000 in online sales. Statewide, this translates into approximately $967 million in annual online revenues for Tennessee’s women-owned businesses.

• Compared to Internet-connected women-owned businesses in other states surveyed by Connected Nation, women-owned businesses in Tennessee utilize fewer online business applications.

• Among women-owned businesses that do not use broadband, two-thirds (66% or approximately 7,000 businesses) report that the main reason that they don’t subscribe to broadband is because they don’t need it or they feel their business is getting by without it.

• Three out of ten small businesses that are owned by women allow their employees to telework from home, and one in four earn revenues from online sales.

Women-owned businesses are a vital part of America’s economy. In 2012, there were over 8.3 million women-owned businesses in the United States that generated nearly $1.3 trillion in revenues and employed 7.7 million people.1 Furthermore, the number of businesses owned by women has grown 1.5 times faster than the national average over the past 15 years.2

The same holds true in Tennessee. There are an estimated 155,600 women-owned businesses in Tennessee, employing 121,100 people and generating sales of approximately $23.5 billion each year.3 Moreover, the number of women-owned businesses has grown by 56% since 1997, surpassing the national average (54.1%) and ranking Tennessee 17th in the nation in terms of growth for the total number of women-owned businesses.4

Considering the impact that women-owned businesses can have on Tennessee’s economic growth, it is vitally important that women-owned businesses are empowered to meet the challenges that they will face in today’sglobalmarketplace.Increasingoperationalefficiencyandmarketreach are key to increasing long-term sustainability, both of which can be achieved by the integration of broadband-enabled business applications. Broadbandallowsbusinessestoincreaseefficiency,improvemarketaccess,advertise jobs, reduce costs, and increase the speed of both transactions and interactions.5 Tennessee has the robust broadband ecosystem to provide thesebenefits,butaretheybeingutilizedbythestate’swomen-ownedbusinesses?Thisreport,utilizingdatafromConnectedTennessee’s2011Business Technology Assessment, seeks to answer this question. Technology Adoption

ConnectedTennessee’s2011BusinessTechnologyAssessmentdefinesa woman-owned business as a privately held business establishment in which the owner, or at least one co-owner, is a woman. Analysis of the survey indicates that, overall technology adoption is fairly consistent among Tennessee’sprivatefirms,regardlessofownership.AsFigure1shows,86%ofwomen-ownedbusinessesownacomputerand76%utilizebroadbandforbusiness operations, similar to privately owned businesses that are not owned by women.

1 American Express OPEN, (2012). The state of women-owned businesses report. Retrieved from website: https://c401345.ssl.cf1.rackcdn.com/pdf/State_of_Women-Owned_Businesses-Report_FINAL.pdf TheStateofWomen-OwnedBusinessesReportutilizeddatafromthepastthreeCensussurveys—1997,2002,and2007—andthencollated,analyzed,andextrapolatedforwardto2012,factoringinrelativechangesinGDP,atthenational,industry,andstatelevels.Thefederalgovernmentdefinesawoman-owned business as a private business that is at least 51% owned by at least one woman. If the company is public, then 51% of the stocks must beownedbywomen.Fully82%ofallfirms—including90%ofwomen-ownedfirms—havenoemployeesotherthanthebusinessowner.2 Ibid.3Ibid.Fully82%ofallfirms—including90%ofwomen-ownedfirms—havenoemployeesotherthanthebusinessowner4 Ibid.5 Federal Communications Commission, (2010). The National Broadband Plan. Retrieved from website: http://www.broadband.gov/plan/13-economic-opportunity/

Broadband: Empowering Women-Owned Businesses

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A comparison to other states surveyed by Connected Nation in 2011 provides additional context. In total, three out of four women-owned businesses (75%) surveyed by Connected Nation in 2011 reported that they subscribed to broadband (Figure 2).

Technology Use

ThepotentialimpactofbroadbandishighlightedbytheKingsport,TNOfficeofSmallBusinessEnterprise’s(KOSBE)2009 needs survey, which was conducted to determine service and program needs for women business owners and professionals.Theresultsoftheself-reportingsurveyfoundthatmostofthesefemalebusinessprofessionalsidentifiedtheirbiggestchallengestobealackofmarketingandsalesability,aswellasprofitabilityandcashflowmanagement.6 Broadband can help overcome these challenges.

