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NEW ~ECONOMIC REALITIES: THE ROLE OF WOMEN
ENTREPRENEURS
/2~/(~
HEARINGS
BEFORE THE
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES.
ONE HUNDREDTH CONGRESS
SECOND SESSION
WASHINGTON, DC, APRIL Z6 AND 27; MAY 10, 11, 17, AND 10, 1988
Printed for the ~ise of the Committee on Small Business
Serial No. 100-53
UM. GOVEENMENT PItINTING OFFICE
88-199 WASHINGTON : 1988
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington DC 20402
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CGMMIflEE ON SMALL BUSINESS
NEAL SMITH, Iowa,
HENRY B: GONZALEZ, Texas
THOMAS A. LUKEN, Ohio
IKE SKELTON, Missouri
ROMANO L MAZZOLI, Kentueky
NICHOLAS MAVROULES, Massachusetts
CHARLES HATCHER, Georgia
RON WYDEN, Oregon
DENNIS 12. ECKART, Ohio
GUS SAVAGE, `Illinois
tIORMAN SISISKY, Virginia
ESTEBAN EDWARD TORRES, California
JIM COOPER, Tennessee
JIM OLIN, Virginia
RICHARD RAY, Georgia
CHARLES t HAYES, Illinois
JOHN ~ONYERS, JR., Michigan
JAMES H. BILBRAY, Nevada
JCWEISI MFUME, Maryland
TLOYD H. FLAKE, New York
8. MARTIN LANCASTER, North Carolirta
SEN NIGHTHORSE CAMPBELL, Colorado
PETER A. DxFAZIO, Oregon
DAVID E. PRICE, North Carolina
MATTHEW G. MARTINEZ, California
OoNaw F. tssar, Snff Dtreetor
4. Dssw }Itar, KiaaSy Staff Direfl'
JOHN J. LFAL(* New York, Chainnas
JOSEPH M. McDADE, Penasylvanla
SILVIO 0. CONTE,' Massachusetts
WM. S. BROOMFIELD, Michigan
ANDY IRELAND, florida
JOHN HILER, Indiana
DAVID DREIER, California
0. FRENCH SLAUGHTER, tTw, Virginia
* JAN MEYERS, Kansas
DEAN A. GALLO, New Jersey
4. ALEX McMILLAN, North Carolina
LARRY COMBEST, Texas
ItICHARD H. BAKER, Louisiana
JOHN ,J. RHODES III, Arizona
JOEL HEFLEY, Colorado
FREDERICK S. UPTON, Michigan'
ELTON GALLEGLY, California
1~,YDE C. HQJMLOWAY, Louisiana
lEft
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CONTENTS
Hearings held on:
April 26, 1988
April 27, 1988
May 10, 1988
May 11, 1988
May 17, 1988
May 19, 1988
WITNESSES
APPENDIX
159
160
159
169
170
176
184
188
195
`205
201
161
Wednesday, April 27, 1988
210
TUESDAY, Anit 26, 1988.
Page.
1
27
59
85
118
129
3
8
13
11
4
Bergen, Polly, chairman, the Polly Bergen Co
Farrar, Mary H., president, Systems Erectors, Inc
Keeley, Kathryn, president, Women's Economic Development Corporation
[WEDCO]
Lincoln, Lillian H., owner, Cetitennial. One, Inc
Rudd Gillian president National Association of Women Business Owners
[NAWBOI
APPENIDIX
Tuesday, April 26, 1988 `,..`
Bilbray Hon James H a Representative in Congress from the State of
Nevada, opening statement
Conte Hon Silvio 0 a Representatiye in Congress from the State of Massa
chusetts, opening statement
National Association of Women Business Owners [NAWBO] position papers
Data and Statistics'
The Changing Work Force and the Impact of Working Women
WomemOwned Businesses in Federal Procurements
Access to Commercial Credit
Prepared Statements
Farrar, Mary H . ~
Keeley, Kathryn
Lincoln, Lillian H
Rudd, GUlian
WITNESSES
W~D~IESbAY, APrnL 27, 1088
Green, Mildred A., president, Accounting Data Systems, Inc., Caro, MI
Hansson Margaret S president and chief executive officer M S Hansson
Inc and chairman PureCycle Corp
Slater Phyllis Hill president~ Hill Slater Inc [HSI~ Lynbrook NY
Stacy Carey I owner Dialogos International Coi~p and coowner, Globex
Inc Raleigh NC
Taylor, Charlotte president Venture Concepts Washington DC and fornter
executive director of the 1977-78 Presidential Task Force on Women Busi
ness Owners
28
42
35
32
45
(III)
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lv
Page
McDade Hon Joseph M a Representative in Congress &~tn the State of
Pennsylvania, opening staten~ent . 210
Prepared Statements:
Green, Mildred A 217
Bansson, Margarct S .~. ~. 238
Slater, Phyllis Hill 233
Stacy, Carey I 229
Taylor, Charlotte j.... 243
Excerpt from The Bottom Line: UnEqual Enterprise in America 253
Schroeder Ron Patricia a Representative in Congress from the State of
Colorado, opening statement 211
WITNESSES
TuEsn~v, MAY 10~ 1988
~Bisrman, Christine, president, C~1t Safety, Inc
Boggs Hon Lindy (Mrs Hale) a Representatrre in Ccsngress fr~m the State O*~
Louisiana 60
Gentry Barbara director Women Otsinass Owners Services, Michigan De~
partment of Coinmmerce 65
eJordan-DeLaurenti, Mary Agnes, president, Jordan.DeLaurenti, Inc., Dallas.,
APPENDIX,
Tuesday, May 10, 1988 j.... 261
&lbray Hon James B a Representatiire in (~oflgress from the State dl
Nevada, opening statemEnt ~ ~... 261
Gentry, Barbara: .
Building the BIDCO industry (Michigan) 281
Capital Access Program (Michigait) 223
Michigan Strategic Fund Capital Access and BIDCO Programs 283
Prepared statement .~.. . `264
Public hearings report and recommendations (Michigan) 336
Response to chairman's request for additional informatio~i 858.
Levin Senator Carl, from the State of Michigan opening statement 262
Touche Ross & Co., Daniel J. Kelly, chairman of the board, Survey of Wgm~
Owned Michigan Businesses
1987 survey ~. `~ 890
1988 surrey . `.~.`.. ~ .... 421
WITNESSES
MAY IL, 1988 ,
Bulow, I~ay, Assistant Secretary for Administration, u.a De~artrnent of Corn~
merce ~.. 101
Crockett, Carol M Director Office of Women s Business Ownership U S
Small Business Administration [SBA) 87
Hager, Susan, president, Hager, Sharp & Abramson, Inc 80
Snyder, Susan, president, the Pathfinder Corporation for International Trade. 91
APPENDIX
Wednesday, May 11, 1988 442
Eulow, Kay, additional material supplied at request of Chairman LaFalce 468
Crockett Carol M additional material requested by Chairman LaFalce and
Mr. Price:
Executive management reports on procurement for womeri~owiied small
businesses for fiscal years 1985-87 . 469
Report on fiscal year 1986 total women small business prime contract
awards goals 489
Trends in Federal prime contract award activity to women-owned small
businesses 490
Meet the Lenders conference data 491
Prepared Statements:
Crockett Carol M 442
Hager, Susan 455
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V
Page
Prepared Statements-Continued
Snyder, Susan 459
WITNESSES
TUESDAY MAY 17, 1988
Scollard, Jeannette Reddish, president, SCS Communications, New York, NY.. 119
Townsend, Bickley, director, research and education, American Demograph-
ics, Inc., Ithaca, NY 114
Wray Beth president National Federation of Business and Professional
Women's Clubs, Inc. tBPW/USAI 123
APPENDIX
Tuesday May 17, 1988 493
Conte, Hon. Silvio 0., a Representative in Congress from the State of Massa-
chusetts, opening statement 493
Prepared Statements:
Scollard, Jeannette Reddish 537
Townsend, Bickley, with attachments 494
"America's New Workers" 505
"The Facts About Working Women" 512
Wray, Beth, with attachment 546
"The Best Companies for Women," Savvy Magazine, article 565
WITNESSES
THURSDAY, MAY 19, 1988
Ascher, Ann, president, Ann Ascher, Inc., Los Angeles, CA 148
Fitzpatrick, Beatrice A., president and chief executive officer, American
Women's Economic Development Corporation, New York, NY 132
Henderson, Laura, president and chief executive officer, Prospect Associates,
Rockville MD on behalf of the National Association of Women Business
Owners 145
Mayer Martin journalist/author New York NY 136
Morella, Hon. Constance A., a Representative in Congress from the State of
Maryland 130
Shapiro Esther creator owner/coproducer Aaron Spelling Productions Los
Angeles, CA 140
APPENDIX
Thursday, May 19, 1988 578
Conte, Hon. Silvio 0., a Representative in Congress from the State of Massa-
chusetts, opening statement 573
Prepared Statements:
Fitzpatrick, Beatrice A . 574
Henderson, Laura 598
Shapiro, Esther . 593
ADDITIONAL MATERIAL RECEIVED FOR THE RECORD
Abacus, Inc., San Francisco, CA, "The Abacus Story," excerpts 612
ComputerLand Austin TX Carol Thompson president statement 619
Executive Order 12138, May 1979 624
Executive Order 12426, June 1983 628
Hub Co ventures for Women s Enterprise New York NY Jing Lyman
president, statement 630
Interagency Committee on Women's Business Enterprise, Susan E Phillips
chairman memorandum on Model Training Program 635
Request of committee to 21 Federal* agencies for information on their activi-
ties in support of women-owned businesses 639
Responses of the agencies and departments:
Agriculture 643
Commerce 651
Defense 658
Education 674
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Page
Responses of the agencies and departmeflts-continued
Energy $78
Export-Import Bank 684
General Services Administration.... .~. .. 686
Health and Human Services ., 690
Housing and Urban Development 697
interior 701
Justice 70.9
National Aeronautics and Space Administration 717
National Science Foundation 723
Nudear Regulatory Commission . 129
Small Business Administration 139
Transportation 753
Treasury 763
Veterans Administration 773
Robert Morris Associates Philadelphia, PA William H Sayre president
statement
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2
Many of the problems are the same that face all emerging busi-
nesses Addressing obstacles that hinder the success of women en-
trepreneurs will benefit all other entrepreneurs as well.
Let me conclude by stating that we must adopt, as a national pri-
ority, the release of the extraordinary and as yet untapped abilities
and resources of women. Our Nation needs the wealth that can be
generated by the business talent of ~ one-half of our citizens. That
wealth represents a national gold mine. We must tap it. The cli-
~nate is right; the opportunities are present; and women can and
should take their rightful place in the economic mainstream as or-
ganizers, managers, and employers.
The majority of the witnesses who will participate in these hear-
ings are women representing a broad variety of industries, demo-
graphics, business sizes, ethnicity, and expertise. We will also hear
from a few men during the closing hearings of this series. As we
examine changes and trends in our economy, both male and female
experts have been invited to assist us as we consider policies and
programs for the future.
I want to welcome today's witnesses who will address the special
achievements of women as business owners arid the effect these
women are having on our changing economy.
Before we call our panelists to the witness ta~Me, I wonder it
there are any members present today who have any statements
they would like to make.
Mr IRELANI) Mr Chairman, { would only take a few nrnrnents to
say once again that your leadership of this committee, and particu~
larly your sensitivity to this area, is exceptional We are moving in
the right direction.
We have an obligation to make sure that we unleash the entre~
preneurial spirit in all of our citizens This is really the backbone
of the success of America, and hearings such as this will Lead us in
that direction I am glad you have seen fit to bnr~g tIns about
Chairman L~F44icz. Thank you very much.
* Mr. Lancaster.
Mr. LANCASTER. I would like to commend and thank you for con
vening these hearings. I look forward to the outstanding panels of
witnesses we have here today and to the others in the series
Thank you for the opportunity to participate
Chairman LAFALCE I ha~ve prepared remarks from Congressmen
Silvio Conte and James I3ilbray If there are no objections, I will
insert them in the record at this time.
Hearing none, so ordered.
fMr conte's and Mr Bilbrsy's statements nz,y be f~iund in the
appendix..1
Chairman LAFALCE I wonder if we could have the witnesses
come to the table. We have your name cards at your places.
Ms. Kathryn S. Keeley, Ms. Lillian Lincoln, Ms. Mary Farrar,
Ms Gilhan Rudd, and Ms Polly Bergen Having introduced you
from my left to my right, we will start from right to left.
Ms. Bergen will be our first witness, and I want to say what a
pleasure it is to have everyone here. I know the difficulty you h~
finding time to come before our committee, We look forward to
hearing from you. Please proceed.
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$
~TESflMONY *OF POttY B1~ROEN, CRAffiMAN~ ~ ~OLLY
~ BERG~EN~CO. ~ ~ ~ ~ ~
, Ms. BEI~GEN. Thank you very mueh, ~ ~ ` ~
. Good morning, Mr. Chairman and members of ~the committee.
M~ name is Polly Bergen, and ~ am the chairman of the Polly
Bergen Co. We manufacture shoes, handbags, be1t~ ~ jewelry, and
other accessories. ~ ~ ~ ~ ~ ~ ~
~ I am here to testify on behalf of the National Assoc~iation of
Women Business Owners, because I believe it is terribly important
that our contribution be recognized. ~ , * ~
Women business owners are boosting the national economy. We
are shaping the business community of today, and we are shaping
the future workforce, . . ~
When I ~ first started in business, * 1 was 10 years. old. I had sent
away for something Qalled Closrerine Salve. The ad in the magazine
had promised if~ I could sell~two gross of Cloverine. Salve, I would
receive a free nurse's uniform and a stethoscope~ Well, not only did
i not know what the salve was, I didn't know what two ~gross were~
and, of course, my mom and dad ended up buying most of~ it, and I
got my prize~ Years later; of course, 1 discovered in the basement
the Cloverine Salve still in ité cartons. I guess they ~ didn't know
what it was either. ~ : ~ ~ ~ ~
Years later, in ~ 1965, 1 * started anoth~ busin~ss-I invested
$3,OOO-.~which was called' Polly's Folly at the time; and I began a
small mail order cosmetic company called Oil of the Turtle. Before
anyone asks me how you get' oil froxt~ a turtle, I will tell you, you
startwith a very l~w stool. ~ *
I knew very little about business, but I figured how could I faji,
because I actually wore The stu1~f. Almost a decade later, having ~
worked 7 days a week, 18 hours & day, ` traveling all over the wOrld,
investing every dime I had earned during my years in show busi-
ness, I sold the company. We were doing over $5 million a year. It
was hard work, and it w~ painful work, and I made a lot of mis..
takes. But I learned, and I was very lucky, because I h~td chosen to
be in a business a lot of women had proven successful in-cosmet~
ics, fashion, businesses that were easy or easier for women to be
involved in at that day and time.
.
(1
(Vt~-
L~ V~. £. iii; ~i:~i V ~ ~ L~ V i,aiL~ LlJijflJL I~aLiL W !J1L~ ~ ~ ~lUWiL ~
my and women business owners are vitally important to the serv-
ices sector.
Women business owners have made incredible strides in the last
10 years. We have contributed increasingly to Federal, Stat?, and
local tax coffers as we own more and more of the Nation's business-
es. `It is estimated that womenown more than 25 percezit ox ~ the
Nation's ~usine~ses today,'and this haè been ach!evéd in just over a
decade. ~ ` ` . ` `. `
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Therefqre,~women business owners must be viewed as vital to
economic development, and vital to making ~ positive impact on re-
ducing our deficits, nationally and i~itèrnationally.
We are not just a social cause. Women business owners have
always looked for opportunities, not giveaways or special programs
just for women. Women have seized every opportunity available to
go into business and ~to be profitable, and the record shows that we
have done it with little assistance from the Government or the cot-
porate sector The record shows that we have done it with the help
of family and friends.
Women business owners create jobs. Small business creates well
over 60 percent of all new jobs today. As women own an increasing
number of businesses, more than a quarter of businesses in the
country, we are providing a growing number of jobs.
I think it is also very important that we strike down some of the
myths that surround women.~owned businesses. We are not mom
and pop enterprises, we are not operated out of a basement or a
garage-though I admit I started Oil of the Turtle there, but then
again, so did Apple computer. Women do not start businesses as a
hobby, and women rarely inherit their businesses. Millions of
women~~owned businesses across this couatry are started from
Scratch and are built on "sweat equity."
Women business owners have shown that we can do it From
every walk of life, in every type of business, We haVe done it. We
have gained experience in the face of resistance, we have broken
into many closed markets, and we have a track record. We are
competitive, profitable, ready to do better, and to do it faster.
The Nation's businesses must develop and grow for this Nation
to survive economically We, as women, want to share that respon
sibthty and participate in the opportunities that will shape the
future of America in the 21st century.. S
Thank you.
Chairman L4FALCE. Thank you very much, Ms. Bergen.
Chairman LAFALCE Our next witness will be Ms Gillian Rudd,
president of the National Association of Women Business Owners~
Ms Rum) Thank you, Mr Chairman
I have a prepared statement, and I would Lute to summarize that
I would like the chairman's perniissiort to add a couple other things
to my testimony. S
Chairman LAFALCE. We will put the entire test of your state
tn~ent in the record You may proceed as you desire
Ms. Ruon. Thank ycu. S
S TESTIMONY OF GILLIAN RUDD, PRESIDENT, &NATIONAL
ASSOCIATION OF WOMEN BUSINESS OWNERS ENAWBOJ
Ms. RUDD. My name is Gillian Rudd, I am a woman business
owner in the District of Golumbia, and it is with great pride that I
come today representing, as president, the National Association of
Women Business Owners, which I will refer to as NAWBO from
here on in. S
NAWBO 5j5 a national trade assdciation that represents wOmen
entrepreneurs across the country. It was founded in 1974 an4 has
grown to 38 chapters throughout the United States. it Is the only
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really believe the country is at an ecOnomic crossroads and that all
of our taxpayer dollars should be toward incentives to create busi*
ness growth, job creation, and international trade
Tomorrow we will release the findings of a major new study on
women business ownership that reflects what the State and local
governments are doing The study refers to women business owners
~s ~ America's hidden resource, and what the report will reveal is
basically window dressing, lip service, and a mere five continually
funded business owner programs around the country. That is a
very unfortunate waste of a very valuable economic resource.
We truly believe that this committee and the SBA should be two
~of the most exciting places to be in Washington, DC It should re-
flect the entrepreneurial community, the growing business commu~
nity, the emerging business community That is where the action,
the energy, the excitement, the jobs, and the innovation are
You will notice that I have not used the term "small business"
NAWI3O has dropped those words from their vocabulary this year
It has tended to be associated with disadvantaged and nongrowth
businesses, and that is not what we are about
I understand you also will be asking Governtiient agencies to out
line the programs they have put in place for women business
owners in the last decade I don't expect much of a catalog I do ask
you, when they appear before you, to query if they were a one shot
deal, query the number of dollars spent, and particularly query the
results, the number Qf contracts, the number of dollars that have
actually gone to women business owners, and the return on the in~
vestment the Government has made
I also understand that you look at the future, what our demo'
graphics are telling us, and where our deficits are leading us We
strongly feel that we need statistics on what our resources are in
this country, and we don't have those at the moment
We need policies that would allow entrepreneurs to grow That is
of most vital concern to NAWBO We want to plan for our future
This is a planning organization, a'id we use a quote from Casey
Stengel, the basebaL legend, very frequently, "If we don't know
where we are going, we may end up somewhere else" We are very
nervous about ending up somewhere else.
What do we want, as growing American businesses9 We want ba
sically a national strategic planning commission for businesses that
will bring together the diverse spectrum of interests and expertise
This is what we do in our own businesses We get together, we plan
for the future, we look at the resources we have. We look at our
weaknesses and our strengths That is what we need to do to tackle
our situation in the global economy.
What do women business owners want in the short term9 The
problems we face are no programs, no recognition of economic
impact, no organized systems of outreach.
Here are some suggestions that are focused on access, business
growth, and stability and economic development We are not sug
gesting new programs, but we are suggesting reallocation of re-
sources, a greater private role in the public sector, the development
of 3-year model programs, and an emphasis on women-owned busi-
nesses across existing programs.
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7
The way that we are suggesting to do this is truly with your
help. We need help from the top down. We need help from the
White House, from whomever the President is in the next adminis-
tration. We need it from the Congress, and we need it from each
Cabinet head. This is a national economic issue, and we need* inno-
vative solutions.
What we are suggesting is a women business owners Federal ini-
tiative that will have long-term and broad-range impact. The sug-
gested mechanism to accomplish this would be a women business
owner policy council that will consist of key agencies, White House
representation, congressional representation, women business
owners' groups, and individual women business owners. The policy
council would have a good budget and staff to carry out its man-
date, and that would coordinate the actions of all Federal agencies
and departments, establish program goals, work with the State,
city, and local planning agencies and associations, establish, moni-
tor, and report progress to Congress and the President, and define
the programs that are needed.
Specific emphasis needs to be placed on capital, procurement,
high technology, international trade, technical assistance, and
training, and we particularly want to look at the Departments of
Defense and Transportation. Each Cabinet officer would establish
within their agency a women business owner policy task force, and
they would include staff members, and women business owners,
and representatives of women business owner groups.
The plan is to develop a 4-year action plan and the accomplish-
ments of the goals that will be built into those plans would be in-
cluded in the merit increases of Federal employees, so, there would
be an incentive for them to work with us.
There would also be a sunset provision in these task forces so
that in 4 years, if goals and objectives are reached, it will be dis-
mantled. Each agency would include agency staff and women busi-
ness owners, and a specific portion of program budgets would be al-
located for model programs. Model programs would be funded for 3
years. The task forces would make a yearly report to the President,
and Congress would review the initiatives each year with oversight
hearings at the end of the 4 years.
The Small Business Administration would concentrate on out-
reach, directory, building a constituency, newsletters, those types of
things.
We want to move quickly. We always move quickly. Within
NAWBO we have something called NAWBO time, so, we are impa-
tient to grow and move our businesses along.
We are suggesting two immediate programs, two that the Depart-
ment of Commerce has in place. The Department of Cominerëe, in
the last 2 years has cosponsored a program called the Mega Mar-
ketplace. The main aim of that was to give visibility to women
business owners and to break into the procurement process at all
levels. We have less than 1 percent of Federal dollars at this point
in time. With 25 percent of the businesses or more, that is a rather
unequal balance.
We are also suggesting we become a part of the Department of
Commerce initiative to export NAWBO, and this is the kind of in-
novative program we are looking for. We suggesi we have a special
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8
export program targeted to women business owners-pick a select-
ed number of women business owners and select them carefully.
Congress would work to develop their marketing `plans with them,
and the Import-Export Bank would be the loan part of that.
The businesses' accomplishments and failures could be docu-
inented and could become beneficial to all Am"~erican exports, par-
ticularly for growth businesses. We could develop from that a
io.nger term entrepreneurial export growth strategy.
As you can see, NAWBO is deeply concerned about America's
prosperity in the future, since we feel we and our children are
going to be living there. We feel. a false sense of prosperity exists
today in the country, that our short-term, "penny wise, pound fool-
ish" approach deeply endangers our future.
We are calling for American business and Government to make a
long-term investment in America, and in May we will issue our
issue book for the coming year. it will be called, "Framework for
the Future II, investing in America."
We think we must invest in America in the long term We are
asking for a visionary approach that truly looks at issues of corn
petitiveness, quality, design, education, technology, research and
development, financing, and taxes.. Our Government dollars should
be spent now to capitalize our future growth. We desperately feel
we need a business mission and vision statement and, with the
right people, the right team and the right vision, we can make our
future prosperous, and we can resume our place as a proper, active,
competitive, first-class, world-class economy.
NAWBO commits itself totally to working with you to achieve
that goal.
Thank you~ S
Chairman LAFAI4CE. Thank you very much.
[Ms Rudd's statement, with attachments, may be found in the
appendix.)
Chairman ~ next witness~will be Ms. Mary Farrar.
IESTIMONY OF MARY II. FARRAR, PRESIDENT, SYSTEMS
ERECTORS, INC. , ` 55, ~`
Ms FARRAR Good morning My name is Mary Farrar and my
company is Systems Erectors in Kansas City.
Systems Erectors provides labor and equipment to erect structur~
al steel, precast concrete, and preengineered building systems for
the low-rise commercial and industrial warehouse markets.
In my company the only employees I have are myself, an office
manager wh9 is also my youngest daughter, an4 the rest of our
people are un~ ~ion iron workers and union hoisting engineers.
Also, I just finished my second term as national chairman of my
trade association, which is the Independent Erector Division of the
Systems Builders Association. I was the only woman who has ever
held office in that association.
I know a lot of you are wondering what I am doing in this busi~
ness to start with, and a lot of days I do, too I don't have any ex
planation for how I got to where 1 am, but I would like `to share my
story a little bit this morning.' S
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9
I grew up in a large family. I was the oMest of six children. My
father was a conductor for the Santa Fe Railroad, and my mother
was a school teacher, but she didn't get her degree until after all
my children were able to attend her graduation, so she was a
rather late bloomer also. ~
I got married shortly after high school and had my family,
stayed home with my children until 1972, at which time I got a job
working for a cOnstruction company, because I felt that I needed to
supplement our income. We were being faced with college for five
kids in the near future.
As I learned and grew in this construction company, the whole
construction business fascinated me, and I learned most phases of
the management of the company In about 1978, I made an attempt
to buy into the company. When `I was denied the right to buy into
the company, I left to launch Systems Erectors.
I started the company with obviously no formal training, no busi-
ness training, no money. I had 6 years of on-the-job training in an-
other company I had the support of my husband We talked about
it long and hard `before I decided to do this, and I had a contract
from a general contractor in Kansas City to build three warehouse
buildings.
I didn't have a bankable deal at that time, and I think probably
would have been laughed right out of the bank if I had gone in and
said: "here I am~, I have no experience, I want to start a union
erection company, I have got $500, and that is it, guys" So, I didn't
even attempt to do that, but the contractor I had this contract with
said that I could draw weekly against my contract, which, typical-
ly, in a construction contract you bill on the 25th of the month `for
labor and material that was expended during the month, and you'
might get your money on the 15th to the 25th of the following
month In a labor intensive organization you need a lot of capitW
because your payroll, even an a very small company, is running
$15,000, $20,000, $30,000 a week
So, Without the contract that I had allowing me to draw every
week, I could not have made my payroll and payroll taxes I made
a little bit of money on that first contract which allowed us to bid
more work, and by the end of 1979, which was our first full year iii
business, we had billings of over $1 million.
Now, 10 years later and millions of dollars in billings and mu
lions of square feet of buildings later, I still have a lot to learn, but
I have learned a lot of lessons I am still struggling for expansion
capital Every time I walk into the bank, it is like I was starting all
over again I generally get the pat on the back I have done a good
job, but they think you are doing all the work you need to be doing
right now.
But in 1981, in stark contrast to this kind of attitude, I joined
forces with my brother, and we were going to do speculative build
ing, and it was speculative, because in 1981, in Kansas City, there
was no construction market The first bank I went to with this wild
idea accepted it, gave us the money, and we built the building Of
course, we couldn't sell the building We Qwned the building 6
years later, but that one experience pointed out to me that it
helped to have a man for a partner, because it was `a much more
PAGENO="0016"
i0
risky venture than what I was doing with solid contracts in my
hand, but it was easier to get the money. .
I feel very strongly that banks need to be require4 to have stated
policies about what they loan money on, what they don't loan
money on, because it is so easy for a banker to-when you walk in,
to look at you and make his judgments not based on what you can
do or what you have done,, but based on gender, or based on maybe
she is not in an area that she should be in,, those kinds of things I
think we need to change.
Also, if you are denied credit on any particular deal, it should be
stated very clearly why you were denied the credit. I think, too
often, the bankers get away with passing us off and saying that
really doesn~t' fit our loan portfolio right now, and I would like to
see something changed on that Also, I would like to talk a little bit
about my experience with the Federal procurement programs, be-
cause Systems Erectors would like to do work with the Federal
Government, and I have gone to the seminars that have been held
in Kansas City or at surrounding areas. They are often called How
To Do Business With The Federal Government, and at these semi-
nars they talk to you a little bit about how to do business, and they
give you stacks of paper to fill out If you fill out these forms, it is
my understanding that you are put into some kind of a data bank
that is available t~ all the procurement people in the various agen~
des.
But in the 10 years that I have been in business, `I have never yet
received a request for quotation fOr the type of work I do or in the
area I do~ Occasionally, I receive one frOm the Corps' of Engineers'
offering that I could build a dam for them somewhere But I don't
build dams, I don't know anything about it.
So, I would like to know how we can break into that system, be
~eause there is a huge, huge marketplace and opportunity for a
~oman business owner; and I think that i~ all companies that are
qualified to do the various kinds Of work that the Federal Govern~
ment is purchasing, and they want to do that work, if they are not
given the opportunity not only might the Government not be get-.
ting the best price for their purchases, but the small companies are
not getting the advantage or the help' that they might need~
Thanks to my association with the Committee of 200, 1 have
learned that most all the women that I talk to., share my frustra-
tions, and just as a note of explanation, the Committee of 200 is a
national organization of women business leaders who are risk-.
takei s in their respective industries, but even women with much
larger corporations than mine seem to be faced with the same
problem of lack of credibility in the marketplace, lack of access to
credit, and lack of Federal Government procurement opportunitieS~
In 1978, in the field that I chose, I was definitely a trail blazer,
but now, looking back, I dor't see anyone following me, and this
concerns me very much. I wonder what is stopping these people
from coming behind me. There is nothing special about Mar7
Farrar. I didn't have an~ family member to model after, I didn t
have any money, I didn t have any education, I didn't have any
business training, and I certainly don't have a genius IQ. I ran into
lots of roadblocks and barriers, I had a lot of grit and determina-
tion, and despite the odds, I have made my company successful.
PAGENO="0017"
11
~ In conclusion, I would like to s~y if. `both tIi~ , public and the pri-
vate sector could work toward assisting wGmen who have the drive
and entrepreneurial rpir~t to achieve their goals, our economy
~v~uid benefit all the more. ~ `
`Thank you.
Chairman LAFALC~ Thank you very much, Ms Farrar
[Ms Parra?s statement may be found in the appendix J
Chairman LAF1~LCE. We have been joinedby the Congresswoman
from the State of Kansas, Representative Jan Meyers, who was the
star of yesterday's Profiles, in Congress on CNN Ne*s, and also
Congressman French Slaughter. ` ` `
Our next witness wfli be Ms. Lillian Linco~n. Ms. Lincoln.
TESU~QNY OF lILLIAN II. LINCOLN, OWNER, CENTENNIAL ONE,
INC.
Ms Liwcou~1 Good morning, Mr Chairman, and members of the
committee
My name is Lillian Larncohi I am president and founder of ~Jen
tennial One, a building maintenance service company located in
Lanham, MD My company currently grosses more than $8 million
in sales, and we `employ in excess'of 800 people.
As I testify today, I am strongly reminded of the climate in 1976,
the year I entered the entrepreneurial arena There was talk at
that time of much support and encouragement to women and nu
~orities to start their own businesses, take the associated risk, and
actively compete on the open market The political environment
~vas supportive, and I received lots of backup from friends, business
associates, and family
In December 1975, I started my company I invested $4,000 of my
own money, and I employed a few people and d~ecided to go after
Government work I decided that I would apply for approval under
the 8(a) program~ but my initial application was turned down, be
cause the Small 13usine~s Administration stated they co~ildn't pro
vide enough contracts to support my business Well, I assured them
that I did not really need them to provide me with the contracts
As long as I had the approval, I would market Government agen
cies and secure the contracts on my own
So, undaunted, I reapplied, provided the SEA with names, ad
dresses, and telephone numbers of agencies to whom I had already
spoken and who had agreed to set aside contracts for my company
In October 19 76, Centennial One was awarded its first 8(a) coatract
from Vie Department of Agriculture in I3eltsville, MD That con
tract was for $150,000 arid required the employment of about 20
part time people
As my comp~py grew over the next few yeers, I continued to do
my own marketing while controlling the growth of my coz~npany
We won more Government jobs while adding a small core of pri
va~ clients In addition, my 8(a) base continued to grow until the
ratio~was 70 percent public sector and 80 percent private
In order for my company to continue to grow, I realized that I
needed greater access to capital I did not turn to the Small Busi
ness Administration, because I had established a rather unique re
lationship with a local bank president who had~ previously been my
PAGENO="0018"
12
personal banker and who really believed in me. I have no doubt
that it was because of this relationship that I experienced no real(
difficulty in acquiring credit. So, in 1976~ with my accounts receiva-
ble as collateral, I was granted a $12,000 line of credit from this
bank.
Today, the company now has more than half a million dollars
line of credit, and we have unlimited bonding capacity. I am aware
that my personal story is somewhat unusual when it comes to
credit, but for many women access to capital is a major obstacle.
In 1982, I was given a fixed number of years to remain on the
8(a) program under the new guidelines. I asked for, but was denied,
a 1-year extension. So, in 1985, I was abruptly dropped from the
program At the time of my "graduation," which I determine is a
misnOmer, I had about $5 million in 8(a) contracts and $2 million
in private-sector contracts. Clearly my. business was in danger of
not surviving the graduation.
Between January and March 1986, Centennial lost $5 million in
sales, and the company could have gone bankrupt had I not had in
place a strong marketing program which had been implemented a
few years earlier. Others with less foresight have seen their compa-
nies collapse upon graduation from the 8(a) program, or have had
to merge with other companies, or sell equity positions. Clearly,
there is definitely a. need to improve the procedure for supporting
the companies during this critical transition period
Many women and minority-owned businesses are unable to perse
vere through such financial hardship, which makes Government
contracting an extremely difficult market in which to build and
grow your business. My company pulled through, prevailed, and
through aggressive marketing it reversed its client base to its cur-
rent level, 90 percent private-sector contracts and 10 percent
public-sector.
It was when I first hired my first salesman, a young aggressive
white male, I was confronted with the realities of sex and race dis~
crimination in the marketplace. Previously, clients had been rather
subtle in dealing directly with me, but it was through this young
man that it became obvious that people were frequently dubious
about doing business with a female, particularly a black female I
have been blessed over the~ last 12 years, and, with hard work, I
have built a fine track record. I am now taken seriously, but it has
not always been that way. Credibility continues to be an issue with
women in business.
Clients, suppliers, and financial bankers are slow to believe in a
business plan if it is submitted by a woman. She still has to prove
herself, and she is put to a much more difficult test than her male
counterpart. I have good credentials, I hold a bachelor's degree
from Howard University in Business Administration, and I was the
first black female to receive an MBA from the Harvard Graduate
School of Business in 1969~ In 1981, I was selected as small business
person of the year for the State of Maryland, an award which I
truly value.
in closing, Mr. Chairman, and members of the committee, I
would like to thank you for allowing me to testify today, and I
hope that my story will help support legislation to assure adequate
and fair credit for women and open up avenues of increased pro-
PAGENO="0019"
is
curernent for female entrepreneurs. I particularly would urge you -
to do all that you can to make the odds better for successful
women~owned business. ~ . ~ ~ ~
Thank you very much. -
Chairman LAFALCE Thank you very much, Ms Lincoln
(Ms Lincoln's statement may be found in the appendix]
Chairman LAFALCE Our next witness will be Ms Kathryn
Keeley from the ~tat~ of Minnesota. ~ -
. ~tESTIMONY OF KATHR~!N KEELEY, PRESIDENT, WOMEN'S
ECONOMIC DEVELOPMENT CORPORATION [WEDCOI
Ms. KEELEY. Thank you, Mr. Chairman, and members of the comrn
mittee. My name is Kathryn Keeley, I am president and cofounder
of the Women's Economic Development Corporation, which is a pri~
vate, nonprofit Minnesota corporation that assists women to start
and operate their Own businesses.
We have been in existence for 4½ years, and in that time we
bave seen over 3,500 women who want to start a business We have
started 650 businesses, expanded another 350, and assisted some
400 that were in trouble. Over that time we account fOr some 2,000
new jobs created within the State of Minnesota and with 65 per-
rent of those being what you call self employed, they are creating a
job for themselves and one other person, 32 percent being small
businesses, and 3 percent being the potential multimi1lion~doJlar
companies.
Our organization targets unemployed and underemployed women
who need to create a job for themselves to support themselves and
their families We have a specific focus which we have gotten na
tional recognition for Women on AFDC The program was recently
spotlighted on a 60 Minutes segment 6 weeks ago for work we have
done with AFDC recipients
A major part of our program is financing We have admimstered
a loan fund with which we fund women owned businesses Our
loans range from $800 up to $125,000 with an average of about
~12,000 We just did our smallest, which was $31 58, but that is typ
ical for us When we do financing, we believe an owner should be
at risk for their business, but we use creative lateral We take kids'
bikes, couches, all the rntan~ib1es, the bankers say, that are in the
business The most creative business we did was a florist, where we
did a 5 day note on the roses and took the roses as collateral, which
we could have sold, beoause roses had a life history of 10 days We
did it on Valentines Day That owner sold $3,000 worth of roses,
she had $2,500 to collateralize her business, and she was in oper
ation. - -
We are known for being very creative and coming up with fi
nancrng schemes that will work Out of our $1 2 million, we have
~800,00O loaned out at any one time, and we have only lost $21,000
in 3 i/2 years We have a loss rate most bankers envy We are hard
nosed b~srnees women in what we do We want to be repaid, ~nd
we do serious business pIa~s Half the women who come to us, we
talk out of the business They would be potential failures
We just did a 3 year followup on the businesses we started, and
~2 percent are still in business functioning and doing well. L want
PAGENO="0020"
14
to focus on capital, because that is the area we work in most. Since
our 60-Minutes segment, we are getting 500 women a day calling
our office. Half want to borrow money from us. We have heard
from every State in the Union. We have had women call-one call
from California, there were 45 women in the room wanting to
borrow money. Some had ideas where they needed $700, some
needed $lO~OOO~ but they all wanted to support families and had no-
where to go.
We tried to send them to the SBA, and, unfortunately, they tell
them to go take classes. Classes do not create capital. Women face
four barriers we see. One of them you heard today, about how we
are stereotyped over and over. Women are seen as starting soft
businesses. They are not taken seriously as business owners, and
we see this all the time.
Second, we don't have the personal assets often when we start
the business. I am reminded only 6 percent of the women in this
country earn more than $25,000 a year. That means we are not ac-
cumulating a lot of cash.
Second, I saw some testimony last week from Frank Swain from
the SBA, and he says businesses start from family and~ friends. You
better have the right family and friends. It is other women like us,
who again are in that 80 to 90 percent who earn less than $25,000 a
year, and we don't have a lot of cash to spare for each other.
Third, is equity money, something that is harder to get if you
want to expand. It is the investment dollars with a higher return,
and it is a network that exists that women are not part of.
Finally, the whole issue of women expanding their businesses
and getting access to different kinds of markets. Again, Lillian
talked about that and the need. When you have new markets, that
is what produces capital and interests investors. I thiiik our organi-
zation has worked actively, and we have stayed private funded over
the years, because no one has taken us seriously in Government.
We have a list of 100 places that. want to replicate' us around the
country. We have contracts in five States to go in, but, again, it is
private funding because the Government sees what we are doing as
sort of soft or too fuzzy for them to understand, We have a track
record now that we can explain and articulate, and wö want to par-
ticipate very much as we restructure this economy.
We believe women are leaders, and we want' to roll up our
sleeves and do it together. You made a comment about creating
wealth in this country. Frankly, women want to create wealth, but
we would like to share some so we can create it together.
[Ms. Keeley's statement may be found in the appendix.]
Chairman LAFAi~cF~. Thank you very much.
Now I will go to the question and answer period. I will ask just a
few questions, myself.
Just so I have a better understanding about WEDCO, how is it
financed?
Ms. KEELEY. We have a $6,000 operating budget that comes from
corporations such as General Mills, Pillsbury, Northwest Founda-
tion, it is all private money. They are grants. We are' a tax-exempt
organization. We only work with women in Minnesota.
Chairman LAFAWE. Most of your contributors come from---
PAGENO="0021"
Ms~. ~EEELEY~. All of ~hem~;c~:xoept the `ord Foundation wo~t be
the only national funding we have Thirty five percent øf my
budget we do earned income, we do on consulting around the c~un
try We get paid for speeches and eherge StateS to explain what we
do. . ~ ~ ~ ~
I raised $600,000 a year The loan fund is primarily from Ford
Foundation
Chairman LAFALCE I see Are there any other corp~ra~ions such
as yours in the United States'~
Ms KEELEY There are probably three in the United States
Chairman LAFALCE Who~
Ms KEEL~Y In West Virginia there is a group called Women
Employed, a group in new York City called AWED, and in Chicago
there is the Women's Self Employment Project There are five
other groups, one in Des Moines, IA, Missoula, MT, San Francisco,
CA, the Range in Minnesota, and Milwaukee, WI, that are trying
to start up. But none of them has loan money.
I am being corrected back here We are the only one in the coun
try to have actual dollars to loan out
Chairman LAFALCE Are any of these organizations funded by
Government?
Ms KEELE~ ~ot that I know of The Chicago pz~o~ject may have
some Government money AWED has some Government money
Chairman LAFALCE Ms Rudd, one of the things you called for
was the creation of a Women business owner's policy Council Right
now isn't there an interagency task force on women's enterprise,
and isn't this just a new name for an interagency task force9
Ms Runo There is e~tistmg an rnteragency task force I have
never been contacted by them I think one of the major problems
with it is that businesa owners are not included in the delibera
tons, and we need to get that kind of input into a policy it is a
little difficult for a group to design a program if they don't have
the input for designing the programs
Chairman LALFALCE Do you know if there is any interfacing be
tween this existing interagency task force on women's enterprise
~nd any women's organizations within the private sector9
Ms RUDO I do not know enough about that interagency task
force I do not know of that We are the major women business
owner group I don't know if they have interacted with the Corn
inittee of 200 which is the other major group
Ms. FAnRAR. No.
Chairman LAFALCE Weil~ on the ~ne hand, I would argue it is
the z~esponsibility of the interagency task force to reach out to the
private aector to include them within their deliberations, that is if
I were appearing before them, or I had them before me On the
other hand, I would argue to private organizations, if there is
awareness of a task force not reaching out to tiem, maybe the pri
vate organizations should be reaching out to the guvernmental task
force In other words, I am suggesting there is a mutual responsi
bility and perhaps neither side has fulfilled the responsibility of
reaching out to the other;
Ms Ruirn There was a report that came out from the interagen
cy task force, and we asked for the report over a long series of
months, and I think we finally got a report about, I got one
PAGENO="0022"
16
anyway, about a month or so ago. But that was after a longer
period of deliberations.
Chairman LAFALCE. Well, I think it is fair to say this interagen-
cy task force, if anything, could be labeled rather dormant over the
past several years--
Ms. EUDD. Totally asleep.
Chairman LAFALCE. That may be accurate. We intend to pursue
that at future hearings.
Is this women's business ownership policy council to include rep.
resentatives from beth the publiô and private sector?
Ms. RUDD. Yes; definitely. Our real strong push is to get the pri-
vate sector within the deliberations of any program that is de-
signed.
Chairman LAFALCE. If we were to reach out to the private sector,
who would we reach out to? Clearly, I would imagine you would
suggest your organization.
Ms. RUDD. I would.
Chairman LAFALCE. Would there be other organizations that
could be deemed representative of women that would be included
in such a council mvolving both Government and public and pri
vate sector?
Ms. RUDD. Yes; I am sure the Committee of 200 might want to be
involved, groups' like WEDCO. There are minority associations that
also would like to be involved, I am sure.
Chairman LAFALcE~ Do we have a list of the major organizations
within the United States in some way representing or purporting
to represent women business owners that could be included?
Ms. Ruon. We probably have the best list in the Department of
Commerce. We do those kinds of `lists together for the Mega Mar-
ketplace, both to contact them, and we have very poor, I would say,
individual lists.
Chairman LAFALCE. Should any further focus we have-~-or the
present interagency task force, or some other business council,
women's business council-be exclusively for business owners or
for women in business as distinguished from women' business
owners?
Ms. RUDD. I think it needs to b~ on women business owners. It is
the ownership that brings special talents, problems and energies.
The owners are the day-to-day runners and take the risk of the
business, raise the capital of the business, and stand behind their
capital, and it is the owners who should be included.
Chairman LAFALCE. Some suggest that perhaps there is a need
or concern for not just business owners but women in business and
the special problems that they might have. So, I understand the
distinction,' and I understand where you are coming from. In a cer-
tain sense, not that it differs from something else in your state-
ment, but you did emphasize what I refer to as mainstreaming, al-
though I don't think you used that word. You didn't call for certain
new activities designed exclusively for women. I think you were
asking for greater emphasis on women-owned business, within ex-
isting activities. Is this true?
Ms. RUDD. We are taking, I think, a budget conscious approach.
There is enough mone~r there, if it is used correctly, and our prob-
- lem is access. We can t get into Government systems or financial
PAGENO="0023"
17
systems. So, what we are asking for is a good deal of commitment,
and the things that we suggested, like merit increases when Feder-
al employees do something that achieves women business owner
goals, those are the things that we are looking toward.
Chairman LAFALCE. All right. Now you say that you can't get
into certain types of activities, which is different from governmen-
tal agencies or individuals not reaching out to women. In that con-
nection, you also stated in your testimony that existing policies re-
lating to procurement, credit, and tax are crippling women-owned
businesses.
But there was no explanation or expansion of that statement. Do
you or do any of you have any information that you could share
which would back up the claim that existing policies of the Govern-
ment relating to procurement, credit, or taxes are crippling women
or hindering women?
Ms. RUDD. We can draw those together for you. We have inter-
nally within NAWBO done credit surveys of our own business
members. There are very few statistics within the FederEtl Govern-
ment, and that is really our large problem. The Department of
Commerce supplies us with a less than 1-percent figure on procure-
ment, for instance.
We don't know what our resources are in the women business
owner community. We really need those statistics as well as the
whole entrepreneurial sector looked at. One of the things NAWBO
has been particularly active on is getting the SIC codes changed
and expanded to fit the kind of economy we have now. What we
are really looking for is a sense of economic direction in the coun-
try, and we need statistics on us and every entrepreneurial entity
in the country to see what we have and where we are going.
Chairman LAFALCE. Fine. Mr. Ireland.
Mr. IRELAND. Thank you, Mr. Chairman.
I have to say, I like what you say, from beginning to end. It isn't
just the women's part of it that gets me excited, it is certainly the
entrepreneurial part as well.
There is a book on the best seller list by Dr. Paul Kennedy of
Yale that has gotten a lot of comment because the title of it is,
"The Rise and Decline of Great Powers," and all of the commen-
tary seems to be focused on, "Are we declining, are we following
what other countries have done in the last 500 years?" Central to
that discussion, except for one prominent comment in the Harvard
Business Review, but absent across the spectrum of commentators,
is the fact Dr. Kennedy points out in his introduction that through-
out the book a central part of his thesis is that no country in histo-
ry has risen to the top without being both pluralistic, and entrepre-
neurial, and active in commerce and the free market; in addition to
that, he points out that no country, in getting to the top of the
heap, has declined without a prominent segment of that decline
being the closing down of entrepreneurial activity by bureaucratic
Government.
I am struck in all of the testimony here by how, for the most
part or almost entirely, the problems you have ticked off and allud-
ed to are somewhat the same.
I see similar problems in procurement. The procurement activity
of the Federal Government is bureaucratic in the extreme and is,
PAGENO="0024"
Is
by and large, a product of people who have never had tobe in busi-
ness and never had to face the kinds of things you and other small
business people a~e facing.
The problems of banks-here, again, I spent 25 years in the
banking business, and I like to think I did a lot of the kinds of
lending we heard about from Kathryn. But the mentality in Amer-
ica is brought about by the fact you are looking to bankers for cap~
ital. In the early 1930's, this Government, because of the Depres-
sion, took commercial banks out of the capital formation business.
They can't invest in your business, or they could go to jail. We
have a Government-sponsored market imperfection as far as our
banks providing capital, and y~tnobody is addressing it.
The Government and our 0MB in particular now say efforts to
solve that by having Government-sponsored entities much like
what Kathryn has said-they said those are Government-sponsored
entities and, therefore, are not a proper use of tax money. Yet from
Fannie Mae on, we have those kinds of things, and I think it is
high time we did a better job of providing capital by a Government-
sponsored entity that could do it.
It is certainly cheaper than the billions and billions of sorry
loans that we have in our SBA portfolio that have gone to less than
1 percent of small business in America, which makes the amount
of what women have gotten pale by comparison.
So, having said that, and with my enthusiasm for what you are
talking about and the economic denominator here, I really think
there are special barriers in the women's world that we need to ad-
dress. As I said at the outset, I am pleased that the chairman has
focused on this area. It needs to be focused on.
Ms. Rudd, you have seen what we have done with Government
trying to get into this kind of business. I think yOur explanation
that you are dropping "small," because in a sense Government ef-
forts are to no growth and are to disadvantaged-there is some
need for that, no mistake about it, but that isn't what you are talk-
ing about, so you dropped the "small." You want to be something
different.
My real concern is, this independence and this need, if you are
going to call-as some of these things that you listed should be
done-if you are going to call on this Government to do it and real-
ize what a miserable track record the bureaucracy has of really
helping people without taking away their ability to succeed, how
are you going to reconcile those?
Ms. RUDD. The women's policy task force we are asking for is a
planning committee, and I don't mean long-term planning. We
a~n't like to plan for long times. We can do strategic planning, that
is, to put in place some programs.
We would like all of the sectors to work together, but we really
want this to be a private sector driven front so that we can-it is
true about the capital area; there must be another way. We have to
come up with other solutions to the kind of bureaucratic layers,
and layers, and layers that we have now. There has to be another
way to get the Government dollar out through the contracting
system.
PAGENO="0025"
19
We will come in with some recommendations on procurement
and credit. We don't have them today, but we will come in with
them by the end of the hearings.
We first suggested a business strategy planning task force. That
was the overriding thing. We want to be a part of that, and I think
women business owners can be the kind of wedge that goes in to do
it. We are the entrepreneurial wedge and the fastest growing
wedge. So, we want to plan now a different kind of activity for the
Government to do, I would say, working with business, things like
Kathy Keeley's program. Why can't we put some money into ven~
tures like that? They work.
You have to have the right people, the right money, the right
places, and we have the commitment to do that. I know from work..
ing in Mega Marketplace that Government people also have the
commitment to do it. But in the meantime they are strangled by
their own regulations.
So, I think in a sense we have to carve out some model program..
zning so that we can say, "This works, and we can do this.'
Mr. IRELAND. Thank yc~.
Chairman LAFALCE. Mr. Lancaster.
Mr. LANCASTER. First of all, I want to tell you how inspired and
impressed I have been by your articulate testimony. Each of the
witnesses was excellent, and I am convinced that you have given us
the basis for questions of the witnesses who will appear on subse~
quent panels.
I really don't have questions for you, but you certainly have
given me questions to ask for of the institutions, private and
public, that have thrown roadblocks in your pr~ress. I thank you
for providing us that.
I would just conclude by telling Ms. Bergen that her first experI~.
ence in business was very similar to mine, except I sold Rosebud
Salve instead of Cloverine. I grew up on a farm, and so, I was used
to hard work, but never business endeavor until I started on my
Rosebud Salve business venture. My first compensation was a red
cutglass ring that promptly turned my finger green. But your testi-
mony certainly brought back those memories of that first effort to
sell something door-to-door in a rural community.
I do thank each of you (or coming and for giving us the arnmuni~
tion we are going to need as these hearings continue.
Thank you.
Chairman LAF~.LcE. Thank you..
Ms. Meyers.
Ms. MEYERS. Thank ioU, Mr. chairman.
Mary, it is nice to see you again, and I am ~ t~ heat your tes~
timony and the testimony of all the women~
I glanced through the testimony from Ms~ fl~rgen and Gillian
Rudd. I was interested in hearing your comments, Ms. Bergen~
about the fact that women-owned businesses are not just a social
program, that they are contributing enormously to. the economy,
and when they contribute to the economy they also contribute to
Government and help us with our deficit problems, and so, it is
something that we should definitely be encouraging.
PAGENO="0026"
20
I guess my question is-and I think Gillian's testimony partially
answered it-specifically, at this time; what can the Government
do?
I know you have suggested the Cabinet policy. council, and I
think that sounds like it would coordinate agency efforts here in
Washington and maybe be able to cut through the bureaucracy a
little bit more.
Specifically, is there anything that the Government should be
doing now, can do now, before this policy council is instituted? I
think I heard Mary and maybe Lillian saying that it was hard to
be aware of what Government programs were there, and that they
were not always notified and aware.
Maybe, Mary, you can address this, or Gillian.
Ms,. RUDD. There could be a very swift outreach to women busi-
ness owners throughout the country in terms of knowing who they.
are and collecting data on them, who are the women, what are
their businesses, where can they fit in.
We . started that process within the Mega Marketplace system-
there is a bank-beginning in the Department of Commerce, and
we produced from that a directory.
The most wonderful thing in the world would be to have a na-
tionwide women business owners directory that could be given to
Government contractors and to corporate buyers,. and that is the
hook between the two. That will be very close.
The other programs, it depends how swiftly Congress can move.
We need the equal access to credit moved so that the banks will
xrt on why we are not getting loans. It is obviously a big prob-
lem for everybody across the table who just testified.