Table 1 shows how Internet-connected women-owned Tennessee businesses use the Internet, compared to women-owned businesses surveyed in other states by Connected Nation. The comparison indicates that Tennessee’s women-ownedbusinessesaremorelikelytoutilizetheirInternetconnectiontopurchaseorplaceordersforproductsorservicesandacceptrealtimepayments.However,Tennessee’swomen-ownedbusinessesreportedlowerutilizationlevelsforthemajority of online applications, including communicating with current customers; marketing and advertising products and services; online billing or bill payment; selling or accepting orders for products or services; and accepting job applications.

6 Tennessee Economic Council of Women, (2010); The economic impact of women-owned businesses in Tennessee. Retrieved from website: http://www.tn.gov/sos/ecw/WOB Final Draft.pdf

Figure 1. Technology Adoption among Privately-Held Tennessee Businesses

84% 86%76%75%

Not women-owned Women-owned

Computer Ownership Broadband Adoption

75%

69%

64%

66%

66%

75%

82%

88%

76%

73%

Connected Nation Average

Alaska

Florida

Iowa

Michigan

Minnesota

Nevada

South Carolina

Tennessee

Texas

Figure 2. Broadband Adoption among Women-Owned Businesses by State

Broadband: Empowering Women-Owned Businesses

4 February 2013www.connectedtn.org

Connected Tennessee also asked women-owned businesses whether they use voice over Internet protocol (VoIP) subscriptions, whether they allow their employees to telework, and whether their businesses have websites. As Figure 3 shows, 9% of Tennessee’s women-owned businesses subscribe to VoIP, which is higher than the Connected Nation average. Nearly three in ten (29%) allow their employees to telework, and 55% have business websites, both of which are lower than the Connected Nation average among women-owned businesses.

“Phillips Printing Company has been a subscriber to broadband service for years and we are part of the 55% with a business website. Our ongoing learning of SEO (search engine optimization) techniques has helped us leverage our online presence, which has resulted in an increase in activity over the last two years.”

Shealia HearnsCEO, Phillips Printing Company in Nashville

6% 9%

36%29%

59%55%

Subscribe to VoIP service

Allow employeesto telework

Maintain a business website

TennesseeConnected Nation Average

Figure 3.Technology Use among All Women-Owned Businesses

% of Internet-connected women-owned businesses that use the Internet to:

Connected Nation

AverageTennessee

Purchase or place orders for products or services 80% 84%

Communicate with their customers 80% 72%

Researchwaystomaketheirbusinessmoreefficient 72% 65%

Market and advertise products and services 64% 57%

Access billing or bill payment 57% 48%

Sell, or accept orders, for products or services 51% 46%

Provide customer support for products or services 48% 45%

Accept real-time payments such as credit card and debit payments 36% 38%

Bid on contracts 31% 31%

Advertise current job openings 28% 26%

Accept job applications 28% 21%

Table 1.How Women-Owned Businesses Use the Internet

Broadband: Empowering Women-Owned Businesses

5 February 2013www.connectedtn.org

Online Revenues

Internet-connectedbusinesseshaveseveraladvantagesovertheircompetitorswhoareoffline,includingtheabilitytoselltheir goods and services online, translating into increased sales revenue. Statewide, nearly three out of ten (28%) women-owned businesses earn at least some of their revenues from online sales. Figure 4 highlights the percent of revenues these businesses earn from online sales: on average, Internet-connected women-owned businesses earn nearly one-third (31%) of their revenues from online transactions. Based on those businesses’ self-reported annual revenues, this equates to a median annual value of $240,000 in online sales. Statewide, this translates into approximately $967 million in annual online revenues for Tennessee’s women-owned businesses.

Accessing Online Government Resources

TheInternetprovidesasafeandefficientmethodofaccessingstateandfederalresourcesthatcanassistwomenentrepreneurs start, grow, and expand their businesses. These e-Government applications are an example of an important online tool that many Tennessee women-owned businesses are using. In fact, Internet-connected women-owned businesses report higher rates of online interaction with government agencies than other Internet-connected businesses. Among Internet-connected women-owned businesses in Tennessee, 84% report that their employees visit state government websites for business purposes, compared to 71% of businesses that are not owned by women. Similarly, 63% of Internet-connected women-owned businesses in the state report that their employees visit federal government websites for business purposes, compared to 58% of businesses that are not owned by women.