I think maybe those would be major things. We can move on the
export program, which Secretary Verity is moving very fast on. If
we could institute that program swiftly, we could put a model pro-
gram in place. It has all the ingredients: A financing arm, if we
can get Export-Import to do that; technical assistance arms; a little
microcosm of what American businesses can do to help solve the
trade problem. So, that would be a tremendous thing to do, and it
would be beneficial for the long run, I think, for the entrepreneuri-
at community throughout the United States.
Ms. MEYERS. Mary, do you have any comments on that?
Ms. FARRAR. The only thing I think about, because I brought up
the procurement program-supposedly it is there, but I am just
asking why in my case it has not worked. I don't know where to go
to get that answer, and that is why I brought it here with me
today.
Ms. MEYERS. I am glad you are here, and maybe I can work with
you on that.
I am very pleased that you are in my district. Thank you for
being here..
Kathryn.
Ms. KEELEY. I was going to comment on the financing end.
We travel across the countty, doing our speeches. The hardest
money to raise is money for loan pools such as we a~minister. The
private sector has a difficult time doing that, and they say the ~BA
does that.
PAGENO="0027"
21
I would like the SBA to stand up and say what they really do
and don't do. That is the first step, which would be fairly sensible,
so we can stop passing it off.
The second issue is the Government may have to be the leverag~
ing partner that says, OK, if you raise x amount of money, we will
put this in a loan pool, and challenge communities to do some
things in terms of financing.
Ms. MEYERS. Ms. Keeley, I think it would be best to address this
to you. Could you answer, how might this committee be helpful in
promoting the establishment of other groups like yours throughout
the country?
Ms. KEELEY. Well, you could help fundraising in your local dis..
trict. The toughest thing is raising the money to support the orga..
nizations. San Francisco has been working over a year to help orga.
nizations. On the 60 Minutes tape I said when you sit in a meeting
and say you are going to help poor wOmen, put them in business,
and loan them money, and they have no collateral or assets, that
tends to drain the color from bankers' faces, and foundations and
corporations think it is some service giveaway program, and we do
enough of those; So, there is a real lack of understanding. We don't
fit in neat boxes in how we do things.
So, lend your credibility to some local groups to raise money.
I think the other is this Government has to put out some chal~
lenge money that lends credibility to these organizations.
Ms. MEYERS. Thank you.
Lillian, I think it was you who said you went to the SBA, and the
SBA told you to take some classes.
Ms. KEELEY. I said that.
Ms. MEYERS. Are you saying the SBA is prejudiced against
Women particularly or-.~-
Ms. KEELEY. I think they are prejudiced against small businesses
right now. Back in the Midwest, we are direct, right? Out of 650
businesses we have gotten started, one is SBA out of all of that.
Most of them are turned down. We don't go in anymore. We had to
lose $2,000 for the points on the loan. We are fifth out in terms of
collateral on the financing. We have gotten paid back our points
and everybody else was paid out of this. The business is working,
and it is doing great, but we see it as twice as hard as a bank to get
money out of, frankly. Your collateral has to be better.
Ms. LINCOLN. I would like to comment on that.
That is. the major problem with SBA. If a company even qualifies
for the loan, by the time SBA gets thepaper~ror~, the company has
gone out of business. It just takes too long.
I was on a bank board once, and we sometimes couldn't approve
SBA loans, because SBA moved too slowly for the bank, and banks
are slow enough. I think that is a major problem, there is too much
bureaucracy and too many people passing things off to someone
else. Nobody wants to assume responsibility for getting things
through all the red tape. So, lots of companies are discouraged
from going to SBA.
I did not get an SBA loan, but I had some personal money and
had bank financing, but I was tha~kful I didn't have to go to them
because of the stories that I had heard about SBA funding.
PAGENO="0028"
22
Ms. MEYERS. Thank you very much. I really appreciate all of you
being here today, and it has been a very interesting hearing.
Chairman LAFALcE. Thank you. Mr. Slaughter.
Mr. SLAUGHTER. Thank you, Mr. Chairman.
I would like to say to the panelists who have come here, I cer-
tainly join in the appreciation of having you all testify, and I think
the comments you have made have been very interesting and ar-
ticulate. I certainly hope that there will be some progress as a
result of your appearance.
Thank you very much.
Chairman LAFALcE. Ms. Bergen, I thought I saw you about to
make a comment in response to one of the questions and didn't get
a chance. Would you like that opportunity now?
Ms. BERGEN. Actually, we were talking about Government con-
tracts, and I think the thing women miss most in bills is really
basic information. The unfortunate part about it, I think, for us as
women, and newly entrepreneurial women over, the last 10 or so
years, 20 years, is that we really don't have our network, and if we
had it, the network doesn't have the information either, because
we weren't brought up in that kind of society where the informa-
tion was taught to us from a very early age, so that many of us
miss opportunities within our businesses; whether it is building or
for me making shoes for the Army, there are so many things that
we could all be available for that could help us expand, enlarge our
businesses, both nationally and internationally, that we aren't even
aware are there for us. We don't have the input.
We don't know the questions to ask to get the right answers in a
lot of cases, and I think that that, if it was available, certainly for
me, a handbook or something that could be passed out by NAWBO
to women in business that would cover many of the varieties of
business that women are in today and the advantages available to
them, not as a give-away, not as anything but information for them
to know, that could conceivably add to their business, enlarge their
business, make them more important not only for themselves but
economically for the country. It would be a tremendotis advantage
to all of us who are striving t~ build our companie~ and enlarge
our businesses.
Mrs: MEYERS. Mr. Chairman.
Chairman LAFALcE. Yes, Mrs. Meyers.
Mrs MEYERS The thing that surprised me most about the testi
mony today was: It has seemed to me that some of the problems
that women have had in the past would be resolved just by time,
and yet, I am still hearing the same conôer~s expressed today that
I heard 10 years ago. Ten years ago I was in the Kansas Senate
and we were also involved with business and encouraging a good
business climate in the State, and I am hearing the ~same ~things
now that I was hearing 10 years ago. I really believe that the
policy council that you are suggesting might be an excellent idea.
Sooner or later we have to make another giant step forward so that
10 years from now we won't be sitting here saying it is very diffi-
cult for women to get credit.
Chairman LAFALCE. Ms. Rudd, in your testimony you suggested
that it was necessary to obtain better information. I forget exactly
where you said itor how you said it, but, clearly, one of your points
PAGENO="0029"
its being use
PAGENO="0030"
24
Chairman LAFALCE. It should be. The reason I asked that ques-
tion is because there is so much confusion so often about what `the
goals of `legislation are. For example, take minority programs. Do
we create minority programs for blacks, and Hispanics, and other
people defined as minorities to establish the owners of businesses
as beneficiaries, or do we anticipate that the people working for mi-
nority-owned businesses will also be minorities? Is it our, primary
purpose to create jobs for minorities independently of who the busi-
ness owners are?
Then, of course, who are minorities? That is one of the reasons I
wanted to pursue what the `goals' of assisting women business'
owners should be. Because, as you know, or perhaps don't, there
was a recent law that passed in this Congress, January 1987, the
Surface Transportation Act, which, for purposes of Government
contracts, included women as minorities within the set-aside pro-
gram. Women business owners have obtained an unusually high
percentage, I am advised, of the contracts under the minority set-
aside program. Some would say this is good, some would say it is
depriving other minorities or true minorities. Women are not true
minorities some people would argue. It is a controversial issue, and
there is no sense avoiding it.
Anybody have any comments they would like to' make on that?
Ms. RUDD. I have' a comment. I am never at a loss' for'words.
Chairman LAFALCE. Sure. " ` , , ,
Ms. RtJDD. Our true goal is to open the system, and we don't'
`want to get involved in special ~terest fights. It doesn't do any-
body any good. Our concern is that America is at an economic cross
roads, and we are having~probleins right, now. I think within the
women business owner community~, we have boot'strapped what
might be called our initial 8(a) program we have done for ourselves
Now we want the system opened up so `~v~ can get more of the mar
ketplace and get some more of the dollars, so that we are totally
focused on expanding the whole system for e~trepreneuri~d busi
nesses, because that is what the country needs
Ms LINCOLN Could I comment on that9
Chairman LAFALCE Surely
Ms LINCOLN Ideally, our system would be sa~ there would have
to be no special programs, that the system is open enough that cv~
erybody can compete I know about the argument between the set
asides for minorities and women as minorities Which side ~do I fall
on? I fall on both. , `
But it seems to me the big argument is that this is the pie, an~l
this is all of `the pie there is, so we slice it into smaller slices, and
that is where a lot of the argument comes in I agree that, ideafly,
we would not have to have any set-aside programs, but there are a
number of barriers that Congress can work on so that access is
there for any business that wants to~participate in"the free econom-
ic system. `
`Chairman LAFALCE. Good. Ms. Bergen.
Ms. BERGEN. I think that all of us agree that as we, I think, have
said, are ~really not looking for special assistance. We are not look-
ing for a give-away. We really want to be able to compete on an
equal basis in an open marketplace and bid as everyone else does,
and if our bid is the best, we get the job.
PAGENO="0031"
25
Unfortunately, we don't know what the job is, so we can't place
the bid That is where we have a problem in the marketplace It is
simply a case of wanting to have the same opportunity as everyone
else to try to get the job If we lose it, we lose it, because we
weren't good enough, or our :bid wasn't low enough. But right now
it is the initial opportunity that is the step we are in many cases /
missing, because we don't know what it is.
Chairman LAFALCE. Thank you.
Well, if there are no further comments, I want to thank all of
you for an excellent presentation in the opening hearing of what
will be a series of hearings on the problems and opportunities of
Women business owners You have given us an excellent departure
point for that I thank you very nw~ch
The committee is adjourned.
(Whereupon, ~t 1.210 p m the c~nmlttee was adjeurned, subject
to the cafl of the Chair.j
PAGENO="0032"
PAGENO="0033"
NEW ECONOMIC REALITIES: THE ROLE OF
WOMEN ENTREPRENEURS
WEDNESDAY, APRIL 27, 1988
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to notice, at 9:10 a.m., in room
2359-A, Rayburn House Office Building, Hon. John J. LaFalce,
(chairman of the committee) presiding.
Present: Chairman LaFalce; Representatives Sisisky, Hayes, Lan-
caster, and Price.
Chairman LAFALCE. The Small Business Committee will come to
order.
This is the second in our series of hearings addressing issues that
affect women business owners. Yesterday we heard from a panel of
witnesses representing a broad range of business activities in which
these women had achieved distinction.
Today, we will continue to review the considerable accomplish-
ments of capable entrepreneurs who just happen to be women. We
will also focus on the persisting difficulties facing women who try
to gain entry to the Federal marketplace.
The committee has received numerous complaints that women
are virtually shut out from Government contracting activities. In
1979, women-owned small business received .22 percent of all con-
tract dollars awarded by the Federal Government. Ten years later,
women-owned business has become the fastest growing segment of
our economy. Yet women still receive less than 1 percent of the
procurement dollar.
I am also happy to report that we will receive the findings of a
major new study, as announced at yesterday's hearing, on the state
of women business owners around the country, a survey of State
and local programs for women business owners.
I appreciate the willingness of these witnesses to appear before
this committee to relate their concerns, and I am confident that we
will benefit from their testimony.
I would now like to call the witnesses to the table. From right to
left, Ms. Charlotte Taylor, president of Venture Concepts; Ms. Mar-
garet S. Hansson, president of the M.S. Hansson, Inc., and chair-
person of PureCycle, Inc.; Ms. Phyllis Hill Slater, president of Hill
Slater Engineering of Long Island, NY; Ms. Carey I. Stacy, owner
of DiaLogos International Corp., and coowner of Globex, Inc. of Ra-
leigh, NC; and Ms. Mildred A. Green, president of Accounting Data
Systems, Inc. of Caro, MI.
(27)
88-199 0 - 88 - 2
PAGENO="0034"
28
The ranking minority member of the committee would like very
much to be here, but unfortunately cannot, and he has asked me to
put his statement in the record at this point in time. Without ob-
jection, so ordered.
[Mr. McDade's statement may be found in the appendix.]
Chairman LAFALCE. .1 also have a prepared statement that has
been submitted by a leader in the fight for women business owners
and women on all issues, Congresswoman Patricia Schroeder. With-
out objection, I would now like to put in the statement of Ms.
Schroeder.
Without objection, so ordered.
[Ms. Schroeder's statement may be found in the appendix.]
Chairman LAFALCE. Does any member of the panel have any
statement that they would like to make before we begin?
Mr. LANCASTEE. Only on behalf of Congressman Price and myself
to welcome a North Carolina woman to today's panel. Mr. Price
will be here shortly. Unfortunately, I may have to leave before she
testifies. But we do welcome Ms. Stacy to the panel, and look for-
ward to the testimony of all of today's witnesses. I know that it will
be equally as interesting, helpful, and enlightening as yesterday's
panel was. Thank you, Mr. Chairman.
Chairman LAFALCE. Do you have to leave relatively early?
Mr. LANCASTER. I do, Mr. Chairman.
Chairman LAFALCE Well, our first witness then will be Ms
Carey Stacy.
Mr. LANCASTER. Mr. Chairman, you might want to wait until her
Congressman gets here, becaUse he is on his way~
Chairman LAFALCE. Then we will wait a little bit. Why do we
not gO from left to right.
Ms. Green, would you like to go. first?
Ms. GREEN. Thank you.
TESTIMONY OF MILDRED A. GREEN, PRESIDENT, ACCOUNTING
DATA SYSTEMS, INC., CARO, MI
Ms. GREEN. Mr. Chairman and esteemed members of4he House
Small Business Committee, I want to thank you for the opportunity
to share a few of my achievements arid challenges as a woman
business owner in the Government procurement market~
J am president, chief executive officer, chair of the board, and
major stockholder for Accounting Data Systems, which is a full sys-
tems house for computerization. My target market is the Govern-
ment. I would like to have that be a larger market than it is right
now. But last year, we did $2.5 million in goods and services for the
States of Michigan and Tennessee, as well as for the Federal Gov-
ernment.
As a woman who~ started four businesses in the State of Michi-
gan, I can say that Michigan has been an excellent place to start a
business. I think that istruer in the last 5 years than it was prior
to that, because now there is an Office of Women Business Owners
Services which is sponsored by the Department of Commerce to
help women-owned businesses, to help us see the road, and find the*
way.
PAGENO="0035"
29
I still believe that perseverance, openness, and a niche in the
market is what makes any business successful, but particularly
women-owned businesses.
All four of the businesses that I started were started with less
than $10,000 in capital and these were from my personal savings.
The way that I obtained my abilities as far as bidding on Goverrf-
ment contracts is concerned is that I worked for a bridge contrac-
tor who bid on bridges in five States, and I think that I helped to
make his business very successful. I took that into my own busi-
ness.
The four businesses that I have started are a piano school, a
retail bridal apparel shop, two intermediate care facility homes for
developmentally disabled adults, and an accounting service bureau
for nonprofit corporations which subsequently became Accounting
Data Systems, Inc. [ADS].
We are right now in the process of moving into manufacturing of
computers as well as manufacturing of software and franchising
my business.
All of the contracts that ADS won and has maintained to this
present date were awarded in an open market with no set-asides,
no incentives, or any other type of equal opportunity access pro-
grams to procurement.
I do appreciate the fact that there is a new 5-percent access to
procurement offered by the Federal Department of Defense. Some
States, such as Michigan, currently offer set-asides to women-
owned businesses. However, these are discretionary funds, and
sometimes do not provide access or encouragement to procurement
opportunities. Usually, the contracts for women-owned small busi-
nesses are awarded after the award, not prior to it.
The Office of Women Business Owner Services was started in
1983, about the same time that I started my business. It has been a
great encouragement to me.
My 5-year old company's expansion into the manufacturing and
franchising environments is significant, because it means that we
have struggled and won against all of the odds and against all of
those who said that it could not be done.
When I started Accounting Data Systems, 5 years ago, I was
ashamed to be a woman-owned business. When I decided to at-
tempt to sell products and services a~ the State level, I walked
around in the purchasing office in Michigan, in Lansing, until 20
minutes before closing time before I got up the courage to go in
and tell them I wanted to sell goods and services to the State of
Michigan.
An Office of Business Owners Services is urgently needed at ,the
Federal level and in each one of the States to encourage the fastest
growing segment of our Nation's economy.
Some of the successes that I would mention to you is that I have
two multi-million dollar contracts with the State of Michigan, one
with the Department of Mental Health, and one with the Depart-
ment of Corrections, and I have several other small contracts. I
have two multi-million dollar Federal contracts right now, one with
the TVA and one with the Federal Trade Commission.
PAGENO="0036"
30
I am in the process of finding, and I heard this morning that we
are a little closer to being successful on two GSA schedules, and `I
am very excited about that.
It is my firm belief that local, State, and Federal Government
agencies should be thought of as any other customer, and that is,
that we give the very best quality that we can to those people.
However, I do have a couple of horror stories, and I would like to
share one with you this morning. After our first Federal contract
was working smoothly, Accounting Data Systems received an op-
portunity to bid on a second one, and it was a bid for 180 to 360 PC
computer expansion boards. After the p~eaward evaluation step
was completed ~on that bid, we contacted the distributor and. asked
him to then prepare to start providing this product to our custom-
er.
What we found out was* that the manufacturer had also bid on
this contract, in competition with the people that he had given
prices to, and was now removing and changing his pricing to us.
Number one, he said that we had to provide chips on the boards
ourselves. I subsequently looked into Japan and tried to retain
chips. At that point, and this was approximately 1 year ago, sanc-
tions were going to be put on Japanese imports, particularly com-
puter products. Sometime later, I would tell you my fish and chip
story.
Because I believed that the manufacturer's access to information,
and I subsequently found also that the manufacturer had commu-
nicated with the buyer on this and that he knew not only my pric-
ing but the pricing of the other people who were bidding, and, in
addition to that, he was now raising his price on the products that
he was going to sell to me.
When I questioned him on this, he said that he was the only
manufacturer and that I had no choice, that I would have to buy
from him. At that point, I said I do not think so.
I subsequently planned for a prototype, and did call the buyer
and told the buyer and his supervisor that we would manufacture
the same board subsequently, and that it would either meet or
exceed the specifications, and that we would produce it within the
allotted amount of time.
I thought that would answer the problem. The supervisor said
that I should list my ,protest in writing. I did do that, and the bid
was withdrawn.
My problem with this is that I lost money, because it cost a lot to
prepare the bid, it cost me a lot of money to find the chips, and it
cost a lot to manufacture the prototype. Now, everyone knew my
pricing. The manufacturer subsequently came in, and rebid it
under my cost, and because he had only paid 50 cents apiece for
those chips while I `had to pay $2.50 for them, and those chips
today are $12 each. At that time, I did not know, and no one had
told me that I could go back to that department and ask for a re-
dress on my costs.
There is a need for change. The current procedures are discour-
aging small businesses, much less women-owned small businesses,
from entering the procurement market. When I talk to other
women-owned businesses, encouraging them to be dealers for nly
company for our products, they look at me with skepticism and
PAGENO="0037"
31
say, "Why, with all of the struggles that you have had in the last 5
years and just barely survived many times, why should we want
to?"
When the Federal Government indicates publicly that it will
place a sanction on products, it invites manufacturers and distribu
tors to stoclçpile and raise prices beyond reasonable markets, and
WBO's, women business owners, just do not have the inside track
to get ahead of this game.
This is especially harmful and discouraging to women owned
businesses. I have struggled and won the right to provide quality
goods and services on some proportionately small Federal con-
tracts. I know and believe that there are women-owned businesses
who are interested in doing the same.
Since I believe that it is in the best interest of the Nation's econ-
omy to support the courageous efforts of women small businesses, I
would like to make the following recommendations, and these are
my opinions solely.
I would like `to recommend that there be commissioned a Federal
study to determine what percentage of American businesses are
women-owned ~small businesses. Some informal ~statistics today
show that is approximately 46 percent.
Second, what percentage of new jobs these businesses would pro-
vide. Those same informal statistics say four out of five.
Third, what dollar amounts of revenue are currently being gen-
erated by women owned businesses in contributing to the American
economy Those same informal statistics today say $250 billion in
revenues.
The second thing that I would like to recommend is a federally
mandated 10-percent access to procurement for women-owned
small businesses on all contracts involving Federal moneys, and
that this be certified at a Federal level, and monitored by a Women
Business Owners Services in each State
There is a model certification process right now in the Michigan
Department of Civil Rights, and also the city of Philadelphia It is
a very stringent process, I might also say
The last thmg that I would like to recommend is that there be a
federally mandated waiver for women owned small businesses to
allow contract prices to increase according to increases for products
listed on contracts, and that is when the price increase is directly
attributable to any Federal or State sanctions or legislation causing
that increase.
Thank you very much for the opportunity
[Ms Green's statement may be found in the appendix]
Chairman LAFALCE Thank you very much for your testimony,
Ms Green I tend to agree with your recommendation for a study I
have some serious qualms about any 10-percent set~aside, or a fed-
erally mandated certification procedure, or a federally mandated
waiver for women owned small businesses We want to remove all
barriers and all obstacles, and any form of discrrnination however
subtle, and we want to have affirmative outreach and affirmative
action But those initiatives would go way beyond that I would
have to be convinced of that
We see Congressman Price here I was about to call upon the
representative from the State of North Carolina to testify.
PAGENO="0038"
32
Ms. Stacy, before I do, Congressman Price, do you have any state-
ment that you wish to make?
Mr. PRICE. I would like to welcome Ms. Stacy to the hearing. I
appreciate her participation, and I look forward to her t~estimony.
Her business is an exciting one and crucial to our country's inter-
national competition and ability to break into new markets.
Chairman LAFALCE., All right. Thank you.
Ms. Stacy.
TESTIMONY OF CAREY I. STACY, OWNER, DIALOGOS INTERNA-
TIONAL, CORP., AND COOWNER, GLOBEX, INC., RALEIGH, NC
Ms. STACY. Thank you.
Mr. Chairman and members of the committee, I am Carey Stacy,
and I am from Raleigh, NC. I appreciate not only the opportunity
of being here, but seeing two people from my State sitting on this
committee. I am much encouraged by this.
Chairman LAFALCE. You are very, very well represented, by the
way.
Ms. STACY. I am assured of that.
Mr. LANCASTER. We are neighbors, also.
Ms. STACY. I am the owner of DiaLogos International. People ask
me what it is, and I can only say that it is an international lan-
guage enterprise.
I started out ii years ago, dissatisfied with the university that I
was teaching. I tried to work through the system, and I wanted
them to put in a more practical language learning track! Not to do
away with the great books and the great literature of the world,
but to put in an alternative for people who needed to carry on con-
versations with their neighbors across the world in foreign lan-
guages.
I was unable to accomplish that through the system. So, like so
many business people, or like so many people, I said I will make a
business out of it. I opened my doors, and said you all come, and
they did 11 years ago.
DiaLogos now has grown to where we provide, for language train-
ing. We provide translations, interpreting, cross-cultural training.
We have the joy of being the first instance in the United States
whereby a public school system has contracted out teaching hours
to a business.
This is significant to us not only because of business, but because
of what it is doing for our country in terms of making it more com-
petitive in international trade.
Our teachers teach beginning in. kindergarten through the
twelfth grade in the magnet schools in White County, NC. They
teach not only Spanish, French, German, and Italian, as you might
expect, but they alsG teach Chinese and Japanese. We have the
contract already signed for next year, and we are looking to adding
probably Russian and Arabic.
If we are going to compete in the international world, we have to
be able to speak the language. The most important language in the
world is always the language of your client. That is what we want
our Nation to be able to speak.
PAGENO="0039"
33
I do not appear here befàre you to lament the inequities which
women in business and women business owners so often suffer You
know in your hearts that those inequities exist, Or we would not be
here today, and you would not be listening to us.
I am confident that you are aware of that, and that you are
working on programs and possibilities for redressing those wrongs
I lament, however, the loss to the country of the talents, the skills,
and the vision of a significant sector of our population
I believe that the vision, the talents, and the skills of all of our
small businesses needs to be harnessed for this country to prosper,
especially in international trade.
I ask you for increased opportunities. I have some difficulty in
asking for special programs for women alone. I want to see pro-
grams where all of us have the equal opportunities, and then we
survive if we are competent. If we do not, then, like everyone else,
we drop by the wayside.
When I opened DiaLogos in 1977, 1 was told by everybody that a
foreign language center had no possibility of surviving Sometimes,
I am a little irreverent, and I said, "But I only have this competi-
tion, Duke University, the University of North Carolina, and North
Carolina State."
I really did not mean it as it sounded. What I really meant was
that we are doing different things, and we are doing them differ-
ently, and there is room for all of us, and there is a need, there is a
growing need.
But this was in Chapel Hill, NC in 1977. We have found 5 years
later, that North Carolina has indeed come into the international
arena It has consistently been listed in the top two or three States
in the country in terms of foreign investments Three additional
language enterprises have begun there. The universities proudly
proclaim their international language offerings
American Airlines will next month begin international flights
out of the Raleigh.Durham Airport, and a world trade center is
under discussion.
I am simply saying that this was a vision, that it has come to
pass, and we need to nurture small businesses and businesses
coming along that are going to be there and be ready when other
people have not seen what was happening.
It is not only women who have this vision, and it is not only
srnal~ business people But whoever has it should be encouraged,
and it should be nurtured as we move along
!n 1985, 1 was selected as one of 18 delegates nationwide to go on
the all female trade mission It was the first all servlce8 trade mis
sion ever to go out from this country
Now, I ask you, what is a foreign language ei~terpnse gorng to
sell in Europe? I did not know, but I was willing to take that
chance and to rely upon my own ingenuity and say if I can go and
if I can be seleeted to go, I can find some way to sell I was the first
person to si~n a contract, the first person to get paid, and my con-
tract is continuing.
What happened? I found mformation there The information was
that the common market is absorbing almost all of the professional
translators and interpreters that Europe is producing Therefore,
they were delighted to find that they could FAX materials to me in
PAGENO="0040"
34
North Carolina, have half the turn-around time at about three-
quarters of the cost that they would have there.
So, today, I have the majority of my work, I would say, coming
from outside of this country. That is good and that is bad. That is
good for my business, but it certainly does not say anything posi-
tive about the way that we do international business.
Europeans know that if they are going to succeed in internation-
al trade that they need to put it in the other man's language.
Americans still believe that anywhere in the world if you really
want to do business with us, that they ought to speak English. It is
not true. We must take steps to correct that.
After the 1985 trade mission, I was asked by the National Asso-
ciation of Women Business Owners to organize and take out the
next trade mission. I did so.
Let me first say that the whole idea of taking out trade missions
for women came from two women in the National Association of
Women Business Owners, Tommy Tarsell of Baltimore, MD, and
Janel Landon of Chicago.
They had the idea that we should be able to do something that is
good and productive for individual businesses within our member-
ship, but that at the same time did something positive for our
country.
The idea is very simply that small businesses need to get into
export, if this country is going to regain first place in international
trade. We do not enjoy first place. I do not enjoy going out through-
out the world and hearing people snicker at the made in USA
label.
Many years ago, we snickered at made in Taiwan or made in
Japan. It hurts now to go throughout the world and to hear those
same tones of derision on made in USA.
We need to use the talent of all segments of our population, our
business population, to succeed in international trade for the
United States of America.
Back to the trade missions. I organized a trade mission to go to
Japan in 1986. This trade mission, like the first one, was under the
auspices of the National Association of Women Business Owners
with great cooperation and great support, from the U.S. Depart-
ment of Commerce and the U.S. Small Business Administration.
One of the ways that we differed from other trade missions going
out was we did our homework, and we found that it paid off. In
deciding where to go, we researched a number of different coun-
tries. We tried to find out what products and services that they
were likely to buy. Then, because we have a wide range of services
without our organization, we tried to solicit participation in compa-
nies that we felt were strong enough to truly market international-
ly. *
We chose health care services. We wanted to focus upon .services,
because we think that offers the new opportunity in international
trade for the United States, We sent a list over to the overseas post
in Japan, and we asked them to give us the benefit of their knowl-
edge of what would be marketable there. They sent back to us that
yes; that health care services would be great.
Chairman LAFALCE. Ms. Stacy, I would ask you to attempt to
summarize your remarks in about 2 minutes or so.
PAGENO="0041"
35
Ms. STACY. I will; yes. We went to Japan, and we found that
health care services indeed was a market. But when we got there,
they told us that the things that we were bringing were not the
things that they had meant by health care services. We meant seri-
ous health care services, and they meant things like physical fit-
ness and diet.
We did do some research, some extra research, and when we got
there, we were well received. The Japanese told us that they pre-
ferred doing business with us, because we had done our homework.
Our homework meaning that we put all of these women through a
training course prior to going. They each spoke a little bit of Japa-
nese. They knew the business customs, and they knew the culture.
They were told that yes, indeed; the Japanese like doing business.
Some of the signed contracts led later to contracts. The headlines
in the newspapers were, "The American Women Businessmen Are
Coming."
After our trade mission, the U.S. Department of Commerce said
they had learned a lot of things about the health care industry in
Japan that they did not know before, and they are now putting to-
gether a health care services mission.
On the heels of that, we hosted a number of buying missions
coming back; people we had met in Japan who decided, yes; that
they would come, and they would try to buy from United States.
One of those missions came to North Carolina only 4 months after
our trade mission.
I simply want to say that as I see the problem, the problem is
that business as usual in international trade is not doing us any
good. There is nothing to lose and everything to gain by allowing
new perspectives.
I would ask you to work together with groups such as NAWBO
and other international groups to help open opportunities for not
only women, but for small business to get into international trade.
International trade is the new frontier. There are new prospectives
out there, and we are willing to help.
Thank you so much for the time.
[Ms. Stacy's statement may be found in the appendix.]
Chairman LAFALCE. Thank you very much, Ms. Stacy.
And now the person from the State of New York, Ms. Phyllis
Hill Slater.
TESTIMONY OF PHYLLIS HILL SLATER, PRESIDENT, HILL
SLATER, INC. [HSI], LYNBROOK, NY
Ms. SLATER. Thank you. Good morning Congressman LaFalce,
and distinguished members of the Small Business Committee,
ladies and gentlemen.
My name is Phyllis Hill Slater, and I am principal of Hill, Jen-
kins, Gaudy Associates, Engineer and Architects, and president of
Hill Slater, Inc., an engineering and architectural support firm.
Both firms are located in Lynbrook, NY on Long Island.
Hill, Jenkins & Gaudy Associates is a 100-percent minority-
owned- and operated-firm. My father, Philbert D. Hill, and two
other pioneering black men started HJG in 1969. Since its incep-
PAGENO="0042"
36
tion, HJG has maintained a diverse engineering and architectural
practice.
Hill Sláter, Inc. is 100-percent women/minority-owned firm of
which I am the president and sole owner. Since 1984, Hill Slater,
Inc. has served the architectural and engineering community and
related enterprises.
I am presently the president of the National Association of
Women Business Owners, the Long Island Chapter. We are 2 years
young and 85 members strong. We also have a mailing list of over
500 women business owners on Long Island.
I am also a member of the National Society of Professional Engi-
neers, and I sit on the National Minority Business Council. I was a
delegate to the White House Conference oil Small Business in 1980
and in 1986. I was also a delegate to the New York State Confer-
ence on Small Business in 1982.
I also participate in a program, a role model program for the 100
black women of New York where I have engineering students
coming to my office twice a year from Speilman in. Atlanta, and
from City College in Manhattan. They come to the office. They are
usually in their third or fourth year, and we show them just what
we do, and try to interest them in coming into electrical engineer-
ing, mechanical engineering, lighting, power and design type of en
gmeering as opposed to electronics communications
I shall attempt to outline, some of the pros and cons that I have
encountered as a black woman business owner. For 8 of the past 19
years, HJG has been involved with MBE/WBE/DBE processing.
Certification as a minority firm seems to come after producing all
sorts of information, just short of a blood test.
Up until 8 years ago. most of our work came from referrals given
by other black minority architects and/or engineers. Ifwe received~
work from the Government, be it Federal, State, or local, then the
work was 9 times out of 10 in a minority neighborhood and consist-
ed of mostly rehabilitation, very seldom new construction
Since MBE goals have been established, our services are now
being solicited by majority engineering and architectural firms for
10 to 25 percent of their intended contract.
Some of the problems I have faced as `a result of this process are:
We have been overlooked by the soliciting agencies for prime con-
tracts. In some cases we have even been removed from the regular
list of engineers and architects and placed on the minority lists.
We therefore receive this information and notices directed only to
minority firms.
This ~is what I consider being "black listed." We are not consid-
ered as capable as majority firms, even though our architects and
engineers went to the same schools, took the same licensing tests.
We are not exempt from the State licensing procedures becausewe
are minorities, and likewise do not take a different or easier ver-
sion of the test.
A popular misconception among Governmeilt agencies and busi-
nesses in the private sector is that minorities enjoy a position of
privilege and, are making truckloads ~f money. As a result of this,
there are many businesses posing as minority owned and operated,
so-ôalled fronts, trying to get on what they perceive to be the
MBE/WBE type gravy train. What iliinority business detractors
PAGENO="0043"
87
fail to realize is that not only do we have to be certIfied as a minor-
ity or a woman business owner, but we also must be capable of
seeing a contract through its completion
The term "Disadvantaged Business Enterprise," DBE, does not
enhance the professional standing of a licensed professional firm or
any other business for that matter.
Also, there is a ceiling placed on the amount of money a compa-
ny may earn. When the firm reaches said amount, they are no
longer eligible for the MBE/WBE/DEB program under the U.S.
Transportation Regulation 49.
As a result of disqualifications, there are now firms facing cash-
flow problems, subsequent reductions of staff, or even closing their
doors and taking down their shingles Let us keep in mind that
women hire other women, minorities hire other minorities, so,
these layoffs are hitting an already economically depressed sector
of society.
We have subcontracted some of the largest engineer and archi-
tectural firms in the country. However, if we are not providing or
satisfying a goal, they do not call us back. We have only had two
cases where these firms have called us back to do repeat work.
They have called us back to do repeat work, but only two. firms
have ever called us back to do work when there were no goals in-
volved. I feel I should mention those firms, because one of them
does a lot of work nationally and internationally, and that's Voll-
mer Associates, and the other one Was a woman owned architectur
al firm by the name of DiGerommo Architects in New Jersey They
have called us to do work only because they were pleased with the
work ~e had done before for them It had nothing to do with goals
I believe that so long as discrimination exi~ts against minorities
and women that there will be a need for affirmative action pro-
grams. I feel very strongly that this program may only be disband-
ed once this Nation truly becomes a melting pot where neither race
nor sex is a determining factor for success.
My other point is about women make being thrown into the pot
of minorities.
Women make up the majority of the population, and, therefore,
women should not be considered a minority group
Minorities and women business enterprises should be kept as
separate entities with separate goals to be outlined in each con
tract and/or a statement of intent for each agency's goals
Women business owners ar~ discriminated against in a way that
is unique to women Their inclusion in affirmative action agendas
lends credence to the need for special consideration on their behalf
Minority business owners are discriminated in a way that is unique
to minorities.
Let us keep in mind that given a choice, this is my opinion, a
majority firm would choose to subcontract to a nonminority women
rather than select a minority woman Also, if the course was
women versus minority, the majority prime contractor would be in
cluded to choose a women business enterprise
The other concern I have is prompt payment and ensuing rights
for subcontractors is a major cause of contention
As a subcontractor under the MBE/WBE process, we have to be
qualified, certified, and follow the same rules ai~d regulations. Ex-
PAGENO="0044"
38
ample: I even carry the same amount of insurance that my prime
does, as set forth in the governing agency.
In this situation, our contract is with the prime and not with the
agency. Therefore, we are at the mercy of the prime and can only
hope that they submit our invoices on time and pay us in a timely
fashion. Timely payments are the greatest problem. We are left to
act as the banker for the prime and/or the agency waiting 30, 60,
90, or 120 days for payment.
The subcontractor should be notified when payment has been
made to the prime. I should have the right to know whether or not
the prime has been paid. Better yet, the agency should make pay-
ments directly to the subcontractor as well as to the prime, rather
than leaving the subcontractor to fight for their approved pay-
ments for services rendered.
I thank you for the opportunity to be heard.
[Ms. Slater's statement may be found in the appendix.]
Chairman LAFALCE. Thank you very much, Ms. Slater.
Before we continue with our next witness, two things. I notice
that we have in attendance now, Governor of the Federal Reserve
Board, Ms. Martha Segar. Martha, I want to thank you for coming
here. I hope you will be coming to testify before us at some point in
the future on these issues.
Ms. SEGAR. Thank you.
Chairman LAFALCE. Do you accept? OK, great.
I know that Congressman David Price has some questions he
would like to ask, and I also know he has a commitment where he
was supposed to have been a short while ago. So, I am going to ask
Congressman Price if he would like to ask some questions right
now, and then we will go back to the panelists.
Mr. PRICE. Thank you, Mr. Chairman. I appreciate the chance to
break in here and ask a couple of questions. I apologize to the re-
maining witnesses that I do have to leave, but I very much appreci-
ate the testimony that we have heard already.
The chairman took the Small Business Committee to North Caro-
lina last year., and we had extensive hearings on procurement mat..
ters. The question we took to those hearings was a very simple one.
It was focused on North Carolina, of course, but the same question
could have been raised in a number of areas of the country, and
that is, with a substantial Federal presence and a substantial mili-
tary presence, why was it that local businesses, small businesses,
minority businesses were getting such a small share of the procure-
ment dollar?
We were partially able to answer that question, and we have
seen some improvement in the ensuing months. For example, a
couple of our major Federal agencies have stepped up their out-
reach programs, have held workshops, have brought in, I'm told,
well over 200 firms, and have made an increased effort to let firms
know what they need to do to compete.
Of course, we need to do a great deal more along these lines. We
need voluntary efforts on the part of these agencies. We also need,
I think, more activity on the part of the Small Business Adminis-
tration and other agencies.
PAGENO="0045"
39
Ms. Green and Ms. Slater, your testimony sheds further light on
this problem, and I would like to turn to Ms. Stacy, and ask her to
comment on the problem as well.
Your testimony did not deal with procurement except in passing,
but I wonder if you could shed some light on that subject since it
has been raised by the other witnesses. Of course, you have had
some experience in dealing with the Government, and perhaps also
with the military. I wonder if you could elaborate your testimony
along these lines.
Ms. STACY. Thank you; yes.
Number one, I did not have any horror stories, not because I did
not have any, but because I dO not remember them. I have been too
busy out there trying to go on from one step to the next. There
were some horror stories.
In terms of procurement, I have found that for the most part it is
lip service. When you have all of these conferences, which we have
in North Carolina, and they have throughout the country, people
really want to open the doors and to help us know how to work
through the process.
The simple truth is, they do not know themselves how to do it
That has been my experience. I do ~not go to any of those procure-
ment conferences any more because I have heard most of those sto-
ries. I have heard most of how you go thrciugh things. I tried to go
through sothe, and I found in my particular business what happens
is that a large company, who may not even be in the business of
translations, will go out after a Government contract at a lower
price and use that as a loss leader to obtain other contracts. So, I
found that it has not been that worthwhile.
I wish it were. I wish that I felt encouraged and felt like going to
some of these opportunities that are provided for us.
Mr. PRICE. You have experienced that kind of competition from
larger firms that have underpriced their services, you feel, so as
to---
Ms STACY Yes, indeed They do it under what it costs them, and
they use that because they are not even in the business, and they
subcontract it out to someone else. They take that loss because
they know that they can get in for other areas of business con-
tracts.
Mr PRICE Well, does this experience lead you to any sense of
what ought to be done or what might be changed?
A~e there flaws in the way the procurement process is carried
out?
Ms STACY I cannot suggest changes there I would certainly be
happy to think about it, and with your permission send some infor
mation in to you.
I have been away from that for a considerable amount of time,
because I did not find it worthwhile, and, frankly, it was taking too
much of my time to run after all of these programs that never pro-
duced any results.
Mr PRICE Ms Green, I notice you are nodding your head Do
you have something to add?
Ms GREEN Do I need this microphone?
OK, I guess the one thing that I would address that Carey is
talking about is that conference, after conference, after conference
PAGENO="0046"
40
is given, and it is all philosophy. What I am offering to the dealers
who want to work with accounting data systems is the hands on,
walk out the door, you have the certification in your hands, and
that is the reason I am franchising my business, because it is not
available out there right now.
The only problem that I run into with it as far as talking women
into doing this is that they take one, look at everything that has
happened to me, and most of them know about it, and say why
would I want to do this, and that is the reason why I suggested
some kind of incentives.
I think some type of good faith opportunity for women..owned
businesses to give them a little incentive to get in. It is like any
other water-when you get in, it is not that cold.
It is a matter of providing good quality goods and services. It
cannot be a front situation, and I do not think there is that much
of that out there. I really believe that the women who are in this
area are in it because they have the tenacity to stick to it, and be-
cause they have quality goods and services, and they go on just as
Phyllis Slater just told you. In order to stay, you might get one con-
tract that way. But in order to stay in the business, you have to
deliver quality goods and services.
What happens with the larger manufacturers is just what hap-
pened to me with that manufacturer that I told you-well, maybe
you were not here* to hear that, but the manufacturer who came in
and bid under my cost, and took a contract away from me. After
the fact, there was no way that I could-because he already had
the-well, obviously having a Government, a Federal Government
contract gives you a lot of credibility.
Mr. PRICE. This was after the process had been reopened.
Ms. GREEN. That is right.
Mr. PRICE. Yes.
Ms. GREEN. So, once his product was in there, this is now en-
dorsed by, or used by, or given by the Federal Government, and so,
we did not go on and produce that board. There was no point in it.
Mr. SIsIsKY. Will the gentleman yield for a moment?
Mr. PRICE. Yes; certainly.
Mr. SI5I5KY. Did any of you deal with the advocates of these
agencies like the military? I know the military, in particular, have
advocates for small business. The Army has a one-star general that
is just assigned to get small business involved. I know the Navy has
a department to do that.
Were any of you involved with the advocates in these agencies?
Ms. GREEN. I guess the only thing that I would tell you is that
the only agency that-the only department, the only person that
has ever been of any help to me was the Office of Women Business
Services in Michigan. Even in other States where I have contacted
and found out that they had some people who were-well, I will
tell you one example.
I was trying to help a lady in Tennessee to become involved with
the Department of Transportation. We went into an agency to talk
to the people and saw a sign on the door that said Women Business
Services. We went down the hall trying to find this person, and fi-
nally talked to a lady who was there, and she said, "Where did you
see this sign?"
PAGENO="0047"
41
We said, "Down the hail."
She said, "Oh, that's me."
Mr. PRICE. My time is limited. I would like to pursue this. I am
sure it will be pursued later in the hearing. I do have just one fur-
ther question with a slightly different focus.
Ms. Stacy, you refer to various trade missions that you have as-
sisted with, and you refer, in passing, to a trade mission of Japa-
nese buyers who came to North Carolina in 1986, specifically to
search out products for import to Japan.
You do not elaborate on how that mission went or what the pur-
poses were. Can you elaborate on that for the benefit of the com-
mittee-what form the Commission took and the role you were
able to play?
Ms. STACY. Yes; I organized the entire trade mission on this side.
I organized their meetings with Government officials in North
Carolina, here in Washington as well, and meeting with business
people who might be able to sell products, move products to them.
The mission went very, very well. They were impressed with
North Carolina. They were disappointed in a couple of things. They
were not able to find very many products other than agricultural
products that they could import.
Mr. PRICE. Why was that? Can you explain that?
Ms. STACY. Yes; number one, the quality was not there that the
Japanese were looking for in a number of things.
The other thing is in textiles; they were there with check books
in hand to make big purchases of terry cloth. We called all of the
major terry cloth manufacturers in North Carolina, and despite the
fact that this was a group of, I think, about 15 Japanese buyers,
they are ready to buy terry cloth. They were told that they could
not see the terry cloth in North Carolina; that they would have to
go to New York to the showroom to buy it.
The Japanese were appalled. They said the United States makes
such a commotion about trying to export, and then you come over,
and you try to buy, and you cannot even buy from them. This did
not sit very well with the Japanese. Consequently, they did not buy
the terry cloth.
They did make some purchases of agricultural products, and the
process is open enough now that I am convinced that more pur-
chases will be made.
Mr. PRICE. What sorts of agricultural products?
Ms. S'rACY. They were interested in fish, seafood primarily. They
are also interested in perhaps starting a sea farming operation
themselves in North Carolina, and I am working with them on
that. They do not, of course, produce enough sea food, or cannot
fish enough, and a part of that is because of the way we negotiated
the fishing rights, which is fine for us But seafood~ and seafood
products, and processing.
One of the things that they would be interested in is various
types of seafood processing plants, and they are looking to North
Carolina.
Mr. Puics. Thank you very much.
Mr. Chairman, I appreciate your indulgence.
PAGENO="0048"
42
Chairman LAFALCE. Thank you. I would like to point out that we
have been joined by Congressman Charlie Hayes and Congressman
Norm Sisisky.
We will go to our next witness, Ms. Margaret Hansson.
TESTIMONY OF MARGARET S. HANSSON, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, M.S. HANSSON, INC., AND CHAIRMAN,
PURECYCLE CORP.
Ms. HANSSON. Good morning. Thank you for inviting me here,
Congressm.an LaFalce, and the rest of you. I note that there are
two Colorado congressmen. I am from Colorado, incidentally, and
own a business there that also works nationally. We have two con-
gressmen on this committee, Congressmen Ben Nighthorse, and
Congressman Heffley. Also, thank you for Patricia Schroeder's wel-
come. She is a star in our firmament, women's causes, and a good
friend of mine.
My major thesis is that we start small businesses, but we also
grow businesses to very good and very large employers, and large
taxpayers, and we do not just, or hope we do not just sit as small,
little businesses that we are commonly thought to be.
I am going to say that I am a myth-buster. I am a myth-buster
because I founded one, two, three, four companies as an entrepre-
neur. I built the first company from a garage, not in a living room.
It was really in a garage where we were bending metals, doing riv-
eting, and a lot of other things that are really not too hard for
women once you just simply decided to look and see how it is done.
It grew from 3 to 350 employees, two overseas ventures, publicly
traded, and always profitable.
I have been listening to things from Ms. Stacy and Ms. Green
this morning that I have been through. We have developed good
exports. We have had some extremely profitable years in the
export. Probably one of our largest accounts, other than Sears,
turned out to be a Stuttgart account, and we feel that it took a lot
of work to do this, and I would have to say here, parenthetically,
that part of the problem is definitely us in the United States,
rather than the barriers that are erected against it.
It has been so easy for us to gain business in our large markets
that we really have not thought of the ease with which, or it has
not been opened for us to do export easily~
There are some good Government programs, but that is an aside.
Chairman LAFALGE, For so long we have effortless superiority,
domestically and internationally, and now we are finding that we
do not have superiority, and that competition is not effortless at
all. We do what is easiest to do. We blame the" opposition or. the
competitors rather than look at ourselves.
Ms. HANSSON. Agreed that this statement--
Chairman LAFALCE. Something that I have attempted to point
out for--
Ms. HANSSON. I had a secretary that would be of interest to Ms.
Stacy who is a Ph.D. German professor at the University of Colora-
do, and she decided to work with me. She was really an assistant,
as are all of my secretaries, because she needed to know what to do
with her super language abilities.. So, she was learning all of the
PAGENO="0049"
43
business terminology, and methods of doing exports, and doing let-
ters of credit, and all of the kinds of things that she needed to
know, and subsequently went into being a German translator and
a business expert in this field.
It is clear that I have lived long enough so that this expertise has
gradually developed over a period of years.
I became a director of mutual funds, director of first a local
bank, and then director of the largest bank holding company in
Colorado; a director of four more publicly traded companies in com-
pletely different industries: Medical technology which exports;
media; a national chain of children's day care centers; and water
recycling.
I really understand business and its many ramifications. I am
doing consumer products, high technology, and heavy industry.
Boulder is in the center of a very fast developing high-technology
area, and, as such, offers to many of us and many women if you
can grab the opportunity to first start small in a garage or wherev-
er, and go on to be a much larger company.
I know banking. I am a modern manager. I understand mathe-
matics, engineering, and data processing, and I am extremely inter-
ested, as I have said, in the global economy.
If this sounds as though it is some sort of a paragon, I am not. If
I were a man, I would be telling you a success story, but only one
of thousands. As a women you often find it hard to believe that we
have done all of these things.
But there are many of us myth-busters. Personally I know at
least 300 of these. They are all members of the Committee of 200,
which many of you have heard about. The Committee of 200 was
formed when it began to--
Chairman LAFALCE. The Committee of 200 is going to have to
change its name.
Ms. HANSSON. It has gone to 300. It really does need to. These
are extremely interesting women with patterns of success and a
whole litany of areas that I have listed here, but I will not go
through it right at this moment.
This group was founded to put some money out to let the
NAWBO, the National Association of Women Business Owners, get
organized and going. We started in 1982.
Really, what I am saying is that we make thousands of jobs. We
are contributing to the corporate culture of success and innovative
companies. We care, we invent, we profit, we share, and we suc-
ceed. We might even do it in spite of all the barriers that are in
front of us. I see it growing, and I see the women networking in
helping each other, and it is just possible that they will make it
without a lot of help. However, I do have a good number of recom-
mendations.
My first company was Gerry Designs, which many people,
women particularly, know. It was one of the best known trade-
marks in the juvenile industry that makes all the back carriers,
almost all the back carriers for babies. In the front ones, they all
have cute, little names like Snuggles, and Cuddlers, and things.
The Gerry carriers are known worldwide, and I would say have the
single most worldwide recognizable product.
PAGENO="0050"
44
I faced all of the same problems that most of the women here
have faced in terms of banking, with insulting comments about
going home and taking care of my family. Why do I not do some-
thin~ that is really going to make some money like get a secre-
tary s job and so forth.
I am somewhat luckier than most. I had a uncle wh~ was a presi-
dent of Bankers Trust.
Chairman LAFALiE. I would imagine that could be helpful.
Ms. HANSSON. One of the things he did not do was lend me
money. One of the things he did do was teach me how to approach
bankers in a business-like fashion, how to do a business plan, what
they wanted to know, and what would be impressive to a banker in
spite of the fact that I was a women.
I think this kind of help is extraordinarily important, and I
think that one of the recommendations that I would have is that
this is one of the technical kinds of assistance that should be set up
for women. This would, of course, apply to minority, any kind of
group that is facing obstacles.
I have sold almost all the ones I have been involved with at a
certain point since I reach a point in entrepreneurism when I
really do not want to deal with the growth of the shelf space of an
item, or trying to push it beyond somewhere to $3 to $5 million in
sales. I find it more interesting to start with the next company.
But one that I. have stayed in touch with a long time and is be-
coming a very, very important part is called PureCycle, and Pure-
Cycle is probably going to be one that you hear of very importantly
in the next 10 years and certainly into the next century. It has
processes for recycling water completely.
In the West, we think about this as water shortages. In the East,
there are places where you have no place to put the water, espe-
cially if it is dirty. They are call septic systems, all kinds of sys-
tems like sewage and so forth. We have systems for completely re-
cycling this water which gives you a source of~~ water and a place to
put it.
This also has the ability to cure lots of contaminations that are
stack gases and various kinds of real hazardous substances.
What I am really saying here, again, is that this started as a
very small business. It is publicly traded now. It probably will
have, if our business plan is realized, $100 million in assets by the
end of this year, by January 1, and it will make jobs. It will be an
important importer of capital into Colorado that we will make use
of, and it will be an exporter.
Therefore, I am saying that we are of basic importance to this
country's economy.
[Ms. Hansson's statement may be found in the appendiz.}
Chairman LAFALCE. Thank you very much, Ms. Hansson.
Ms. HANSSON. You are welcome.
Mr. SisisKy. Mr. Chairman.
Chairman LAFAI4c~ I am afraid we are going to have to recess.
Mr. SIsIsKY. Yes; I know we have to. But I cannot come back, be-
cause we have a little bill on the floor that I played a part in devel.
oping for $300 billion.
But I would just like to reiterate that almost every witness testi-
fied today that export is that area that we need to approach, and I
PAGENO="0051"
45
would remind the chairman that I do have a bill' that may offer
some incentive. I put a bill in that was developed in the White
House Conference, which is designed to stimulate small business
export.
Ms. HANSSON. We used to have something called DISC that ~ras
great for small business. It was somewhat subverted by very large
businesses, but it was very helpful to our company~
Chairman LAFALCS. Very good.
We are going to have to recess. We will come back in approxi-
mately 10 minutes or so. I would encourage whoever can to come
back and advise other Members. Our next witness is Ms. Charlotte
Taylor, and she directed the Presidential Task `Force of Women
Business Owners for a number of years, and has conducted a study
that I think will be especially interesting to the Members. So
please try to spread the word to our other members of the Small
Business Committee, and we will look forward to hearing your tes-
timony, Ms. Taylor.
[Recess.] `
Chairman LAFALCE. The Small Business Committee will come to
order.
Our next witness, with rather extensive testimony, is Ms. Char-
lotte Taylor. Charlotte.
TESTIMONY OF CHARLOTTE `TAYLOR, PRESIDENT; VENTURE
CONCEPTS, WASHINGTON, DC, AND FORMER EXECUTIVE DI-
RECTOR OF THE 1977-78 PRESIDENTIAL TASK FORCE ON
WOMEN BU~INESS OWNERS
Ms TAYLOR Thank you, and good morning and thank you for
inviting me here I will deviate from my testimony in order to
make this brief.
Chairman LAFALCE.We will put. the entire text of your testimo-
ny in the record.., . ` ` ` ` " .