Figures 5 and 6 compare the types of activities Tennessee’s privately held Internet-connected businesses conduct on government websites. The results indicate similar uses among women-owned and non-women-owned businesses.

Figure 4.Revenue from Online Sales among Tennessee’s Internet-Connected Women-Owned Businesses

25%

5%

5%

8%7%

7%

91-100%

76-90%

61-75%

46-60%

31-45%

16-30%

1-15%

Percent of revenues earned from online sales

28% Earn

revenue from online

sales

72% Do not earn

revenue from online sales

43%

Figure 5.The Online Activities of Tennessee Businesses

That Access Tennessee State Government Websites

Download forms and documents

Run background checks

Other

Conduct online transactions with state government

Search for general information about state government services or locations

Access state employment programs, search for job candidates, or list job openings

75%78%

70%71%

66%60%

18%8%

Women-ownedNot women-owned

1%0%

1%2%

Broadband: Empowering Women-Owned Businesses

6 February 2013www.connectedtn.org

Both the Tennessee and the United States governments offer several useful online tools for women professionals in the state, including:

Tennessee Economic Council on Women - The Council was created in 1998 by the Tennessee General Assembly to assess Tennessee women’s economic status. The Council develops and advocates solutions to address women’s needs in order to help women achieve economic autonomy.

Tennessee Department of Economic and Community Development - This website offers numerous services and information resources for Tennessee businesses, including the ability to verify professional licenses, search for corporationsandLLCs,registerforabusinesstaxnumber,filetaxesonline,andapplyforstategrantsandfunding.

StartupTN - In partnership with the Governor’s Economic and Community Development team and the EntrepreneurCenter in Nashville, StartupTN launched nine business accelerators throughout the state. StartupTN.com serves as the online network to connect these physical locations and connect entrepreneurs with resources to grow their companies.

Governor’s Office of Diversity Business Enterprise - The central point of contact to attract and assist women-owned enterprises interested in competing for state contracting opportunities.

U.S. Small Business Administration-Thisfederalorganizationprovidesloans,education,andalevelplayingfieldforwomen-owned businesses to compete for federal contracting opportunities.

LaunchTN - This public-private partnership, sponsored by the State of Tennessee, supports the development of high-growth companies in Tennessee with the goal of fostering job creation and economic growth.

Business Enterprise Resource Office – Part of the Tennessee Department of Economic and Community Development, thisofficeservestoprovideeconomicopportunitiesforsmall,rural,minority-andwomen-ownedbusinesses.Theofficeprovides information on entrepreneurship development programs, procurement opportunities, and access to capital from Tennessee private industry and government entities.

Tennessee Small Business Development Centers - These centers are located throughout the state of Tennessee to assist new and existing business owners in growing and developing successful, thriving businesses at little or no cost.

Tennessee Valley Authority Economic Development - The authority (TVA) in partnership with other economic developmentorganizations,helpsfostercapitalinvestmentandjobgrowthinthearea.Itswebsiteprovidesentrepreneurial resources for businesses in the TVA region.

University of Tennessee Chattanooga Veterans Entrepreneurship Program - The program offers training to veterans in entrepreneurship and small business ownership, along with assistance in sustaining and growing their business.

Download forms and documents

Conduct online transactions with state government

Search for general information about state government services or locations

Other

81%80%

68%75%

67%66%

1%

Women-ownedNot women-owned

Figure 6.The Online Activities of Tennessee Businesses

That Access Federal Government Websites

0%

Broadband: Empowering Women-Owned Businesses

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University of Tennessee Center for Industrial Services (UTCIS), Entrepreneurship and Small Business Training – The UTCIS Tennessee Entrepreneurship and Small Business Development Course promotes entrepreneurship and small business development in Tennessee by engaging state development practitioners, government leaders, and others interested in economic development within the state. This course is part of a series offeredbytheUniversityofTennesseetoeducateeconomicdevelopersontrendsandbestpracticesinthefield.