Ms. TAYLOR~ `OK.~
Chairman LAFALCE You may abbreviate and make it brief, but
please do not omit anything particularly important
Ms. TAYLOR. I certainly will not do `that.
My name is Charlotte Taylor. I am the president and chief execu~
tive officer of Venture Concepts, a Washington, DC based manage
ment consulting firm which specializes in economic development
and small business policy
I was asked to testily here today for two reasons, basically One
is to provide a historical perS$ôtive~on this very important issue,
and the second is to provide ~ curi~ent perspective on what is hap
pening nationally in terms of Ihe status of women owned business
enterprise m the United States.
The historical perspective comes from the fact that I directed the
first task force that looked at this issue in 1977-78 when people
were still saying, show m~ a women business owner I had never
seen one That task force ware~tablzshed by President Carter and
led to the current national policy that exists in Executive Order
12138 which set up the framework that is now operating in the
Federal Government. " .
PAGENO="0052"
46
Chairman LAFALCE. That Executive order is still operative, cor-
rect?
Ms. TAYLOR. Yes; it was put into force again by President
Reagan, re-signed, but Carter did establish it initially.
Chairman LAFALCE. So, theoretically, we still do have a national
policy for women business owners; is that correct?
Ms. TAYLOR. That is correct.
Chairman LAFALCE. That is supposed to be implemented.
Ms. TAYLOR. That is correct.
Chairman LAFALcE. Whether it is implemented or not is another
question for----
Ms. TAYLOR. That is the subject of these hearings.
Chairman LAFALCE. Yes.
Ms. TAYLOR. So, there is a policy. We, as women business owners,
feel that it is dormant at best, and has not been implemented in
the fashion that was intended.
Chairman LAFALCE. I said dormant. Somebody said asleep.
Ms. TAYLOR. Right. I have attached the recommendations of the
task force to my testimony, which numbered over 60 in 1977-78, for
your use in questioning the Federal sector when they do appear
before the hearings.
Chairman LAFALCE. That is going to be very helpful.
By any chance, has anybody such as yourself or anybody else at-
tempted to give a score card rating on the various recommenda-
tions?
Ms. TAYLOR. No; not that I am aware of.
Chairman LAFALCE. Well, that might be an interesting assign-
ment for some group. It is certainly something that we should be
interested in.
As a matter of fact, I think it would be an excellent idea if we
asked the Federal Government to give us a report card on how
they accomplished all of those recommendations, but it might also
be a good idea if the private sector gave us their own independent
report card so we might compare. There might be different grades.
Ms. TAYLOR. True.
The task force developed those recommendations, after over a 9-
month study that included all eight agencies. So, they were well
thought out a decade ago.
I am sure you will find that if work has happened at the Federal
level, it has been surface at best, and window dressing without
major action.
The current perspective, which is the real reason I was asked to
testify here, is that my firm, Venture Concepts, performed last
year the first nationwide study, the first look at the subject of what
States and cities were doing for what we saw was a very important
economic development issue.
At question here was if women were streaming into business
ownership at two times the rate of men-sometimes you hear five
times, depending on the year-if we were starting enterprises at an
incredibly high speed, what were State and city governments doing
to channel this entrepreneurial energy into job creation, tax feve-
nues, and economic prosperity.
The study was funded by the U.S. Department of Commerce's
Economic Development Administration. It spanned over 11 months,
PAGENO="0053"
47
and we looked at every State and over 100 cities. We were only
funded to look at 50 cities, but we found so few programs that we
extended the program to try to see if we could get a more compre-
hensive look at what was happening out in the State and city level
for women business owners.
Quite frankly, Mr. Chairman, the story we found was different
than the one we expected. We expected, given the high visibility to
the subject of women as the new entrepreneurial wave, as the new
immigrants, if you will, who are taking to the streets to risk their
fortunes for the rewards this country can present. We expected to
find a great deal of action at the local, city, and State level given
the current philosophy of decentralizing programs to that level.
We found something vastly different. We found that, indeed,
women were almost invisible when it came to public policymaking
at the State and city level.
The pivotal finding of the study was the surprising degree, if not
an amazing degree, to which there were no programs for women
business owners that specifically looked at the barriers they face
and tried to look at creative mechanisms for helping them over-
come those barriers.
While it is true that many State and city governments have now
awakened to the fact that small businesses and not smoke stacks
create jobs, what we found was that when they looked at small
business they did not define a women as being in that population
despite the fact the figures show we own 25 percent of Main Street
U.S.A., and will own 50 percent later.
We found three major findings.
One, there was relatively little action at the city and State level,
which is one of the reasons I think it is important for the Federal
Government to take a role.
Second, where the programs did exist, they were poorly funded. I
will not even say poorly designed. I will s'iy they were not designed
at all to overcome barriers that women address, some of the ones
you are hearing here.
Last, but most often, they were viewed as affirmative action pro-
grams and social cause programs, not as an economic development
issue. I think if one message comes out loudly through the message
we are bringing at these hearings is that we, as women, want to be
viewed as an economic development issue that just happens to be
female, and that we believe that we are caught in--
Chairman LAFALCE. Well, I suspect there is some difference of
opinion about that. I have listened to witnesses whose emphasis is
primarily affirmative action, and some whose emphasis is some-
thing else. Now these are not exclusive one to another. They are all
complementary, but would lead down different paths, too.
So, you are suggesting economic development should be the pri-
mary thrust of any Federal policy.
Ms. TAYLOR. Well, what we are dealing with is, unless we have
affirmative action, we cannot get in the economic development
ballpark. In this sense of the economic development, pohcymakers
are not viewing women who are over here. So, they are linked.
But we found, and the U.S. Conference of Mayors studies on mi-
nority programs found also, that the better programs at the State
and city levels existed where they were integrated with economic
PAGENO="0054"
48
development strategies, but not over in an office of civil rights, let
us say, as an affirmative action goal program.
So, what we are looking at is, how can you creatively create poli-
cies that will create affirmative action mechanisms that will then
move women into becoming more of an economic development
force? I believe that is what I am trying to say, if that clarifies it.
Chairman LAFALCE. All right. Please proceed.
Ms. TAYLOR. Where the programs existed, as I said, we found
that few were designed for women business owners, and that, in
the sense of overcoming barriers. The two key barriers that women
mention over and over again is access to capital, and technical as-
sistance.
We found almost no programs designed that would give a woman
access to capital, and relatively few technical assistance programs
that provided the kind of sustained hands-on technical assistance of
the type that Kathy Keeley mentioned yesterday where you are ac-
tually helping the woman get the business launched.
It is true that there are plenty of workshops. There are plenty of
1-day how to start a business, but no one is addressing the critical
issue of how do you grow a business, how do you get this business
into the economic mainstream.
There were a f~w States that were doing that. Your own State,
New York is one of those. But for the most part the approach that
was being taken to the women business ownership effort was to
print a brochure and say, here it is.
As a research team, we found one of the hardest problems was to
find the information. We had researchers looking for the Office of
Women Business Owners, and it would often take us three to four
phone calls. We figured that was not a very visible or effective
women-owner business program even though the State or city
called it that way.
Oftentimes, as a check, we sent letters to Governors and mayors
stating that we had found there was no program, and we get con-
flicting information from the Governor or mayor as to the exist-
ence of a program from the program people. So, there was, to put it
mildly, a little bit of confusion as to whether programs did exist,
and if so, what they were.
In large part, we found that there were no substantial programs
for women business owners. Only five States-Louisiana, Illinois,
Michigan, New Jersey, and Ohio-had programs specifically target-
ed to women business owners, and the rest of the States, there
were 17 others, attached women business owner programs to exist
ing programs for small businesses or minorities
Only 1 city out of the more than 100 we looked at had a specific
program targeted to women business owners. However, there were
21 cities that had some kind of affirmative action program.
Of most interest to you here was the high degree to which pro-
curement drove the women business ownership programs at the
local and State level, and the high degree to which Federal policy
was linked to those procurement policies at the State and Federal
program.
I mention that today, because I want to emphasize the impact
that Federal policies have at these State and city levels in terms of
the types of programs that are being created.
PAGENO="0055"
49
As you are aware, masses of moneys are spent by the Depart-
ment of Transportation, highway construction, environmental pro-
tection, urban redevelopment. Moneys flow to cities and States to
carry out and implement the programs that the Federal Govern-
ment needs.
What happens is we find that the criterion, rules, and regula-
tions that the Federal Government sets are then mirrored in the
State and city procurement programs. Procurement was, by and
far, the largest, most prevalent program we found. All 21 of the
city programs that we found were procurement programs and of-
fered very few other services outside of certifying, monitoring, and
enforcing procurement regulations to women business owners who
might be trying to access that system.
The same emphasis on procurement held true at the State level
where we found that over half of the 22 programs for women busi-
ness owners had a procurement component.
Chairman LAFALCE. When was your study conducted?
Ms. TAYLOR. It was finished in October of last year.
Chairman LAFALCE. When did you start?
Ms. TAYLOR. We started it in December the previous year.
Chairman LAFALCE. I wonder if it was at all influenced by the
fact that women became eligible as of January 1987 for the 10-per-
cent minority set aside in surface transportation.
Ms. TAYLOR. The procurement aspect of it?
Chairman LAFALCE. Yes.
Ms. TAYLOR. No; these were programs that had been in place
before. In fact, the major portion of the research was conducted up
until March, and then we did field visits for the rest. So, most of
these had been in place, though I do think that act will have rami-
fications on all of this.
We found, as I was saying, that there was little evidence that
they were working well. Indeed, what we found was that procure-
ment programs were being used as a red herring to show that a
State and city were doing something for women business owners
when, in fact, relatively few women knew about the program, or
were provided with technical assistance that could allow them to
access the program.
This situation is not dissimilar to the Federal Government where
the majority of the emphasis is on teaching us that the market is
out there, but not giving us the skills and helping us learn how to
access it, or working with the system to make access easier.
What also surfaced in this effort was the degree to which lump-
ing women business owners with minority business owners is a dis-
service to both sectors. Often, the women business owner program
was added to a minority program, and it was overshadowed by the
efforts for minorities that were already ongoing.
If anything surfaced in our interviews with State and city offi-
cials, it was not only the lack of commitment to the intent of such
women business owner targets, but the degree of skepticism and re-
sistance which existed in allowing women to have an equal oppor-
tunity to compete even in targeted programs that said when busi-
ness owners had goals.
A prevailing assumption appeared to be that the majority of
women-owned businesses are not legitimate. At first I thought that
PAGENO="0056"
50
they were just talking about husbands in this sense, and I would
say, welir that excludes the 50 percent .~oi us who are not married~
But, no; we could have fathers, brothers, sons, and lovers~ So, the
issue is that until the front issue is dealt with, we will be locked
out of the procurement market.
The second assumption was that women business owners were
not technically qualified to perform the work.
The last assumption was that we were not in the goods and serv-
ices that the governments needed.
I think if you have heard the types of businesses women are in
today, that assumption is a myth. The Government buys every-
thing from pencils to planes, and we do not just make pencils; we
also make planes now.
In some cases, it was even stated when there was a program that
included women with minorities, that there was less active out-
reach and assistance to women than for minorities because of the
belief that ri~ orities needed programs more than women.
We do not, as women, want to get into a "who needs anything
most." We think that this ~s an economic development issue; that
there is talent out there that is not being utilized~ But what we do
not want to have is for people to pit us together against each other
so that all we both do is lose.
In general, it appeared that as much time was spent in certifying
women out of programs than in trying to find qualified women to
get into programs I do not believe this is much different than it is
at the Federal level as well. Certainly, little or no attention was
given to programmatic responses of how you solve problems of
bonding, how you work with cash-flow problems and slow payment,
how you teach people to be involved in the bid process, and how
you can outreach and educate people so they can have access to the
considerable amount of contracting that is. done at the Federal,
State, and city level.
Certainly, two of the key issues that appeared and places that I
do believe there is serious need for Federal guidance is the need to
deal with this question of community property laws in States, and
also one that I had never heard of before until I took to the field
interviewing, which is the impact of commingled family funds on
ownership of a business.
In some places, a woman who owns 100 percent of her business
and operates it daily could not be certified as a legitimate WBE be-
cause she had not. put her own money, sole money in to buy the
assets of the company.
I would point out that the majority of American families com-
mingle their incomes and certainly have joint checking accounts,
and it is difficult at best to distinguish who owns what in American
families.
Such strict, interpretations severely . limit the ability of married
women in the United States to participate in the procurement
system, and the intent was not to keep out women who live or are
married to men, but to keep out fronts who were not legitimate
businesses. I think that we have taken this front issue to a degree,
quite frankly, that is sometimes ridiculous.
Yet, procurement programs can work with a proper commitment.
Cleveland's program, which was an FBE program and not mixed
PAGENO="0057"
51
with minorities, did an outs~tanding job. They set a goal for $3 mil-
lion for 1986 They exceeded that goal for $5 5 million with not too
much difficulty. This~was totally different than the story I got from
people who were saying how difficult it was to meet women busi-
ness owner goals, usually which are set at the 2-percent level, not
the 16 percent that women--
Chairman LAFALCE. Ms. Taylor, what laws are we talking about
that women business owners could be fronts for9 What are the laws
that would be operative?
There is no Federal law, to my knowledge, is there?
Ms. TAYLOR. There is a Federal definition to use to determine le-
gitimate women business owners, and. that definition is 51 percent
ownership, and owned and operated by women.
Chairman LAFALCE. For what purpose? I mean Tor what pro-
gram?
Ms. TAYLOR. For procurement programs and procurement goals.
That is to make sure that there is, I will call it a "legitimate chief
executive officer" operating the business
The issue that has come about is how the regulations are inter
preted in terms of looking at ownership and looking at control and
management In some cases, if you own a painting contracting firm
that paints bridges or something like that, there is the question of
have you ever painted a bridge in terms of the operating and con-
trol issue, and then the control of assets is the issue on who funded
the actual capital to start the business that makes the 51~percent
ownership.
But what we are talking about is the 51-percent ownership is for
the few percentage of women `who do not own 100 percent, and
many women own 100 percent of their companies
As I was saying, there are programs that do work I pointed to
Cleveland's as an example of one that works. We found a need for
more recognition of the importance of the women business owner's
contribution to the economy.
The latest data we had was 1982, which only looked at sole pro-
prietorships, and which indicated that women owned businesses
generated $98.3 billion revenues.
Today, the level is probably closer to $100 billion, and if we take
the impact of what that dollar does in the local economy, we esti-
mate that the actual contribution of women~owned. firms equals
$250 billion a year in national income
Of the $250 billion, if you use the ratios that normally go for
Federal and State taxes~ about $37 billion is paid to the U S Treas
ury in Federal taxes, and an estimated $13 billion to local and
State governments. `
With that kind of economic implication at hand, and these are
not counting corporations These are just counting sole proprietor
ships My question to the committee is, is it not a good investment
to spend some of that money that we are ourselves generating in
the types of programs that are needed to help us move up the en
trepreneurial curve into bigger and larger businesses9
I think I would like to close with saying that the question at
hand here is not a question of funding programs, but really making
an investment If we could look at the funds that are utilized to
stimulate' women business ownership as an investment in a capital
PAGENO="0058"
52
resource of this country, which happens to be female, and look at
the return on investment, I think you would find it is good busi-
ness for the country, and I think that the time has come that some-
body looks at it as a business issue.
Thank you.
{Ms. Taylor's statement may be found in the appendix.]
Chairman LAFALCE. Thank you very much, Ms. Taylor, and I
thank all the panelists for their fine contribution. I am only going
to ask a few questions. Unfortunately, the Banking Committee is
having a meeting right now, and we are considering changes, and I
really should be there, too.
Ms. Taylor, you gave, primarily, a synopsis of the report that you
prepared for the EDA. When will that be issued?
Ms. TAYLOR. The fact sheet is available, and the report will be
available next week.
Chairman LAFALCE. Next week.
Ms. TAYLOR. The entire report, which is a directory of programs.
Chairman LAFALCE. This is a bit of a preview then of that report.
Ms. TAYLOR. Right.
Chairman LAFALCE. Fine. But most of your testimony dealt with
that, and I was very interested in it. But if you would go back to
your position as director of the task force on-what was the title of
it, Women Business Owners?
Ms. TAYLOR. Right.
Chairman LAFALCE. Or Women in Business? What was it?
Ms. TAYLOR. Women Business Owners, President's Interagency
Task Force on Women Business Owners.
Chairman LAFALCE. Right. And look at the national policy for
women business owners, would you have any assessment right now
of where we have fulfilled the promise, fulfilled the charge, or
where we have been most grievous in not fulfilling the promise and
the charge?
Ms. TAYLOR. I would say that, if anything, it is a broken promise;
that there has been surface effort. The original funding at the SBA
and the position of the Women Business Ownership Office was at a
much higher funded level, and a much higher programmatic level
than it currently is.
Chairman LAFALCE. At one time there was a set-aside of a cer-
tain dollar amount of guaranteed loans for women business owners.
Ms. TAYLOR. No; that program was done away with. It was a
miniloan program that would allow the lower amounts of money
that went in without collateral. III can run through the areas in
the recommendations.
Chairman. L~FM~cE. Sure.
Ms. TAYLOrR. In the area ~of data assessment, we called for serious
data collection on the subject of women business owners that would
correct for the undercounting of our effcrt iii the economy, because
it is limited to : sole proprietorships. That has not seriously been
dealt with in terms of it
The question of seriously collecting and monitoring goals and
performances of Federal agencies, I believe, has not been done in a
way that is affirmative-action oriented rather than just data collec-
tion.
PAGENO="0059"
53
The Interagency Committee on Women Business Owners did not
meet for a long period of time, and you can question them on the
number of reports that they have done. I believe that they were re-
quired to report to the President every year.
This is off the top of my head. I have not made a study of this.
Chairman LAFALCE. Surely.
Ms. TAYLOR. And off the bottom of my heart as well, as you can
see. We directed the Women's Bureau of Labor to be a clearing-
house We made recommendations in the area of education, so that
little girls in America could grow up knowing that this was a
viable career, and that we would not have these problems later
We made specific recommendations in management training and
technical assistance, and some rather formidable ones in credit and
capital formation Let us just say that nothing in the credit and
capital formation has happened at all. It has only been under the
direction of Congress in trying to get this legislation passed that we
have begun to get some movement i~ the area of capital.
Under marketing and procurement, which I know, is the area
that you are most interested in today, if you look closely at the sta-
tistics that come out `on not the dollar volume of contracting, as it
has grown but the population of women business owners has
grown, you will notice that the proportion grew heavily after the
task force put in the Executive orde" and then it decreased
I think that is an indication that monitoring and persuasion, if
we can say, has not come on; and certainly no creative programs
have been done that can help women get into this.
We are 10 years later, and I want to point out that. Many of
these recommendations may not be relevant today. What we are
looking for is a new look at creative and innovative solutions, so
that we can move forward~ and move women into the economic
mainstream.
I think that it is time, as Ms Rudd pointed out, for a new serious
look at the ways that this can happen I think that since Congress,
and actually this committee, led to the first task force on women
business owners, that it would be a service to the country as a
whole, and to the women business ownership community, and, cer
tamly, the minority business ownership community if it could im
plement more thorough thoughts and recommendations that we
could bring forward to the new administration in January, be it
Republican or Democratic. `
The issue is an important issue for the country, and the reSson
that we have come to Congress with it is just because of that, that
there has been no actioli at the Federal level
Chairman LAFALCE Let me clarify a few things There was a
task force on women business owners in 1977 and 1978, and you di
rected that.
That differs from the interagency task force, does it not?
Ms. TAYLOR. Right. ` `
Chairman LAFALCE What was the difference between the task
force on women business owners and the interagency task force9
Ms TAYLOR The task force on women business owners was a
study commission that was mandated for a short life to look at the
barriers and to come up with recommendations, and we went out of
business once there was a report.
PAGENO="0060"
54
Chairman LAFALCE. Mandated by what?
Ms. TAYLOR. By the President. It was a presidential commission
signed into law or whatever, created by President Carter.
Chairman LAFALCE. OK.
Ms. TAYLOR. It was to look at the issue of why there were so few
women business owners, and what we could do to stimulate the
economic resource, and to identify if there were barriers, which we
found there were, and to identify recommendations to overcome
barriers. If you remember at that time, we had a woman Secretary
of Commerce, Juanita Krepps. It was Secretary Kreeps' suggestion.
Chairman LAFALCE. These recommendations that you are refer-
ring to are the recommendations of that task force?
Ms. TAYLOR. That task force.
Chairman LAFALCE. As opposed to the interagency task force.
Ms. TAYLOR. The presidential task force. One of the recommenda-
tions of the presidential task force was that there be an interagen-
cy task force which would be mandated to be the oversight mecha-
nism to make sure that the agencies carried out the plan.
Chairman LAFALCE. Did you direct the interagency task force?
Were you the executive director of it?
Ms. TAYLOR. No; I am purely the task force.
Chairman LAFALCE. Fine, good.
The presidential task force as opposed to the interagency led to
Executive Order 12138, which has been repromulgated by Presi-
dent Reagan, and that created a so-called national policy for
women business owners.
Ms. TAYLOR. Yes, sir.
Chairman LAFALCE. Now, is there a document entitled the Na-
tional Policy for Women Business Owners?
Ms. TAYLOR. I believe that is usually referred to as the Executive
order.
Chairman LAFALCE. The Executive order and the national policy
are one and the same document?
Ms. TAYLOR. I believe so. You could ask whether SBA has a na-
tional policy written. But the Executive order instructed the agen-
cies to do certain things.
Chairman LAFALCE. Did the Executive order encompass some of
the recommendations of the task force, and in a certain sense su-
persede the task force?
Ms. TAYLOR. Yes; the Executive order created the interagency
committee as an ongoing operating mechanism to make sure that
the recommendations were in place. It set goals and targets for
Federal agencies.
Chairman LAFALCE. Is this interagency task force charged with
the responsibility by the Executive order of issuing reports periodi-
cally?
Ms. TAYLOR. I believe that they are required to do a report once
a year to the President'.
Chairman LAFALCE. Have you seen any reports, or have there
been any reports recently by this interagency task force?
Ms. TAYLOR. I believe that there have been none up until recent-
ly. I could stand corrected by SBA.
[Pause.]
PAGENO="0061"
55
Chairman LAFALCE. Only one has come to our attention appar-
ently, and that was after we made it known that we were going to
have these hearings. That was a quick eight-page report. Apparent-
ly, nothing preceded that for the past 8 years Now that may be
inaccurate But if it iS inaccurate, the burden of presenting those
reports is on the preparers of the reports.
I am Curious. If I were to óontact GAO and ask GAO to render a
report card, what would be the basis of that report card? Would it
be recommendations of the task force, or would it be the implémen-
tation of the E~ecutivé order; if I were to ask GAO to make a study
of the progress that has been made over the past decade, what
would be the most appropriate yardstick to use for the GAO report
card?
Ms TAYLOR Well, I do think that these recommendations were
well thought out by the mteragencies 10 years ago, some of them
Chairman LAPALCE You were director
Ms ~I'AYWR There was an interagency committee of Assistant
Secretaries who actually did it, who came up with the recommen
dations. I was merely staff director.
Chairman LAFALCE. Who was on this task force?
Ms. TAYLOR. It was at the Assistant Secretary level of the major
agencies that impacted on women business owners. I am. not sure
that I can remember all of them, but the Department of Com-
merce, HEW, DOD.
Chairman LAFALCE. The interagency task force was the successor
to that task force.
Ms. TAYLOR. Right.
Chairman LAFALCE. So, it is almost one of the same.
Ms. TAYLOR. Right~ So, I would think that the recommendations
would be a good starting point. I think that what you want to
query on carefully is was the program ongoing What we are talk
ing about here is not just a one shot confe~rence, but a philosophical
commitment to the issue, and how you ask questions in that way
Chairman LAFALCE We are going to take a look, and I have not
done it yet, at the Executive Order 12138, and see if that might be
a good yardstick If that is the national policy, let u~ see if GAO
can do a study of how that national policy has been implemented
But we will take a look ~.t it a~d make a comparison to see what
would be an appropriateyárdstick;
Ms. TAYLOR. Excellent.
Chairman LAFALCE Representative Hayes
Mr HAYES Thank you, Mr Chairman I just want to commend
you first for having put together this hearing on this very, very
troublesome problem of women entering into business I do not see
too many of them listed in the Fortune 500 publication Unless we
change our course, that will not happen.
I am a supporter of programs to assist the development of
women-owned businesses. I am conscious of your time, Mr. Chair-
man The testimony that I have heard from these witnesses has
been invaluable to me, both interesting and informative I, too,
have a time pi'obiem. I have to leave. You know how we. get
jammed with commitments. . ~
PAGENO="0062"
56
Chairman LAFALCE. I know that you have a time problem. But if
you do not talk about the 10-percent set-aside and surface transpor-
tation, you are not going to be happy.
Mr. HAYES. I have to talk about some of the testimony that I
have heard here. There have been some troublesome developments
recently in relation to Federal contract and policy. Adding to
women and minorities as a single Federal contracting goal has
caused considerable trouble in the Federal highway program.
What you have said here goes beyond this Federal highway pro-
gram. Particularly as it relates, to the improvement of the Federal
highway in Chicago.
I would like to know what are your views on the probability of
separate goals for Federal procurement for women and minorities.
I noticed, Ms. Slater, that you said quite candidly, I think, if I
understand it, on the fourth page of your testimony, I think in the
sixth paragraph. First you start off by saying, "Women make up
the majority of the population. Therefore, women should not be
considered a minority group." But then you go on in the next para-
graph and say, "Minorities and women business enterprises should
be kept as separate entities with separate goals to be outlined in
each contract and/or `a statement of intent for each, agency's
goals."
Could you elaborate on that. Because in this situation that I, al-
luded to in relation to Chicago, aside from the fact that women
period have been short, we find out that white women have been
used as fronts in order to satisfy the minority compliance request.
We find no black women being awarded any contracts or subcon-
tracts or anything at all.
Do you think that this would change with your suggestion?
Ms. SLATER. I do. I think that would give everyone a fair chance.
Women would not be infringing on goals set for minorities, and
women would also have their slice of the pie. I really believe that if
they cannot put it in one contract, then there should be some kind
of overall agency goal, a dollar amount.
If there is going to be $10 million worth of contracts given out,
then a certain percentage should be going to women business
owners, and a certain percentage should be going to minority busi-
ness owners. Separate, not thrown into the same pot.
As a black woman, and I say black woman because nobody ever
calls me woman black, because they see that I am black first. So, if
it came down to a choice, if a majority firm had to use someone, if
they had a choice between a woman business owner and a black
woman business owner, they would take the white woman business
owner.
It is mere fact. It is just the way that it is. Until that changes,
maybe you can group us all together. But as long as it is not going
to change. It is just like if I came into an office. If I walked into an
office, the receptionist would go and tell her boss that there is a
black woman here to see you. If another woman came in, there is a
woman here to see you.
This is a fact, and this is how people think, and we cannot
change how people think right now. It is not going to happen in
our lifetime. So, I really believe that there should be some kind of
separate goals in there, instead of throwing them into the same pot
PAGENO="0063"
57~
and pitting them against each other, and giving legitimate woman
business ownerS a chance at the surface transportation money, and
legitimate minority business owners a chance
I have done a lot of transportation work I would say that about
95 percent of my work is transportation now, because of all of the
moneys that are out there I do a lot ~f work for New York City
Pransit, New Jersey Transit, DOT for the State I had no problems,
up untjl I just got notification that DBE's and women would be
considered minorities also in the same pot Before, there was
always a separate goal It was either 5 percent for women
Mr. HAYES. In the RFP?
Ms. SLATER. Yes; it came in one of my RFP's. I knew this to be,
but they put it on the front page of the RFP from the MTA last
week. They clarified it.
Mr. HAYES. Ms. Taylor, you mentioned, too, this whole problem.
Do you share the opinions that have been expressed?
Ms. TAYLOR. This is my personal opinion. I do not know the opin-
ion of them on this, but yes, I do I believe that separate tracks
create better programs I think that there is no question that there
is racism in the country In what we are highlighting here, there is
also sexism And that they are different things, and need different
mechanisi~is~to accomplish goals.
Mr. HAYES. Have you got any suggestions that might be helpful
for us to rectify such things?
Ms TAYLOR I feel, as Ms Slater said, the idea of separate goals
I also feel that there needs to be separate track advocates, because
I do not believe that minorities know how to outreach to women
business owners. Not because they do not want to, but we are in
different segments of the population I think that there ha~ to be
serious monitoring of it.
Mr. HAYES. How many employees do you have?
Ms. SLATER. Twenty altogether.
Mr. HAYES. Thank you, Mr. Chairman.
Ms SLATER Which is considered a medium sized engineering ar
chitectural firm.
Mr HAYES I notice that you talk about the separation, that a
regular list of engineers and architects are placed on a minority
list, and that is tantamount to a black list
Is that what you are saying?
Ms. SLATER. Yes.
Mr. HAYEs.~Ali right.
Ms SLATER It is a good pun, but it is not fun
Chairman LiLFALCE Ms Slater, let me ask you a question
How do you feel about that Federal law that came about through
the Armed Services Committee under the Small Business Commit
tee jurisdiction that imposes a limit of, I believe, $85,000 on the
amount of architect and engineering contracts that can be set aside
for smell business It is right now the only operative law that
limits by dollar amount the contracts that can be set aside for
small businesses.
Ms. SLA'rEn. I think that I touched on that also in my testimony.
I do not like it at all My father started this firm back in 1969 I
can tell you who the black engineers and architects are in New
PAGENO="0064"
58
York. I can just name them. There are not that many, that sur-.
vivéd any of this.
Some of them have built up. The one firm comes to mind, E.W.
Finley. He was a very progressive* man. This man went walking all
over the country. He has built up his firm to a very large size, and
he is doing a lot of work down in Atlanta. He has an office here in
Washington, and one in Boston. He was doing a lot of good work,
and he was doing work as part of the minority set-aside.
Now, when they put this dollar value on him, he had to cut his
staff, and he lost a lot of work. They were pulled out. They do not
need him anymore. He had to cut his staff.
Like I said, minorities hire minorities. Of my 20 people, they are
all minorities. Whether they be Indians, or Chinese and other
Asians, black, or Hispanics. This is what makes up my firm. I had
one Caucasian engineer, who did not come with us when we moved,
because he is in a wheelchair. I guess that in some sense that you
could say that he is a minority. Nobody wanted him either. This is
who we hire.
Back to your question about things, I see another firm, Leroy
Calender. He moved up very well and had a nice-sized firm going
for him. He has cut his staff by 30 percent, because of the dollar
amount put on the work. Just like myself. I am now getting a lot of
transportation work, because it is sought after.
I would like to make another point. One of the reasons that I
started Hill-Slater as a paraprofessional firm was because of the
outrageous cost of liability insurance. I think I mentioned that as a
subcontractor that I have to carry the same amount of insurance
as my prime does, but I am not treated the same.
Chairman LAFALCE. All right. Thank you very much.
Do you have any further questions, Congressman Hayes?
Mr. HAYES. Do you have trouble getting liability insurance and
bonding?
Ms. SLATER. No; we do not bond in my business.
Mr. HAYES. You do not have a bond.
Ms. SLATER. We have never had a claim in almost 20 years of op-
erating the business. It just went up, because it went up, and we
were caught in there.
Mr. HAYES. Thank you, Mr. Chairman.
Chairman LAFALCE. Well, thank you.
I want to thank all of the witnesses. We will be having further
hearings on the entire subject of the problems and the potential of
women business owners in future weeks. I thank you very, very
much.
~Whereupon, at 11:15 a.m., the committee was adjourned, subject
to the call of the Chair.]
PAGENO="0065"
NEW ECONOMIC REALITIES: THE ROLE OF
WOMEN ENTREPRENEURS
TUESDAY, MAY 10, 1988
HOUSE OF REFRESENTATIVES,
COMMITTEE. ON SMALL. BUSINESS.,
Washington, DC.
The committee met, pursuant to notice, at 10 a.m., in room 2359-
A, Rayburn House Office Building, Hon. John J. LaFalce (chair-
man of the con~mittee) presiding.
Present: Chairman LaFalce; Representatives Hayes, Bilbray,
Lancaster, Martinez, Hiler, Slaughter, and Meyers.
Chairman LAFALCE. The Small Business Committee will come to
order.
Our hearing this morning is the third in a series of hearings on
the special problems facing women business Owners.
The desire to seek economic independence by starting one'S own
business is not limited by gender. The ability to achieve this goal,
however, is often dependent upon factors unrelated to entrepre-
neurial skill.
Equality of access to business credit is vital for business forma-
tion and development, and in spite of advances in achieving equah
ty of opportunity, women still face subtle discrimination in credit
transactions for subjective reasons unrelated to creditworthiness
The Equal Credit Opportunity Act of 1974 prohibits cliscrimma
tion in credit transactions on the basis of race, color, national
origin, sex, marital status, or age While we have achieved moder
ate success in providing equal access to consumer credit, women
business owners insist that a business exemption from key provi
sions of the ECOA for business and commercial credit has creat'~d
a climate in which discrimination is likely to occur
Access to capital ha~ often been cited as one of the two most
vexing problems of women-owned small businesses The second is
management and technical training. Many such businesses remain
dangerously undercapitalized Our hearing today will examine this
issue as we seek to remove barriers to the achievement of commer
cial success for women and for all sectors of the small business
community.
Our witnesses today include two small business owners whose
stories will illustrate the particular problems women face in seek
mg business loans We will also hear from Ms l3arbara Gentry of
the Department of Commerce for the State of Michzga~, and from
Representative Lindy Boggs, who is well known and respected for
(59)
88-1990-88-3
PAGENO="0066"
60
her tireless efforts on behalf of women who seek the American
Dream.
Are there any statements the ather members have?
Mr. BILERAY. I have one I would like to submit for the record.
Chairman LAFALCE. So ordered.
[Mr. Bilbray's opening statement may be found in the appendix.]
Chairman LAFALCE. I have a statement from Senator Carl Levin,
who would have liked to testify, but cannot. He asked that we
submit his statement in the record. Without objection, so ordered.
[Senator Levin's statement may be found in the appendix.]
Chairman LAFALCE. Before we call the entire panel, I thought it
would be appropriate to have as our lead-off witness, Congresswom-
an Lindy Boggs of Louisiana.
Lindy, I assume you would like to testify and then go to your
other business, as opposed to remaining with the other members of
the panel.
TESTIMONY OF HON. LINDY (MRS. HALE) BOGGS, A REPRESENT-
ATIVE IN CONGRESS FROM THE STATE OF LOUISIANA
Mrs. BOGGS. I am happy to testify as you wish. I am grateful to
you and all the members of the panel for allowing us to have this
hearing today. It is an extraordinarily important hearing.
Not only am I here to express my personal appreciation, but also
that of the Congressional Caucus for Women's Issues, for your lead-
ership in holding this series of hearings to focus on the problems,
successes, and prospects of women who are, or who seek to become,
entrepreneurs.
As you well know, entrepreneurial enterprise has long been
much admired in our society and has represented a key component
of our Nation's economic vitality.
The burgeoning entrepreneurship of women represents an impor-
tant national resource. I commend the members of the committee
for your recognition of this source of new dynamism and for your
commitment to examining ways in which Government can con-
structively assist women entrepreneurs and remove impediments
to their success~
Problems with equal access to business or commercial credit
have been identified as a key area of concern by the National Asso-
ciation of Women Business Owners, other organizations concerned
with women in business, and individual women business owners.
It is a distinct honor for me to address that subject today and to
speak in support of legislation introduced by Chairman LaFalce
which is designed to clarify the application of the Equal Credit Op-
portunity Act to commercial transactions. I have been pleased to
work with and support you, Mr. Chairman, in this legislative
effort.
Chairman LAFALCE. You have done more than support me in
that effort. You have led me in that effort, Mrs. Boggs.
Mrs. BOGGS. The Congressional Caucus for Women's Issues has
included the bill, H.R. 1897, in the Economic Equity Act, a package
of legislation which constitutes the Caucus' l~gis~ative focus.
You will be hearing, this morning, from others who will shed
considerable light on the nature and extent of the continuing prob-
PAGENO="0067"
61
lem ofdiscr~rni~ation against women in commercial credit transac~
tions Because we lack reliable stahstical information about credit
problems of women, it has been difficult to document the extent of
the problem,
Evidence has been largely anecdotal, but we have some statisti
cal evidence, especially that obtained by the National Association
of Women Business Owners when they conducted a survey of their
membership in 1985, which indicated that two out of five respond
ents felt that they had been the victim of discrimination when. ap-
plying for commercial credit.
Three out of four women who responded had applied for some
form of credit within the past 5 years, and one of every three was
denied credit. The SBA sponsored a study of women entrepreneurs,
hut, unfortunately, it focused on well-established businesses and ig-
nored the important area of concern: Credit problems of young
businesses and would be entrepreneurs
Difficulties in credit access for women in those categories were
found and studied by the SBA's Task Force on Women's Business
Enterprise in 1978 and 1979 and published man important volume
entitled: "The Bottom Line: Unequal Enterprise in America."
Mr. Chairman, I have to tell you and other members of the panel
that I have some strict notes from my staff saying I can't give
away these copies, because they are the only ones we have. But it
was this important document, which led to the establishment of an
autonomous Office of Wo'men's Business Enterprise within SBA
and to the establishment of a miniloan program, among other `ini-
tiatives, specifically in response to access-to-credit problems.
Those initiatives have been almost entirely eliminated since
1981. The majority of "women-owned businesses tend to be service
based and lacking sufficient collateral to secure a loan. Our econo-
my has become more service based and lenders have had to adjust.
Yet, individual savings are the major source of capital for women
entrepreneurs and joint savings of husband and wife rank second,
according to the Women's Equity Action League.
The Census ,Bureau finally issued 1982 data on women-owned
businesses in 1986 after considerable pushing by many of us who
were concerned that we had only data from the "1977 Economic
Census to rely on. So, you see, it is not always easy to get accurate,
up-to-date information about the status of women in our economy.
The evidence we do have indicates that, 14 years after passage of
the Equal Credit Opportunity Act, there has been considerable im
provement with respect to consumer credit, but problems continue
to crop up with respect to commercial credit.
Mr. Chairman, and members of the panel, I was a member of the
Financial Institution Subcommittee that helped to write the Equal
Credit Opportunity Act in 1974, and I can assure you there was no
difference in our minds or in the congressional intent, the legisla
tive intent, between consumer credit and commercial credit
Key aspects of the problem, other than outright denial of credit,
are the discouragement of applicants before they even file a formal
application, and the granting of credit on less favorable terms than
might be expected and appropriate
The very informality of the discussion and negotiation process
that is an accepted and important part of business credit transac-
PAGENO="0068"
62
tions offers particular opportunity for discouraging applicants and
for leading them to actually request less favorable terms in the
formal application.
In business transactions, the filing of a formal application is
often the culmination of the process as opposed to consumer trans
actions where the filing of a formal application tends to take place
at the outset. Therefore, the nature of the discrimination problem
with commercial credit is more subtle and difficult to pinpoint.
The. Equal Credit Opportunity Act of 1974 prohibits discrimina-
tion in both consumer and commercial transactions. An amend-
ment to the act in 1976 gave the Federal Reserve Board flexibility
in drawing up the reguiations and, as a result, the implementing
regulation, regulation B., now reflects a distinction between com-
mercial and consumer credit, based on the differing nature of the
types of transactions.
Commercial credit transactions are specifically exempted from
provisions of the act relating to: One, notification of adverse action
regarding a loan application, including a written statement; two,
retention of records requirements; and, three, information concern-
ing marital status.
At the time the Federal Reserve initially crafted these regula-
tions, it is understandable that these exemptions for commercial
credit were deemed appropriate in recognition of the greater
amount of negotiation and subjective judgment typically associated
with commercial transactions. I am confident there was no intent
to make it easier to discriminate.
But there is ample evidence of continuing discrimination and of
a view on the part of many lenders that the ECOA doesn't really
apply to commercial credit.
As you know, Mr. Chairman, the legislation that you and I intro-
duced would remove those exemptions for commercial .credit. The
bill does provide . for the possibility of legitimate exceptions which
could be approved by the Federal Reserve Board through an ad-
ministrative hearing process.
When the Federal Reserve Board acted to change some aspects of
regulation B, about 2 years ago, it chose not to alter the portion
pertaining to business credit because of insufficient evidence of
need.
While the Board acknowledges that continuing discrimination
does exist, as indicated by the testimony of Governor Martha Seger
before the House Banking Committee's Subcommittee on Consumer
Affairs and Coinage in August 1986, it maintains that the problem
is primarily one of education of bank officers, minorities, and
women to the rights already guaranteed by the act.
In an effort to assist in the education of these groups, the Feder-
al Reserve Board has produced an excellent pamphlet. Those of us
involved in efforts to rectify the problems are very appreciative of
the Fed's responsiveness to the concerns raised, but we question
how successfully the pamphlet can be distributed to all lenders and
applicants, and whether or not it would be read.
If recordkeeping and written notice of denial were requir'ed, it
would, at the very least, ensure that both bank officers and appli-
cants are aware of their guaranteed rights.
PAGENO="0069"
63
Clearly, women-owned businesses already form an important
component of the business sector To assure that these promising
contributors to our national economic vitality can prosper, it is
critical that we heed the signs of continuing disQrirnination in their
access to credit and act to remove impediments to their success.
Thank you allowing me the opportunity to share these observa-
tions with you as a part of your hearings on women entrepreneurs.
I congratulate you and thank you for holding the hearings, and for
the heavy attendance we have among the committee members this
morning.
Chairman LAFALCE. Thank you very much, Lindy. I think the at-
tendance here is testimony to the affection and respect in which we
all hold you, in addition to the interest that the members obviously.
have in the issue.
Since the introduction of our bill, we have heard from some indi-
viduals or organizations who oppose it, for one reason or another,
the National Commercial Financial Association, for example, and
the National Association of Credit Managers.
I think the time has come for us to do tWo things To sit down
with Mr Annunzio and try to get hearings on this bill in this Con
gress before his subcommittee, and then tO see if we can work with
these groups who oppose it to see if we can amend it without weak-
ening it to accommodate their concerns in return for their support
Now, of course, if there would not be some quid pro quo, some
support to accommodate their concerns, our disposition to accom-
modate those concerns might not be as great.
Would that generally be your disposition?
Mrs. BOGGS. It certainly would be. I think you have to recognize
that some of the groups that are in doubt about the bill or opposing
the bill, have very little outright experience with the kinds of
ôredit that we are really talking about.
If I may say so, when we first started the Equal Credit Opportu
nity Act for all credit, including consumer credit, we had great op
position from many of the groups Of course, that was finally over
come I remember the testimony of the immediate past president of
the American 13ank~~ng Association, who came to testify in favor of
the bill But he was immediate past president when he did so
When the bill was completed, the legislative history of it is such
that different persons, the minority interests, the interest of the
aging, and so on, were all reflected in suggestions to the Federal
Reserve Board for regulations
When the first regulations were-or the preliminary regulations
were published, all of them were very pleased that their feelings
and their experiences had been included Of course, when the corn
ments began to come in and the people who had to, in practicality,
carry out the purposes of the act, you began to get some negative
comments and some suggestions for change.
When those changes were reflected in the permanent regula
tions, the women's organizatipns, the minority organizations, and
others really thought that they had been taken in. They had failed
to comment on how wonderful the proposed regulations were, you
see.
We, the women Members of Congress, which included several mi-
nority women, asked the Federal Reserve Chairman-Arthur
PAGENO="0070"
64
Burns at the time-to come to meet with the leaders of these
women and minority organizations, which they did. So, there has
been difficulty in the interpretation all along.
I think we have been able to meet all along the requirements of
the people who feel that they are still discriminated against and
are still having trouble, and the requirements of the groups that
are charged with the application of the regulations. So, I think
there is no reason to assume that we cannot satisfy those needs in
this instance as well.
Chairman LAFALCE. Good.
Well, I look, forward to working with you more closely. I would
like to do something in the next month.
Mrs. BOGGS. Thank you.
Chairman LAFALCE. Do other members of the committee have
questions or comments they would like to make?
Mr. HAYES. I would just like to commend my colleague for
having introduced this much-needed piece of legislation. I want to
let you know I fully support it. There is no question abQut the diffi-
culty that women entrepreneurs have in trying to seek social fi-
nance, particularly among minorities.
Thank you very much, Mr. Chairman.
Chairman LAFALCE. Thank you. Any others?
Mr. Lancaster.
Mr. LANCASTER. I would like to add my welcome and thanks to
Mrs. Boggs for her leadership and testimony this morning.
Mr. MARTINEZ. Mr. Chairman, I would like to add my commenda-
tion to Mrs. Boggs. It surprises me when people in a position to use*
common sense don't. Women in business who want a commercial
lOan are going to have substantially the same kinds of collateral
and situation as a male. Why someone in a position to make that
loan would deny a woman under the same set of circumstances is
beyond my wildest imagination.
It never ceases to amaze me that these situations have to be cor-
rected by law when they should be corrected by common sense. I
commend you and the ëhairman for introducing this bill.
I think we have to make it known that there is no distinction
between a commercial loan and regular credit.
Chairman LAFALCE. Based upon the comments of all the mem-
bers, I would assume all wish to cosponsor our bill. So ordered.
Mrs. BOGGS. Thank you.
Chairman LAFALCE. If there are no further comments, Lindy,
thanks a million.
Mrs. BOGGS. Thank you very much, Mr. Chairman, and all the
members of the committee.
I may mention that my colleague from Kansas has been a leader
in these regards as well. Thank you so much.
Mrs. MEYERS. Mr. Chairman, may I say that I may be a cospon-
sor of the bill. I am not sure, because of my participation in the
Congressional Women's Caucus, but I do congratulate you for intro-
ducing the bill and for working so hard on this, in this area. Thank
you.
Chairman LAFALCE. Mrs. Meyers, I am sure that you are, and if
you are not, you are retroactively.
Mrs. BOGGS. Thank you very much.
PAGENO="0071"
65
Chairman LAFALCE. We will now hear from a panel on business
owners or individuals involved in Government with respect to
women in business Ms Barbara Gentry, director of the Women
Business Owners Service, Michigan Department of Commerce, Ms
Christine Bierman, president of Colt Safety, Inc., St. Louis, MO;
and Ms. Mary Jordan-DeLaurenti, president of Jordan-DeLaurenti,
Inc., Dallas, TX,
It surely is a pleasure for us to have the three of you before us
today. What I will do, without objection, is put the entire text of
your remarks in the body of the record at this time~ If you wish to
read them, fine. If you wish to summarize them, fine.
Whatever you do, I hope you can do it within, ~ no more than
10 minutes each Thea we will have time for questions Without ob
jection, the testimony of the three witnes~es will be included in the
record.
First we will hear from Ms. Gentry.
TESTIMONY OF BARBARA GENTRY, DIRECTOR, WOMEN BUSI-
NESS OWNERS SERVICES, MICHIGAN DEPARTMENT OF COM-
MERCE
Ms. GENTRY. Mr. Chairman and esteemed members of the Small
Business Committee, as the director of Women Business Owners
Services in Michigan's Department of Commerce for the last 5
years, and also as a business owner for the past 13 years, I want to
thank you for this opportunity.
Chairman LAFALCE. Ms. Gentry, when Jim Blanchard served in
Congress, he served with us on the Banking Committee with Lindy
Boggs and myself. He brought a good many of his staff at that time
from Michigan with him.
Were you on his Washington staff?
Ms. GENTRY. No; I was not.
Women Business Owners Services has recently been recognized
by the U.S. Department of Commerce as the most outstanding pro-
gram in the United States providing the most comprehensive eco
nomic development initiatives for women entrepreneurs It is from
this experience that the following testimony is presented.
Our free enterprise system is based on the premise of equal op
portunity for all. But for small businesses in startup or business
growth stages, access to capital is not a level playing field There is
definitelya problem.
Women's business startups are experiencing a growth rate of 94
percent annually Yet, this growth is being restrained by the un
availability of capital due to systematic discrimination in the lend
ing practices The impact of this discrimination is causing women
to start businesses undercapitaiized.~
Systematic discrimination impacts a women's traditional experi
ence in the workforce and limits her income This affects the
amount of collateral and assets she has been able to gain A well
known rule of thumb is in order to get money, you must have
money.
Women traditionally do not have sufficient assets~ access to fi
nancial markets, or access to family assets.
PAGENO="0072"
66
Perceptual discrimination further limits access to capital. In July
1986, Michigan held four public hearings concerning access to cap-
ital for women business owners. Testimony given by the 435
women business owners identified one overriding concern. In their
opinion, women do not have equal access to credit and are discrimi-
nated against in the business and loan process.
Lenders perceive women-owned businesses as high-risk invest-
ments due to misperceptions about women's ability, experience,
and commitment to operate successfully. Women are, therefore,
charged excessive amounts of interest and collateral, up to five
times the amount of the loan, and cosignatlires are required for
husbands, fathers, or sons when women have attained personal
credit in comparable amounts.
Traditional banking lending policies have a discriminatory
impact on young companies which have not accumulated sufficient
assets or resources to meet the loan criteria. This is especially true
for serve sector businesses, because they possess few tangible assets
which banks require as collateral for most loans.
This has an impact on women business owners because in Michi-
gan, 84 percent of all businesses owned by women are in the cate-
gory of service, wholesale or resale.
In 1987, a Touche Ross Michigan study surveyed 3,400 women
business owners and received responses from 18 percent, 62~1. This
survey showed that while 69 ~percent of these women business
owners approached banks and lending institutions, only 14 percent
of the capital used to start their enterprises came from lenders,
with more than 70 percent coming from savings and earnings, and
another 15 percent from friends, relatives, and private investors.
This reliance on their own earnings and savings, despite the tra-
ditionally low earning power of women in the workforce, resulted
in 80 percent of the businesses being capitalized at under $20,000.
Only 5 percent of the women in the survey started their businesses
with more than $75,000.
These Michigan businesses were not part-time ventures or home-
based enterprises with no plans. for expansion. The survey showed
that 66 percent of the respondents are corporations, 86 percent op-
erated full-time ventures, and that 80 percent leased or owned
space. Most important, from an economic development perspective,
was the fact that almost half, 47 percent, were considering expand-
ing in 1987.
It is critical to point out that the data collected from IRS about
the revenue of women business owners is incomplete. The $100 bil-
lion to $200 billion annual revenues represent sole proprietorships,
partnerships, and subchapter corporations only. The data does not
reflect the U.S. corporations owned by women.
In Michigan, in 1983, IRS reported that 111,620 women-owned
nonfarm businesses created $1,087,487,000 in sales. The recent
Touche Ross survey, polling the top 50 women business owners, in-
dicated that their corporate revenues for 1986 exceeded $867 mil-
lion. Therefore, the actual economic impact of just these 50 addi-
tional corporations would almost double the gross revenues report-
ed by IRS in 1983.
As a result of these barriers, the area of greatest risk for women
business owners continues to be the necessity to start undercapita-
PAGENO="0073"
67
lized businesses which significantly reduces their ability to be com-
petitive.
The impact of undercapitalization and lack of capital from tradi-
tional sources limits the potential of growth for women-owned busi-
nesses. As businesses expand, growth capital, the permanent work-
ing capital needed to sustain growth, is not available either inter-
nally or externally.
Data gathered in the Touche Ross survey indicates that 31 per-
cent of the companies that started with less than $20,000 in capital
were grossing over $100,000 in 1986. While 65 percent of the com-
panies that started with $20,000 or more in 1983 were grossing over
$100,000.
In the Michigan Touche Ross survey, over half, 52 percent, of
these Michigan business owners were operating with a bank loan
of any kind. Yet, these were not new businesses. Only 8 percent of
the survey respondents had been in business for less than 2 years,
64 percent had been in existence for at least 5 years, and 32 per-
cent of these more than 10 years old.
In terms of size, 41 percent of the respondents indicated that
their businesses grossed more than $100,000 a year, and 54 percent
employed more than four full-time and part-time employees. This
is all large.
When bootstrap financing is necessary, when a company has to
rob Peter to pay Paul continually, the growth is slower and more
cautious. It is as if these companies must save their money in order
to afford the luxury of growth.
Some States have addressed the issue of capital, and the State of
Michigan has implemented two major initiatives: The Capital
Access Program and the BIDCO Program, to increase access to cap-
ital for small- and medium-sized Michigan businesses.
It is important to point out the greatest challenge of our office
has been to get State and local economic development policy and
decisionmakers to include this existing growing segment of small
business.
The issue is not only systematic and perceptual discrimination, it
is even more serious. Women business owners are not even thought
of, let alone considered, in policy decisions. It is one thing to be dis-
criminated against. It is another to not even be thought of or in-
cluded in decisions.
Without the specific intervention of Women Business Owners
Services, our office, I doubt many of our programs would have
worked. Attitudes change before behavior. Someone must be there
to advocate on behalf of women business owners to raise conscious-
ness and seize opportunities. This is a challenge ahead of us
throughout the United States.
In conclusion, I want to stress the market value of women busi-
ness owners. Savvy profit-oriented companies in Michigan like
Touche Ross Accounting Agency have recognized it. Their commit-
ment is not the least* bit altruistic. It is about growth potential,
theirs as well as their client's.
It is imperative that public national policymakers, such as your-
selves, think strategically in our changing economy to maximize
this resource, the fastest growing segment of small business.
PAGENO="0074"
68
Women sole proprietors contribute between $100 billion and $250
billion to the national economy in spite of all the restrictions men~
tioned earlier in this testimony. What kind of growth and impact
could be created without the hindrances?