National Federation of Independent Businesses - The federation helps small and independent businesses to own, operate, and grow their businesses. This small business association offers discounts, research, online forums, networking opportunities, and state and federal lobbying to small businesses across the US.

Women-Owned Small Businesses

In 2011, an estimated 29 million adults started running new businesses in the United States, according to a report by Babson College, and there are approximately eight women entrepreneurs for every ten who are men.7 These women entrepreneurs,whoaresignificantlymorelikelytodelveintoconsumer-orientedbusinessesthanmen,aremakingalargeimpact on local economies as they spur local hiring and increase demand for other locally produced goods and services. Whiletheoveralllevelofentrepreneurshiphasbeenfluctuatingforthelastfewyears,entrepreneurshipamongwomenhas remained steady.

Small businesses are a key component of local entrepreneurship, and nearly nine out of ten business establishments in the US are small businesses with fewer than 20 employees.8 According to the recent statistics from the survey of business owners, there are approximately 140,249 small businesses in Tennessee owned by a woman.9 According to the 2011 Connected Tennessee Business Technology Assessment, nearly nine out of ten women-owned businesses in Tennessee (89%) have fewer than twenty employees. These small businesses owned by female entrepreneurs subscribe to broadband service at a rate that is comparable to other small businesses in the state (Figure 7).

Three out of ten small businesses that are owned by women allow their employees to telework from home, and one in four earn revenues from online sales, representing over $760 million per year in online sales revenues. The one area of technology adoption where women-owned small businesses fall behind their competitors is in terms of using websites to promote their businesses – while 61% of small businesses that are not owned by women have websites, just over one-half of women-owned small businesses (52%) do so.

7 Babson College, Global Entrepreneurship Monitor 2011 United States Report, http://www.babson.edu/Academics/centers/blank-center/global-research/gem/Documents/GEM US 2011 Report 2.pdf8 County of Business Patterns, http://www.census.gov/econ/cbp/9 Survey of Business Owners, http://www.census.gov/econ/sbo/, More than 90% of these businesses have no employees other than the business owner.

Figure 7.Technology Adoption and Use among Small Women-Owned Businesses in Tennessee

Use Broadband

Allow Employees to Telework

Have a Website

Earn Revenues from Online Sales

72%61%

27% 27%

Small businesses not owned by women

Women-owned small businesses

74%

52%

30%25%

Broadband: Empowering Women-Owned Businesses

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Barriers to Broadband Adoption among Women-Owned Businesses

Statewide, 24%, or approximately 11,000 privately held women-owned businesses, do not subscribe to broadband. Of these non-adopting businesses, two-thirds (66% or approximately 7,000 businesses) report that the main reason that theydonotsubscribeisbecausetheydonotneeditortheirbusinessisgettingbywithoutit.Thisissignificantlyhigherthan the 54% of women-owned businesses who report this as their barrier to broadband adoption in states served by Connected Nation (Table 2). These data appear to indicate the need for strengthened engagement efforts with Tennessee’swomen-ownedbusinessesonthebenefitsofbroadband.

Conclusion

Tennessee’s women-owned businesses are not a small, niche market; rather, they have a profound effect on the state’s economy.Ifthefullpotentialofthesebusinessesistoberealized,itisbefittingthatTennesseefindwaystohelpbusinessownersmaximizetheirresourcesanddevelopnewproductsandservices.Broadbandcanhelpadvancetheseefforts.

While Tennessee’s women-owned businesses report broadband adoption rates that are on par with other businesses, women-owned businesses have yet to achieve an optimum level of Internet use. Further, for non-adopting women-owned businesses, the belief that broadband would not help their business, or the lack of knowledge of how broadband positively affects business development, is the main reason that they do not adopt broadband service. Many believe that since they have always operated without broadband, they can continue to do so. Important to overcoming these barriers is the communicationofhowbusinessescanachievesignificantresultsviatheutilizationofbroadbandandbroadband-enabledbusinesstools.Anawarenessprogramshouldpromotethebenefitsofbroadband,offereducationandtraining,andprovide assistance with follow-up questions and concerns.