The strong participation of this vigorous segment not only con-
tributes more -diversity and resilience in our economy, it vests even
more actors with a vital stake in staying competitive and an inter-
est in making our national -economy strong.
To conclude, I have eight specific recommendations. Their enact-
ment by Federal regulatory agencies would do much to open doors
now closed to women business owners, and -unlock their potential
for job creation and economic growth.
One, adopt a specific affirmative action program to help women
business owners overcome traditional lending practices that limit
their access- to financing. - -
Two, support the present legislatIon introduced by Representa-
tive John J. LaFalce and Representative Lindy Boggs regarding the
Equal Credit Opportunity Act of 1974. -
For women-owned businesses, the Equal Credit Opportunity Act
of 1974, ECOA, is a missed opportunity. It had - the potential to
eradicate barriers that have limited the ability of women-owned
businesses to acquire business credit. Although the act requires fi-
nancial credit institutions -to make credit available equally without
regard to sex or marital status, many of its provisions have been
interpreted not to apply to business transactions.
Three, expand the bank examination process to examine for com-
pliance with the ECOA's prohibition against sex discrimination in
business lending and to include data coliec~tion. on commercial
loans granted or denied to women business owners. -~ -
Four, develop a rating system to be inc~orporated into the exami-
nation and implementation of the Community Reinvestrr `nt Act to
measure the impact of the lenders' loan practices toward satisfying
the -credit needs of women business owners.
Five, sponsor educational programs instructing lending institu-
tions how to review loan packages for soft asset companies based
On cash-flow analysis, rather than asset-backed financing.
Six, reverse the conservatism of the SEA 7(a) guaranteed loan
program and develop new pOlicy that reflects the borrowing r~eeds
of today's economy to include soft asset loans, particularly for
women business owners. -
Seven, improve the quality and information about small business
growth in the United States by expanding the County Business
Pattern data - to include women-owned status and business type,
sole proprietorship, partnership, or corporation. - -
Eight, enact legislation authorizing the implementation Of .a Na-
tional Capital Access Program, and a National BIDCO Program for
women - business owners, based on the models being developed so
successfully in Michigan. - - - -
I look forward to the day when women entrepreneurs are free to
focus their energies and talents on growing their businesses and
creating jobs, instead of pushing the rock of systematic~and- percep~
tual prejudice up the hill aga-in and again. With your help, we can
give women -business- owners the tools they need.-
Thank you.. - -
PAGENO="0075"
69
Chairman LAFALCE. Thankyou, M~. Gentry.
lMs Gentry's statement may be found in the appendix I
Chairman LAFALCE Our next witness will be Ms Christine Bier
man from St.. Louis, MO
TE$TIMONY OF CHRISTINE BIERMAN, PRESIDENT COLT SAFETY,
INC.
Ms. BIERMAN. Mr. Chairman, members of the committee, I am
honored to be here today to tell my story, my struggles, my success,
my passion, and my dreams with you
I would like to introduce my businesses I am 100-percent share
holder. This is on your last page. You have a copy. Three corpora-
tions. Colt Safety, Inc., founded in 1980, to warehouse and distrib-
ute safety products such as hard hats, respirators, safety glasses
and goggles, steel boots, and gas detection produôts,
We distribute to local industries in about a 200-mile radius of St.
Louis.
My second company is GFG America Gas Detection, Ltd. We are
the exclusive U S importers of gas detection products of Gesell
schaft fur Geratebau These products are sold nationally through
safety products distributors. Projected 1988 sales are $500,000.
Number of employees are three.
* My third company is Safety Technologies, Inc. We incorporated
in October 1987 to* maintain, calibrate, and repair all GFG electron-
ic gas detection products, all Enmet gas detection products, and all
Survivair respirators. Projected 1988 receipts; are $50,000. Number
of employees are two, one full-time technician and a full-time engi-
neer.
I have been approached to purchase my fourth corporation I
don't know if I am going to be able to get the banking for that But
a safety house in Fort Worth, TX has approached me. They want
me to buy them out: So, we will see how that goes.
Today, I will be focusing on Colt Safety, Inc., the oldest of my
companies and the one also in need of money and all kinds of
work.
I want to be a business owner, not a woman business owner I
would prefer to do business without taking special account of my
gender I am one of less than a handful of female safety products
distributors in this country
I started this company in 1980 at the suggestion of my husband,
who offered me office space and a telephone in his machine tool
dealer business.
I have never expected anything to be handed to me on a silver
platter I realized that starting a new business would be a constant
uphill struggle, and I was willing to sacrifice a lot to make it work.
My roots are from a small southern Illinois town and a middle-
class family I have a BS degree in education I taught high school
journalism, English, and physical education for 6 years, and then
founded Colt Safety, Inc. * *
I brought nothing to this business, no family money, no MBA,
and no expertise in the safety field The only thing I had was a pas
sion to succeed. I am a strong believer in the "American Dream." I
PAGENO="0076"
70
believe any person can do anything they set their body, soul, and
mind to.
With this philosophy a part of my life, I refused to fill out
woman enterprise business forms. I never solicited that kind of
business and certainly never expected it. But over the course of 8
years in this business, I found out I could not be as good as my
competitors, I could not be anyone's equal. I had to be better.
My metropolitan industrial area is a $40 million~ marketplace. A
major defense contractor in St. Louis spends $1.5 million a year on
safety products. In 8 years, I have done $2,000 worth of business
there. I have been tefused bid solicitations by this company, and
the excuse has been that all they need are three bids, and since
there are six safety houses in St. Louis, they do not need me.
So, there are no Government set-asides or what I call "token
business" waiting to drop in my lap. In many cases, I am not even
given a fair chance to bid as an equal, which is all I have ever
asked for.
In spite of negative and uneducated attitudes of people in my in-
dustry, Colt Safety, Inc. has grown. In 1987, we doubled our sales,
making it our first million-dollar year, and we are currently on
target for tripling those numbers for 1988. We employ 14 people. In
1987, I paid $61,144.20 in combined withholding, sales, and unem-
ployment taxes. I have taken 3 of those 14 people off of unemploy-
ment rolls, and that makes me feel proud of my American Dream.
An inevitable evil with a rapid growth is cash-flow problems. I
have been turned down for a loan by every bank in St. Louis. It
always got down to the question of personal assets an4 can you
bring your husband back to sign? This, to me, is blatant discrimina-
tion.
Through some political connections, I met the owner of a minori-
ty bank in my town, and made my appeal to them on a very
human level, accompanied by a loan package that showed definite
growth and assets.
That banker introduced me to MO BUCKS, set up by the State of
Missouri to help small businesses at a low interest rate. Neat idea,
but most banks didn't want to deal with it because it entailed a lot
of paperwork and less of a return on their money than if they were
dealing with the real corporate world.
With my banking relationships finally in place, we grew more.
By the way, my husband did have to sign for my MO BUCKS
loan also, but I was not in a position to argue. A year later I went
back to my minority bank for more money and was informed that I
grew too much-evidently they had a commercial lending limit,
and I had reached that limit. They said they would give me glow-
ing referrals to any bank I chose to solicit.
So, once again, after a year of comfort, I will be forced into beg-
ging bankers and proving to them that I am for real and that, yes;
I really do sit at the helm of this safety supply company.
On a more positive note, in January 1987, I was told about
Southwestern Bell Telephone Co.'s aggressive policy on procuring
from minority and women-owned business. I did fill out their
forms. I was asked to bid on their safety glass contract for their
five-State area.
PAGENO="0077"
71
We won that contract and have gone on to win a contract for
their protective clothing and respirators for asbestos removal at
their facilities Because we are a woman owned enterprise, they
gave us a chance to earn their business.
It is my goal that through this testimony I can help to humanize
the process of allowing women enterprises to do their jobs as equals
in the business world~
Chairman LAFALCE. Thank you very much, Ms. Bierman.
Our next witness is Mary Agnes Jordan-DeLaurenti.
TESTIMONY OF MARY AGNES JORDAN-DELAURENTI, PRESIDENT,
JORDAN-DELAURENTI, INC., DALLAS, TX
Ms. JORDAN-DELAURENPL My name is Mary Agnes' Jordan, also
known as Mary Jordan-DeLaurenti, and I am the president of
Jordan-DeLáurenti,' Inc., [J..DL'j. Jordan-DeLaurenti, Inc., is a man-
agement company specializing in training and contract services for
the Government.
I started J-DL on January 5, 1975, as one `employee embarking
on a management consultant career. At that time I knew one
thing-that I wanted to see what I could accomplish, on my own. I
had been laid off by General Motors the previous May and decided
that if there was no security with such a large company as General
Motors, then there was no such thing as security with any compa
ny That recognition produced a sense of self dependence Fears of
marching off on my own with no financial resources or `backing
and with only the moral arid financial support of my husband of 2
months-his salary fed and sheltered me-were reduced.
After 2 years of building my training capability with Govern
ment and business, I was ready to hire a second employee In order
to accomplish my marketing plan, I needed financing of $10,000 I
was denied by several banks because I was female, so I just put my
nose to the grindstone and worked harder and longer without the
employee.
The following year, I put together another business plan for a
loan of $10,000 to expand the business Aga~ I was rejected The
laws were only beginning to take hold for Women's personal credit,
and there was no protection for business credit for women. .1 decid-
ed to fight.
The reason given to me for the first rejection was that I was a
woman7 and the bank had no loans to give to women The second
rejectioti by the same bank had a different, more subtle, reason
My business plan was not sufficient When I asked what I could
add or change, the president indicated that my husband needed to
submit a personal financial statement.
When I indicated that my husband had no financial or personal
interest in the business, the president asked me, "What kind of
marriage do you have, anyway?" Very calmly and sweetly, I said,
"Now, Curtis, you know you can't ask me that question." The
Equal Employment Opportunity Act at least made him aware and
gave me the courage to persist.
I finally asked him to humor me I wanted to dramatize some
thing for him. I told .him I would leave his office, and I would close
the door, open it again and reintroduce myself as Mary Agnes
PAGENO="0078"
72
Jordan, single woman, owner of J-DL, Inc., and would he please
review my application and my personal financial statement, and
see if I qualified for the loan.
I did exactly that. My drama worked. He reviewed the appliça-
tion as I sat there. Having completed the review, he raised his eyes
in amazement, and said, "I know this loan committee isn't a bunch
of male chauvinists." I told him he was probably right. At this
point I just wanted my money.
Getting that $10,000, even if it did take 2 years, proved to be
easier than getting $100,000 when I needed it 2 years later. I sub-
mitted my request for a loan with my business plan to several
banks. Again I got the same story, I was too high a risk. It was
1979 and our sales were $220,000. They had grown 120 percent
since 1978 and at least 100 percent every year since 1 started the
business.
I applied for an SBA guaranteed loan. I was rejected. My credit
record was excellent. I had not missed a single payment on the
$10,000 loan. My marketing of Government contracts and the sup-
port of a wonderful woman friend encouraged me to pursue SBA
8(a) certification.
I was rejected by the SBA for the certification because I was a
nonminority female. Disadvantaged nonminority males had been
accepted into the program. At every level of appeal to the SBA, I
was rejected and insulted. This led to 3 years of litigation, partially
supported by the Women's Legal Defense Fund. Persistence tainted
by controlled anger and frustration resulted in a successful settle-
ment 2 days before the final date for a court trial.
Now the work began. I again was rejected by the banks, but this
time I was able to use the SBA guaranteed loan program. and suc-
cessfully borrowed $100,000. That was the beginning Of J-DL's ex-
p~insion. It was the year 1980.
I would not be testifying for J-DL today without this loan. It gave
J-DL the basis to engage in large Government cotitracts. Although
my experience with gaining credit happened 8 to 10 years ago, they
are not outdated. It is still happening to women in emerging busi-
nesses. Growth depends on capital. Banks are in the business of
providing this capital, but it appears that with nearly 30 percent of
businesses owned by women in 1988, the banks are not in business
to loan to this large portion of the economy.
Banks in Texas, as you all know, are having their own problems.
I am not asking them to take unreasonable risks. I am asking them
to apply the same criteria for loan approval to emerging business-
es, whether they be male- or female-owned.
I am asking Congress to assure that this is done. ECOA, the
Equal Credit Opportunity Act, does not cover equal access to credit
for women business owners, and almost every banker knows this.
We need laws that will provide access to credit and access to cap~
ital.
I would also like to add some testimony on procurement for
women-owned businesses.
Being SBA 8(a) certified was a business issue for me, not a social
cause. Jordan-DeLaurenti, Inc., is a successful business today be-
cause we market heartily. I pursue business. My staff is extremely
competent and dedicated. We watch our cash-flow and our business
PAGENO="0079"
73
and accounting practices carefully. We are proud of the work we do
for our customers.
8(a) was not a gift. The contracts do not come as gifts. What 8(a)
has done for J-DL is to provide it with equal access to do business
with the Federal Government. It is no different than the equal
access laws Congress has created for personal credit for minorities
and women, nor for equal access to education.
SBA 8(a) certification has given me an opportunity to create a
business and to nurture that business into a $5 million operation.
Mr. Chairman and members of the committee, respectfully I
submit that the 8(a) program does not cost the American people
money. It contributes money to the public coffers. J-DL supports
175 families. All of them pay taxes. This year alone J-DL and its
employees paid $729,182.94 in Federal taxes.
Had I not been successful in my legal pursuit of 8(a), I guarantee
you I would not be head of a company that does defense contract-
ing with the Army, Navy, and Air Force. Women-owned businesses
have very little opportunity for equal access to defense business.
The barriers are too great. Very few women have had military ex-
perience, therefore, few understand the internal workings, nor do
they have the credibility with defense procurement or program
people. But they have services and products that defense uses, and
they can hire people who understand the military, as I did.
There are no programs for women-owned businesses that work.
There is much talk but very little action. The programs have no
force of law. There is no requirement for Government agencies or
prime contractors with WBE's, in spite of all the legislation. We
need these requirements. Women must have equal access to con-
tracting.
We are not asking for a gift, we are asking for equal access. This
access must be in the form of either the 8(a) program or a new pro-
gram for all women.
I believe your records will indicate that access to the 8(a) pro-
gram for women of all races is next to impossible. Although the
large portion of nonminority women who have 8(a) certification
obtain it after some form of litigation, it is not much easier for mi-
nority women to gain 8(a) approval.
I support a Federal Government access program for women-
owned businesses, and I urge you to pass the legislation to obtain
this goal.
I want to thank you for the opportunity to testify before you
today.
Chairman LAFALCE. Thank you very much, Ms. Jordan.
Let me ask a few questions before we turn to the other members
of the committee.
Ms. Gentry, your first recommendation was to establish offices
for women business owners in each of the 50 States.
About how many States right now have such offices?
Ms. GENTRY. According to Charlotte Taylor's report, there are
approximately five offices that are specifically designed to deal
with the economic development issues of women. Most of the of-
fices that have been established have to do with the procurement
or set-aside programs. They deal specifically with that and not nec-
PAGENO="0080"
74
essarily the issues that affect the economic development policymak-
ers.
In my region, Michigan,. Ohio, and Illinois, those are the three I
know of. I believe there is one in Louisiana and another in another
State. So, there are five. None of them have the staff nor the finan-
cial resources that we have. They are one-person operations.
Chairman LAFALCE. Is there any Federal role that you might en-
vision, any catalytic role that we might have in establishing or
helping to establish these offices for women business owners in the
States?
Ms. GENTRY. I contemplated this. On a Federal level, I think it is
crucial to point out that we have within the State of Michigan
begun to see that our customers are really the fastest growing seg-
ment of small business. They just happen to be women.
On a Federal level, I think something needs tO be addressed
about the existing market that is growing and growing and impact-
ing the economy.
When you talk about this fastest growing segment in small busi-
ness and then say it is women, that is when the perceptions are
askew. .
On the national level, I would like to see a policy that addresses
that existing growing segment. There is nothing you have to do.
We don't have to spend our time encouraging women to start busi-
nesses; they are doing that. So, the opportunity that is here is to
take advantage of it.
* To encourage on, a national level, specific programs for the fast-
est growing segment of small business, I think that would address
that issue.
Chairman LAFALCE. Your first recommendation would be to
adopt a specific affirmative action program to help women business
owners overcome traditional lending practices that limit their
access to financing.
Can you flesh that out a little?, Have you done that in Michigan?
Ms. GENTRY. What we have begun to do in Michigan is work on a
county-wide basis. In Michigan, when we began this program, one
of the things we found out was that within the banking industry
there is not only a problem in the area of lending, but there also is
a problem in the area of management hiring practices. YOu will
find a predominant amount of females working in the banking in-
dustry; you will not find them in commercial lending.
Over the past few years, the management experiences in com-
mercial loans to women have grown. You will find women in~
charge of trust accounts, personal accounts. In 1983 in Michigan; 3
percent of all commercial lenders in Michigan were women. I was
going into communities where there were no women commercial
lenders. Today, that number is about 10 percent. .1 would venture
to say that probably holds true around the United States.
Chairman LAFALCE. I am not saying. that this would be adequate
or fast enough, so don't misunderstand me But do you think the
problem that women have in accessing capital will be self-correct-
ing in part by virtue cf the fact that more women will become in-
volved in commercial finance, and more women will be decision-
makers? *
PAGENO="0081"
75
When I graduated from law school there was one woman in the
graduating class, and today it is not just one, it is 50 percent in
virtually every law school class across the country.
In the future, in 5, 10, or 20 years, aren't 50 percent of the com-
mercial loan officers going to be women? I know that is going to be
much too slow, but don't you think that is going to happen eventu-
ally?
Ms. GENTRY. I don't know. It is as if the banking industry is the
opportunity for economic equality. I would hate to wait and see
what happens. I don't know how many bank presidents of the
United States are women, but I would bet we can count them on
both hands.
Chairman LAFALCE. Presidents are one thing and commercial
loan officers are another. I am sure that day will come with respect
to bank presidents.
We had a seminar in my district in December. I wanted only
women as participants in the seminar. I had a tough time deciding
which loan officers and vice presidents of banks to pick, because
there were so many women in very, very high ranking commercial
lending positions.
I wonder what type of affirmative action program we might try
to suggest to help women business owners to overcome traditional
lending practices that limit their access to financing.
This is your realm.
Ms. GENTRY. Not only looking at the hiring practices of the bank-
ing industry, but also the loan practices. There seems to be an
overriding attitude about women in the banking industry.
In Michigan, we have been able to encourage banks to hire more
women commercial loan officers. That has speeded up the process.
Attitudes change. When you begin there is an enormous reluc-
tance. There is a lot of fear. When all the change happens-some-
times it is forced and sometimes it is not-most people then say it
is not as frightening as they thought it was going to be.
We now have commercial lenders who are women, in counties
where they never had them before. It has enormously helped the
process itself. What I am talking about is not only the management
and hiring practices of women in the banking industry, but it also
has to do with the perceptual discrimination that women experi-
ence.
If they begin to work with ~women, they will begin to experience
the creativity and talent that is there. Lenders come to the table
with their experiences and that is how they make decisions-and
also their biases, so it is an opportunity to heal those biases.
Chairman LAFALCE. Well, I agree with you regarding the bill I
introduced.
Now, the bank examination process-~--what is that right now?
Does it not examine for compliance with the Equal Credit Opportu-
nity Act prohibition against sex discrimination?
Ms. GENTRY. Not necessarily. When women go in for commercial
loans, there is no record. As you know, when a lot of women who
go in and talk about loans, that is not even recorded. They are dis-
couraged before they have an opportunity to make a loan applica-
tion. So, we don't know how many women even make applications.
PAGENO="0082"
76
I have had conversations with bankers who say we wish more
women would come in for loans, but today we hear testimony that
women are continually asking for loans. There is no way to prove
loan applications. There is no way to prove how many loans were
neither granted nor denied.
Chairman LAFALCE. I have a few more questions, but I think I
will defer my questions until after the other members of the com-
mittee have had an opportunity to ask questions also.
Mr. Ireland, do you~ have any?
Mr. IRELAND. Thank you, Mr. Chairman.
I would like to pursue some questions concerning access to cap-
ital.
Before I came here 11 years ago, I had been in the banking busi-
ness for a long time, and 25 years ago in a rural Florida town I
made a conscious effort to have women vice presidents, much to
the horror of my competition. These women ran circles around
other banks. We grew from an $8 million bank to a $108 million
bank in about 5 years.
I say that only to say that I agree with you. The record in lend-
ing to women and having women making the loans certainly was a
very big part of. our large success.
It does concern me about access to credit. I know that there are
bankers out there, I know them, I have seen them-they get all
nervous and don't know what to do and their lawyers tell them
that they have problems in not having husbands, on the loan. That
has nothing to do with the credit operation; it has to do with if
somebody doesn't pay, how do you get to court to get the. money
back. Truth to tell, women are just like other people, sometimes
they can't pay also.
Leaving that part aside, I think there is a lack of enlightenment
out there that needs, candidly, a kick in the fanny from time to
time All of this is to lead up to the fact that I was struck by the
DeLaurenti testimony "Banks are in the business of providing this
capital, but it appears that with nearly 30 percent of' businesses
owned by women in 1988, the banks are not in business to loan to
this large portion of the economy."
Do each of the others of you believe that banks are in the busi-
ness to lend capital? Do you agree wIth the statement that banks
are in the business of providing capital?
Ms. GENTRY. They are in the business of making money, and one
of the ways they do that is to lend money~
Mr. IRELAND. For capital. .
Ms. GENTRy. Yes, sir. `
Mr. IRELAND. Do you agree with that? `
Ms. BIERMAN. Yes.
Mr. IRELAND. When our banks were separated as a result of the
crash of 1929 and the Depression, investment banking was taken
away from commercial banking, and a banker who makes an in-
vestment per se is violating the law. So, we have told our banks
historically that they should not be making capital loans. If you
are a banker, you can make a certain number `of long-term loans,.
but the examiner will say you. are not in the business of making
capital loans, you are in the business of making commercial loans
Investments are for the SEC.
PAGENO="0083"
77
I bring that up before you beat up too badly on bankers. This
country, in its wisdom, took capital lending away from our com-
mercial lending system.
There is limited awareness that bankers are restricted from
making capital investments of any kind as an investment, and, as
to loans, they are greatly restricted in making long-term loans and
can be severely criticized if the proportion of those `loans goes up.
So, with all that in mind, I have been quite céncerned that we
are doing so little, not just for women business owners, but for all
small business owners, by creating a market imperfection by our
laws. In other words, taking banks out of the investment business
and not providing anything to fulfill that market imperfection.
I think in Missouri you referred to something similar to Michi-
gan, a State-run operation?
Ms BIERMAN MO BUCKS was set up by the State of Missouri
I don't think we have an organization other `than the SBA that
does what her organization does. If they do, they are not as aggres-
sive as her organization. They would be in Kansas City or St.
Louis, and I would know about them.
MO BUCKS is a State-run program. I had to make a trip, an
hour and a half through country roads, to get to the State Treasur-
er and tell him no one knew about it in St. Louis, and I asked him
how we could get it known that this $20 million was available for
small businesses, not just women.
Mr IRELAND Did your husband have to sign the loan, as well9
Ms. BIERMAN. Yes.
Mr IRELAND Did you think differently about that, from a legal
standpoint? .
Ms BIERMAN I understood since he owns half the personal
assets, and I own the other half, that he had to sign. 1 know the
wives of many male borrowers do not have to sign when the houses
are put up. Wives don't have to, but husbands have to. because of
this~
Mr IRELAND In the Touche Ross report, there were two ques
tions that stood out to me
"Does your business have a business plan9" 48 percent said no
That sounds like something that might need correction within the
ranks.
The other says, "How do you feel you were treated at the lending
institution? Were you treated fairly?" 67 percent said yes
How do you reconcile that7
Ms GENTRY In the back there was a place for comments In the
comments section, 85 percent complained about the banking rela
tionships, which eschewed what they said It was conflicting testi
mony We could not figure it out either
We recognized later that we did not frame the question correctly
We have changed the question to get the point we really want So,
we hope to have clear information about that
When they responded in writing in the back, they talked about
the same things we are talking about today, the figures that are
required and continue to be required I~ven though the women
have been in business for 5 or 10 years, every time they go to the
bank the husband has to sign for the loans
That testimony is available. I can submit that for the record.
PAGENO="0084"
78
Chairman LAFALCE. Thank you.
[The information may be found in the appendix.]
Chairman LAFALCE. I want to point out that whenever you ask a
question about capital, there are different ways of defining capital.
Mr. IRELAND. I think she said the right thing, get the money.
Chairman LAFALCE. If you go to a bank and say do you have
legal ability to give me legal working capital, you might think they
have the legal authority to do that.
Mr. Hayes.
Mr. HAYES. Let me explain to the panelists that my pursuit is
quite different from the ex-banker down there. I do want to make
it clear that I would like to know from all of you, currently how
many employees do you have?
Ms. JORDAN-DELAURENTI. J-DL has 175 employees.
Ms. BIERMAN. I have three corporations, 14 in one corporation, 2
in another, and 3 in my third corporation.
Ms. GENTRY. At the present time I own my real estate invest-
ment company, and I am the small owner. Up to a year and a half
ago, I owned a small manufacturing company and employed 8
people.
Mr. HAYES. Am I correct that all three of you are supporters of
H.R. 1397, the proposed legislation?
Ms. JORDAN-DELAURENTI. The Boggs-LaFalce legislation bill?
Mr. HAYES. Yes.
Ms. JORDAN-DELAURENTI. Yes; definitely.
Mr. HAYES. You mentioned, Miss Jordan, that you are supporters
because you have been a benefactor of the SBA (8a) program.
Ms. JORDAN-DELAURENTI. Yes; that is correct.
Mr. HAYES. Do you have any specific suggestions as to how you
think it would be improved?
Ms. JORDAN-DELAURENTI. Yes; they don't happen to be in the bill
that happens to be pending. I don't know the status. Has it been
passed in the House?
Chairman LAFALCE. There was one bill that was initially intro-
duced, and that went through many, many changes. We did pass,
through the full committee and the House of Representatives, a
bill to reform the SBA 8(a) program~ I don't know whether the bill
we passed will be the bill that you are knowledgeable about and
are now going to comment on.
Ms. JORDAN-DELAURENTI. Yes; I think that is the one. There is
also one in the Senate at this point.
Mr. HAYES. There is one in the Senate that is somewhat similar,
but there are some dissimilarities.
Ms. J0RDAN-DELAuRENTI. One of my difficulties, Mr. Hayes, is
that I believe the whole point of SBA (8a) is to look at people who
violate the, rules of SBA (8a). There are so many good, good con-
tractors who are doing very well, and I think they are forgotten
about. I really believe that bill was made for those people who vio-
late, as many of our laws are, rather than to support the people
who are abiding by it.