Tennessee is fortunate to have a host of resources for women-owned businesses. The Business Enterprise Resource OfficeoftheDepartmentofEconomicandCommunityDevelopment,theTennesseeSmallBusinessDevelopmentCenters,theGovernor’sOfficeofDiversityBusinessEnterprise,theSmallBusinessAdministration,andthebusinessincubation centers across the state are excellent resources for business planning and management. The employees of theseagenciesandorganizationsareskilled,knowledgeable,creative,andinterestedinhelpingTennesseansstartandgrowprofitablebusinesses.Theseresources,coupledwithincreasedbroadbandawarenessandutilization,willhelpTennessee’s women-owned businesses reach their full potential.

Main barriers to broadband adoptionConnected

Nation Average

Tennessee

I don’t need it or am getting by without it 54% 66%

My business does not use computers 13% 6%

Broadband service is not available in my area 5% 9%

The monthly cost of service is too expensive 4% 3%

It poses a security risk 2% 2%

It would be too much of a distraction to employees 3% 0%

It would take too long to train my employees 1% 4%

It is too complicated 1% 0%

The installation cost is too expensive 1% 1%

Other 1% 4%

Don't know/refused 15% 5%

Table 2.Main Barriers to Broadband Adoption Reported Among Non-Adopting Women-Owned Businesses

Broadband: Empowering Women-Owned Businesses

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Methodology

2011 Business Technology Assessment

Between October 5 and November 1, 2011, Connected Tennessee conducted a telephone survey of 807 Tennessee business establishments. Data were collected by Thoroughbred Research Group, located in Louisville, KY. The purpose of this survey was to measure trends in technology adoption; measure barriers to technology adoption; determine how Tennessee businesses are using broadband as an engine of economic growth; and measure the average price and speed of broadband service among business establishments across the state. On average, these surveys took approximately eight minutes to complete.

Samplequotaswereestablishedbycompanysize(5brackets)andindustrysector(8sectors).Withinthese40cells,a randomly drawn sample of businesses listed with Dun & Bradstreet was contacted for the survey. Altogether, this sample included 179 businesses with 50+ employees, 212 businesses with 20-49 employees, 212 businesses with 5-19 employees, and 204 businesses with 1-4 employees. In cases where the respondent’s information regarding the number of employees at the establishment differed from the information provided by Dun & Bradstreet, the respondent’s answer wasusedindeterminingbusinesssizequotas.ConnectedTennesseeintentionallyover-sampledlargebusinessestoensureasamplethatwaslargeenoughtoanalyzeandcomparetosmallerbusinesses.

Inadditiontothesizeandsectorquotas,thedataweresubsequentlyweightedtoensurethatthesamplewasrepresentative of all employer business establishments statewide, with targets determined according to the 2009 United States Census Bureau’s County Business Pattern report, the most recent data that was available at the time the survey was conducted. Weighting and research consultation were provided by Lucidity Research LLC, and the survey results were reviewed by Dr. John Horrigan, head of the Media and Technology Institute at the Joint Center for Political and Economic Studies.

This sample provides a margin of error of +4.72%atthe95%confidencelevelforthetotalsampleof807businesses.Thissampleerroraccountsforsampleweighting,usingtheeffectivesamplesize.Aswithanysurvey,questionwordingandthepracticalchallengesofdatacollectionmayintroduceanelementoferrororbiasthatisnotreflectedinthismarginof error.

These surveys were conducted as part of the State Broadband Initiative (SBI) grant program, funded by the National Telecommunications and Information Administration (NTIA). The SBI grant program was created by the Broadband Data Improvement Act (BDIA), unanimously passed by Congress in 2008 and funded by the American Recovery and Reinvestment Act (ARRA) in 2009. To learn more about Connected Tennessee please visit http://www.connectedtn.org or e-mail us at info@connectedtn.org.

Broadband: Empowering Women-Owned Businesses

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APPENDIX A:

Select Sample Sizes

2011 Business SurveyConnected Nation

(n=) Tennessee

(n=)

Privately Owned Businesses 5,733 647

Women-Owned Businesses

All 2,221 242

Businesses with fewer than twenty employees 1,400 144

Internet-Connected 1,871 204

Use Broadband Service 1,752 196

Visit State Government Websites 1,343 173

Visit Federal Government Websites 1,128 137

Earn Revenues Online 797 84

Do Not Use Broadband 469 46

Non-Women-Owned Businesses

All 2,999 337