I believe one of the things that needs to be changed is that the
category for women, not totally women but women who qualify for
small and disadvantaged, needs to be opened up. That is not hap-
pening and does not happen now. So, in response to that, I think
PAGENO="0085"
79
that is one of the thiflgs that needs to be changed. Sometimes the
violators are not necessarily the SI3A (8a) companies There are
* some changes that you did ~make in response to the way the act is
being administered that needs to be changed also.
Mr HAYES I happen to be the husband of a female business
owner My wife is a certified small business operator who has been
struggling for survival, so I know particularly what you are saying
I actually think she has more strikes against her than you do, as a
black woman.
Ms JORDAN D~LAIJRENTI Definitely
Mr. HAYES. What did you use as collateral to get your first
$10,000 which you struggled so hard to get?
Ms. JORDAN-DELAURENTI. I had contracts and tried to assign
those contracts to the back at that point, and they would not
accept them. That was high risk. That even happened to me last
year. I had Government contracts, and I needed ~for those for at
least the first 90 days You all know how long it takes to get some
thing going and get paid by the Government We say we need 90
days of financing when we pick up a Government contract
I had to talk a long time to a banker who I have done business
with for a long time tb get them to accept assignment of note. Part
of it is that they don't like to be involved in the paper work. As far
as I was concerned the best collateral they could have was a Gov-
ernment contract. We had total performance on everything we had
done. They still would not accept it immediately. They did later,
but I had to bring them some people who convinced them I could
do it, et cetera. I know what she is going through.
Mr. HAYES. Ms. Gentry you mentioned in your list of recommen-
dations on number six "reverse the conservatism of 78 guaranteed
loan and develop a new policy that reflects our needs in today's
economy that reflects soft asset loans particularly for women busi
ness owners" Are you suggesting an expansion of the program?
Ms GENTRY No, the women who have been able to use SBA (7a)
guarantee progratnmmg have had very positive experiences In
Michigan, some bank lending officers have said to us that the SBA
Government program has become So conservative that there are
loans they would do They are not considered risky loans
Mr HAYES You are conscious of the fact that the surVi 1ral is in
~jeopardy? *
Ms GENTRY Yes, I do, and I believe by expanding~--
Mr HAYES Do you have any influence with the administration
at all? Thank you, very much~
Chairman LAFALc~E Mr Hiler Mr Holloway
Mr. HILER. Not at this time~
Mr HOLLOWAY I just want to make a brief statement to say that
I think everyone who is in business, it doesn't take them long until
they wish they were a banker, because so much of the time you are
worrying about the banks It seems like the only person who can
get credit is the person who doesn't need it There is a tremendous
need in America I don't know my feeling toward what the Govern
ment role is in trying to lead on to entrepreneurship I think some
time we need to .fightthat battle.
I started with a small business and worked On my own to build it
up. There are many things we can do to encourage it, and I think
PAGENO="0086"
80
there is a role that we can play to help small business. I think we
need to proceed with extreme caution when our role is trying to be
paid in business life. Too often we jump into things in the business
life, and we run into more problems than we solve.
I think all small businesses have a problem with credit, and we
should look into it.
Chairman LAFALCE. I agree we have to proceed cautiously. but
with great speed, because we are basically simply attempting to
deal with the discrimination that has existed and built~ up since
1776. That is a rather slow progress. We are trying to give the
Equal Credit Opportunity Act some application as it was originally
intended so that we can have some documentation with respect to
our personal observations regarding real, although subtle discrimi-
nation toward women in business.
One other recommendation made by Ms. Gentry was to have a
rating system built into the Community Reinvestment Act to meas-
ure the impact of the lenders' loan practices toward satisfying the
credit needs of women business owners. Do you have anything that
fleshes this. out? Would you accomplish this by amendment? Would
you change the way the Community Reinvestment Act is imple-
mented and, if that is the case, how have you gone about trying to
get a change in implementation?
Ms. GENTRY. When we made this recommendation this came
forth, when we held the four public hearings around the State of
Michigan. We were at that point supporting the legislation pro-
posed at that time regarding the Equal Credit Opportunity Act. We
saw the necessity to develop a rating system into the Community
Reinvestment Act that did not require legislation. The gentleman
who worked with me was at that time very much involved in the
Community Reinvestment Act and is now the director of the
BIDCO Program in Michigan. He felt by requiring, them to report
their business, it could be done without legislation.
Chairman LAFALCE. Is this being done in Michigan right now?
Ms. GENTRY. We are in the process now of redefining it; yes.
Chairman LAFALCE. So, the Michigan banks do not now have to,~
as a part of their implementation of the Community Investment
Act, measure the impact on women?
Ms. GENTRY. No, sir.
Chairman LAFALCE. Well, if you have any paper that further em-
bellishes that, I ask that you submit it to me.
Ms. GENTRY. I will do that.
Chairman LAFALCE. Your next recommendation is to sponsor
educational programs to instruct lender institutions how to review
loan packages based on cash-flow analysis rather than asset-based
financing.
Of course, I would assume that you could have independent semi-
nars or educational programs. I would think educational programs
of this nature would be most effective if they were sponsored by
the American Bankers Association, the Independent. Bankers Asso-
ciation of America, the National Council of Savings Institutions,
the U.S. League, et cetera, because they are constantly . running
educational programs for their membership.
Has any effort been made, to your knowledge, to work with these
- financial organizations or trade associations, to get them in their
PAGENO="0087"
81
conferences? For example, I returned from the conference of the
National Council on Savings Institutions in Toronto, Canada. I will
be attending another conference in Boston in June, the American
Bankers Association, for those bankers who want to reach out to
small businesses.
Do you know if there is any organized effort to work with these
trade associations to get them to sponsor this type of educational
program within their annual, or semiannual, or monthly educa-
tional conferences or programs?
Ms. GENTRY. Mr. Chairman, I don't know the answer to that. I
can only respond to what is happening within the State of Michi-
gan. I think that is an excellent proposal.
Chairman LAFALCE. It would seem to me this is something the
National Association of Women Business Owners and others might
want to do, work with these trade associations to encourage them
not to provide a special program just for women, but in their regu-
lar program for everybody to have a program of this nature which
might be of special benefit for women.
Ms. GENTRY. I absolutely agree. The problem that we have run
up against in Michigan is, as you know, Michigan is predominantly
a manufacturing-based State. The issue of tangible assets is a
major issue for us.
For example, many women have said when they come to Wash-
ington, DC, because it is not a manufacturing-based industry here,
that it is easier for them to get loans in Washington, DC, than it is
sometimes in Michigan when they have contracts here, because the
bankers here have an understanding, a better understanding of
service-based loans.
When the bankers in Michigan look at loans, they look for tangi-
ble assets. Even though it is a service-based company with few tan-
gible assets, they still look for us. We began to talk with some of
our bankers, and right now we are talking with a statewide bank
in Michigan that is beginning to develop a special loan program ex-
clusively for women-owned businesses.
They are going to incorporate our capital access program. One of
the things we talked about was developing this educational pro-
gram. They felt that would be very touchy in that you would be
inferring that bankers did not know how to do this, and you would
have to be very careful as to how you presented this.
One of the strategies that we talked about was talking about the
new economy that was emerging in Michigan as we shift from the
manufacturing econoMy into this newer economy. How were we
going to sell the concept of having these bankers obtain, participate
in a workshop that dealt with how to finance soft asset-based com-
panies without offending them?
So, that has been one of the things we have been talking about
right now, and that is an issue that might come up nationwide, but
that is an issue that is very clear in Michigan.
Yes; they will say they understand that, but that is not how they
review their loans. They understand cash-flow analysis, but they do
not look at the loans in that way. That is why they keep denying
the loans.
Chairman LAFALCE. This is something we might be able to
pursue with these associations. I am wondering-I mentioned a
PAGENO="0088"
82
number of other groups, too. I can't remember the names. But over
the years, I have had women counsel. One of them now is the as-
sistant to the Chairman of the Federal Reserve Board. Others,
counsel to the Secretary of Treasury.
It seems to me that there is an organization in Washington-is it
Women in Finance? Is that what it is called? There is some
group-it may be a national, or perhaps, it is a local group. I have
forgotten.
But I don't hear of them getting together other than for the pur-
pose of networking to know each other and, therefore, perhaps, ad-
vance themselves. I don't hear them talking about programs that
could be adopted either by Governments, whether Federal, State or
local, or by trade associations, of an educational nature.
Maybe that is something that should be pursued, also.
Ms. GENTRY. That is an excellent concept. Except this program
would benefit all small businesses, not just women only.
Chairman TkFALCE. I understand that. I think it would be an ex-
ceptional benefit for women.
Ms. GENTRY. It has been ~r `~xperience when you can shift the
attention from it being women business owners, you~ seem to get
much greater participation than if it is this special program for
women.
Chairman LAFALCE~ I agree.
Ms. GENTRY. I agree with you, that would be a marvelous recom-
mendation. Partnerships have worked very well, like that in Michi-
gan.
Chairman LAFALCE. Very good.
If there are no further questions, then I-Mr. Hiler; yes.
Mr. HILER. Mr. Chairman, I came in late, so if this question has
already been answered, I will read through the testimony. When
we talk about access to credit and the need for increased capital for
new businesses and small businesses, it seems to me that is a prob-
lem that is pervasive through. small businesses in general-the 15
million small businesses that exist in our economy today.
I guess from. reading through your testimony fairly quickly, you.
are saying it is even more of a problem for women-owned~business-
es? I wasn't sure that I saw in the testimony the evidence for why
that is more of a problem for women-owned businesses than just'
small businesses in general. Maybe you can help me out?
Ms. BIERMAN. I am here at the request of NAWBO, but I am a
very good proponent of small business,, entrepreneurship, anything
like that. I am on the board of directors of the Small Business Coa-
lition in Missouri I spent many volunteer hours ~ week working
for that organization.
I say in my testimony that I don't want to be `a women business
owner. Let me be a business owner; let m~ be equal to my competi-
tors and everybody else out~ there in the face of my banker. It is
true that all small businesses have these problems, all small busi-
nesses are undercapitalized, all small businesses ` have to put up
personal backing, et cetera.
As a women business owner; I see discriminations that my co-
horts in the Small Business Coalition of Missouri don't have. I had
to bring my husband in to sign that loan with me. I know many of
the people in our organization of 150 in `St. Louis are an SBC orga-
PAGENO="0089"
88
nization. We work closely with SBA. They did not. have to bring
their wives in to sign loans. It was not venture capita!. We are not
venture capitalists.
But I am asking for operating capital. I think it could be a little
bit. I think maybe he is misconstruing it at this point in time. But
we are blatantly discriminated against.
Yes; all small businesses are. I work hard to help change those
rules for all small businesses, I am here today for woi~en-owned
business, but eince 75 percent of our economy is based on small
business, that is what I am here fighting for.
Does that answer your question?
Mr. HILER. A little bit. You were giving, I think, some very good
anecdotal evidence of what you experienced in participating in a
couple of different groups. I just think of the number of small busi-
ness people I meet back in my district. When 1 meet those who talk
about having to get someone to cosign a loan or something, or be a
guarantor for maybe a son that is starting out a small business or
something, it seems to me that is-I guess what you are saying is it
is more endemic to a woman-owned business, but it is a problem
that is endemic to small business, I believe.
Am I mistaken?
Chairman LAFALCE I think there is a hierarchy of discrimma
tion. You are discriminated against if you are small. You are spe-
cially discriminated if you are small and a woman. Then you are
especially discriminated against if you are small, a woman, and
black.
Mr. HAYES. That is right.
Ms. JORDAN-DELAURENTI. I think that says it. I think what we
were trying to demonstrate by our experience is that we women
business owners are not treated as capable, competent people I
think your example, Congressman, was a good example to point out
what we feel.
Yes, many times a young son who does not have experience, who
comes into a business, is asked to have some cosigner. But we are~
talking about experienced women business owners who have estab-
lished records, who have established credit records and still get the
same kind of rejection.
I think the difference is that we are not regarded as competent
people in the banking community
Mr HILER My father had a very successful business, went out to
start another business, and they wanted a personal guarantor of
that loan He ended up telling the bank to forget it
It just seems to me that there may be a particular problem here,
but there is generally an access to credit, an access to capital
When you look at where the capital comes from for small business
es, it comes from one's own pocketbook, family, friends That is
where the capital comes from Somehow, if we were able to-we
have two things we have to work on here.
One is~ of course, improving access to credit and capital for a
woman oWned business, but the other is to improve access to credit
and capital for all small husinesses
Ms. JORDAN-DELAUREN~n. Absolutely.
PAGENO="0090"
84
Mr. HILER. It is not a zero-sum game, where if we improve your
access, it takes someone else's access away. What we have to try to
do is improve the overall--
Ms. JORDAN-DELAURENTL That is correct. Every time small busi-
ness is improved, we are improved. There is no doubt about that
for all of us.
Mr. HILER. I appreciate your comments. Thank you.
Chairman LAFALcE. Thank you very much. I say that to the
members of the panel, and to the members of the committee, and
most especially to the members of the panel. You have been ex-
tremely informative and insightful. We are. extremely appreciative
for that.
Thank you very much.
[Whereupon, at 11:45 a.m., the committee was adjourned, subject
to the call of the Chair.]
PAGENO="0091"
NEW ECONOMIC REALITIES: TIlE ROLE OF
WOMEN ENTREPRENEURS,
WEDNESDAY, MAY 11, 1988
HousE OF REPRESENTATIVES,
COMMITTEE ON SMALL Busnsrnss,
Washington, DC.
The committee met, pursuant to notice, at 9:10 a.m., in room
2359-A, Rayburn House Office Building, Hon. John J. LaFalce
(chairman of the committee) presiding
Present Chairman LaFalce, Representatives Torres, Olin, Hayes,
Lancaster, Campbell, Price, Hiler, and Gallo
Chairman LAFAI.JCE The Small Business Committee will come to
order.
Executive Order 12138, dated May 18, 1979, created a National
Women's Business Enterprise Policy and prescribed arrangements
for developing, coordinating, and implementing a national program
for women's business enterprise The Executive order recognized
the significant role which women entrepreneurs can play in pro
moting full employment and~ economic growth. It recognized the
many obstacles facing women entrepreneurs, and it recognized the
need to aid and stimulate women's business enterprise
The Executive order provided for affirmative action by Federal
agencies to facilitate, and to strengthen, and support such enter
prises, to prohibit and discourage discrimination, and to create pro
grams responsive to the special needs of women as entrepreneurs
Such activities were to include management, technical, financial,
and procurement assistance, education, training, and information
dissemination; and procurement.
The Executive order established an Interagency Committee on
Women's Busn~ess Enterprise to oversee the action ordered, to do
velop goals, policies, guidelines, mobilize resources, design innova
tive plans, promote research, convene and consult with experts,
and assess progress.~
All Federal agencies were to assist and cooperate, but SBA was
given the lead responsibility of providing an Executive Director,
adequate staff, and administrative support.
In preparation for today's hearings, and to prov~de a comprehen
sive record før future action and recommendations, the Committee
sent a letter to 21 Federal agencies requesting information regard
ing initiatives undertaken pursuant to the Executive order includ
ing procurement figures, grant or loan programs, data collection ef
forts, and any other efforts made in compliance with the Presi
dent's directive.
(85)
PAGENO="0092"
86
It was fairly obvious from reading the agency responses that, for
the most part, our governmental efforts in support of women's
business enterprise are weak and ineffective, mostly window dress-
ing and lip service.
For example, the SBA is the agency expected to provide special
financial assistance for women. But, with the exception of a brief
pilot miniloan program for women at SBA several years ago, the
authority to provide such financial assistance has been ignored.
SBA business loans to women have gradually decreased in num-
bers, dollar amounts, and as a percentage of total loans. In 1984,
women received 2,103 business loans for a total amount of $212.6
million, which represents 10.7 percent of the total number of loans
to all businesses.
In 1987, those figures had fallen to 1,565 loans, for a total of
$203.3 million, or 10.1 percent. During a period of astonishing busi-
ness activity and increases in numbers and sophistication levels of
women-owned small business, it is inconceivable that the demand
for business loans for women business owners should decrease.
Federal agencies routinely establish procurement goals for con-
tract awards to women. Since 1979, the percentage of prime con-
tract awards to women-owned business has increased, but still re-
mains at less than 1 percent, far below what I ~vould expect their
reasonable share to be.
This is not surprising, given the fact that only SBA and the De-
partment of Commerce have established full-time positions to pro-
mote and facilitate women's business enterprise, and, in the case of
SBA, its budget has been slashed; and with the exception of the De-
partment of Commerce, no Federal agency reported any jnternal
memoranda or policy letters to promote women's business initia-
tives.
The Interagency Committee still operates, but without any power
or purpose. The committee issued its first annual report in 1980.
The next annual report was not issued until September 1987. That
report contained a one-page introduction, 15 paragraphs of text
spread across six pages, and the rest of the 100-page report consist-
ed of an appendix containing statistics, reprinted material, and a
summary of five meetings. I think the report is an embarrassment
and a waste of taxpayers' money.
Susan Phillips, Associate Director of Presidential Personnel, was
appointed by the President to serve as chairman of the Interagency
Committee on Women's Business Enterprise. Last month, we invit-
ed Susan Phillips to appear at today's hearing to discuss public
policies and programs relating to these issues, but I regret that she
has chosen not to appear or is unable to appear. But we will give
her another opportunity.
In recent years, there has been much talk about support for
women. I think it is time that we started to demonstrate some re-
sults.
This morning, we are pleased to have before us, representatives
of two of the agencies that have been doing something about
women in business. From the U.S. Department of Commerce, Ms.
Kay Bulow, Assistant Secretary for Administration, and Ms. Carol
Crockett, Director of the Office of Women's Business Ownership of
the U.S. Small Business Administration, who was kind enough to
PAGENO="0093"
87
come to my congressional district to participate in a seminar on
women in business.
We also have Ms Susan Hager, president of Hager, Sharpé,
Abramson, mc, in Washington, DC, and Ms Susan Snyder, presi
dent of The Pathfinder Corp.
Is Ms. Bulow here yet? Is Ms. Snyder here yet? That being the
case, we will ask Ms. Crockett and Ms. Hager to come to the wit-
ness table.
Carol, why don't we begin with you?
TES'flMONY OF CAROL M. CROCKETT, DlRECTOR~ OFFICE OF
WOMEN'S BUSINESS OWNERShIP, U S SMALL BUSINESS AD
MINISTRATION [SBAI
Ms. CROCKETT. Mr. Chairman and members of the committee,' I
am pleased to have the opportunity to appear before the Small
Business Committee-~-- -
Chairman LAFALCE. Just 1 minute. Do any members of the com-
mittee have any statements that they would like to make before we
begin?
Mr. TORRES. No, Mr. Chairman. Thank you.
Chairman LAFALCE. Please proceed.
Ms CROCKETT I am pleased to have the opportunity to appear
before the Small Business Committee to discuss the Small Business
Administration's program for women business owners My testimo
ny today will focus on the economic progress of women's business
ownership and SBA programs that are so successful in assisting
this progress.
In 1980, there were 2 5 million nonfarm sole proprietorships
owned by women which earned $36 billion in annual receipts In
1985, our latest figures, there were 3 7 niilhon with receipts in
excess of $65 billion This accounted for 12 percent of total sole pro
prietorship receipts compared with 8 9 percent in 1980 and repre
sents an increase in receipts of 80 percent.
SBA data show that women are starting businesses at almost
`twice the rate of their male `counterparts and that almost 3 out of
10 businesses are owned by women Recent figures indicate that 25
percent of all women businesses are 1 to 2 years old We expect
this solid growth trend to continue
But where are women heading? In 1980, 78 percent of women
businesses were in the service a~d'retail areas. `In 1985, this per-
centage increased to 81 percent However, we are seeing reinarka
ble growth in the less traditional industries of construction and
manufacturing.'
Between 1980 and 1985, receipts for women business owners in
service rose 140 percent In that same period, receipts for women
business owners in construction and manufacturing rose 200 per
cent. `
Women have also made considerable strides in the area of pro-
curement In 1980, only 87 percent of Government contract awards
were made to women Today it is at a level of 1 percent In 1987,
we exceeded our goal by $235 million, while o~terall Government
procurement declined by $1.8 billion.
PAGENO="0094"
88
With the increase of women-owned businesses in manufacturing
and construction, we estimate that figure to increase dramatically
in the next few years. So, the outlook is* positive~
The SBA's Office of Women's Business Ownership has many and
varied programmatic responsibilities which include:
One, to develop and encourage education and marketing opportu-
nities for women business owners through quality conferences and
workshops, trade missions, and utilizing the resources of public and
private sector cosponsors and management experts.
Two, to negotiate Federal prime contracting goals for women-
owned businesses.
Three, to provide support for the Federal Interagency Committee
on Women's Business Enterprise.
Four, to act as an advocate for women business owners.
And five, to effectively disseminate all appropriate information.
The delivery of the program is carried out at the 75 district and
branch offices by a women's business ownership representative and
in each regional office by a women's business coordinator.
This office now effectively serves a constituency of nearly one-
third of the small business community and provides an outreach
program which assists, strengthens, and promotes women-owned
business throughout the country.
Misunderstandings concerning the status of women business
owners stem from the lack of a comprehensive statistical informa-
tion system. Because of this, the Office of Women's Business Own-
ership has taken the initiative to sponsor research by the Internal
Revenue Service, the Bureau of the Census, and SBA's Office of
Advocacy. Each year, since 1980, has shown a statistical data im-
provement. It is clear, more updated information is necessary.
Since 60 percent of women who started business today have no
previous paid managerial experience, the Office of Women's Busi-
ness Ownership has improved their skills in the areas of market-
ing, finance, inventory control, and production through targeted
seminars, conferences, and instructional materials.
The Office of Women's Business Ownership has been involved in
a myriad of activities which encourage the full and equal participa-
tion of women business owners in selling their goods and services
to the Federal Government.
As director, I feel business ownership education and planning are
the most important aspects of starting a successful business.
We have provided the assistance necessary for women not only to
consider starting a business, but to actually make that dream a re-
ality through realistic advice and information.
In addition to my responsibilities at the Small Business Adminis-
tration, I also serve as executive director of the Interagency Com-
mittee on Women's Business Enterprise.
This committee is responsible for carrying out a Presidential
mandate to promote--
Chairman LAFALCE. What is your position there?
Ms. CROCKETT. Executive director.
With the Presidential mandate to promote, monitor, and coordi-
nate Federal efforts on behalf of women business owners. Member-
ship of the committee is drawn from major Federal departments
PAGENO="0095"
89
and agencies and reflects the wide scope of governmental policy
areas.
Mr. Chairman, members of the committee, based on the available
information from our data base it is clear that Women as a group
are a viable and rapidly growing contributor to the Nation's econo-
my. The growth in just the last 8 years is probably the most expan-
sive increase of any one group in this century. By all accounts, it
will continue to grow. By the year 2000, it is expected that one-half
of all self-employed individuals will be women.
From the data we have today, we know that the needs of women
today are different than a decade ago, and we must constantly
monitor and provide for these needs. Women are entering the
mainstream of commerce at a rapid rate, and, certainly, by the end
of the next decade, this will have been accomplished.
Thank you, and now I am happy to answer any questions you
may have.
[Ms. Crockett's statement may be found in the appendix.]
Chairman LAFALCE. Before we go to questions, I think it will be
appropriate to hear from the other witnesses.
Ms. Hager.
TESTIMONY OF SUSAN HAGER, PRESIDENT, HAGER, SHARP &
ABRAMSON, INC.
Ms. HAGER. Thank you, Mr. Chairman, members of the commit-
tee. I am Susan Hager, the founder and president of Hager, Sharp
& Abramson. It is a public relations firm here in Washington.
We are the fifth largest independently owned agency in the area.
I am also a founder and the first National president of the Nation-
al Association of Women Business Owners, and since 1973, have
been part of the NAWBO team working to bring women business
owners and women's business enterprise into the public policy
arena.
I think it is in that capacity that I have been asked to comment
on the effectiveness of the Federal Government programs that are
set up to support women business owners, and on what makes
them successful.
As I think everybody knows, in 1972, women business owners
were virtually invisible from a public policy standpoint. Since then,
there are many Federal programs and many programs have been
set up to support women business owners.
We applaud all of those initiatives and programs. Unfortunately,
we are now at the point in taking a look at all of these programs
where we have to say that they are not quite achieving the results
that we all hoped for. They are not making a difference is the
bottom line.
Let me give you a few examples of that. For example, the Feder-
al Reserve Board, in its role as the Government's primary financial
monitor, is certainly very interested in entrepreneurship. Martha
Seger, who is a member of the board of governors, is definitely sup-
portive of women.
The bottom line really is women still do not have access to com-
mercial credit. The access to commercial credit data we really
should have.
PAGENO="0096"
90
The interagency task force produced a booklet on women busi-
ness owners selling to the Federal Government. The GSA, the
Labor Department, Agriculture Department, AID, and many, many
agencies have programs and seminars to train women on ~getting
contracts and on procurement. The Commerce Department spon-
sors Megamarketplace. It is a terrific program. It has really been
successful. We at NAWBO ~re committed to keeping that going
and making it successful. We worked with Kay Bulow very closely
on that.
While we are getting many, many more women trained and
knowledgeable about the Federal system, the bottom line is the
contract and awards are still 1 percent. It is 1 percent or less. We
will talk about that. I am glad to hear it is up to one of the Federal
prime dollars.
Carol has been testifying about all the great things happening at
SBA. We applaud all your efforts. Carol, we are glad you are there,
all of those things. But we didn't read about these great reports
and all of these gains in the SBA's report to* the President. We
didn't see any gains made by women owners in procurement, loan
dollars, or any other areas. So, why is it that Federal programs
that we were all so hopeful for and we all care about so much,
really aren't working?
I think part of the answer is that Government programs are
based on some assumptions that are no longer valid. For example,
most of the Government initiatives directed at women entrepre-
neurs and procurement are based on the premise that limited re-
sources are best spent in training for women business owners. We
agreed with that premise through the Ford administration, Carter
administration, and Reagan administration, but looking at the re-
sults, I think we can no longer say if only the women were better
trained, they would have access to the Federal Government pro-
curement system. I think perhaps women might best be served if
the Federal Government procurement officers were getting the
training.
Many of the other Government programs, loan programs, man-
agement programs, and so on, are based on a premise that there
should not be separate programs for women, that women business
owners should become part of the mainstream of all of these pro-
grams. Again, we agree in principle with that, with mainstream-
ing. Mainstreaming to me and to us means getting women included
into existing programs. That is very valid. That is exactly what we
hope for. But unfortunately, mainstreaming seems to have been in-
terpreted in many of the agencies to mean a return to the good old
days when they didn't have to deal with women as a constituency
group. Mainstreaming seems to be business as usual. In some cases
it is a step backward.
Just as an example, Carol heard about this before, but just on
the SBA national advisory council, for example, for years we had a
women's committee, a committee on women's business enterprise,
part of the setup within the NAC. That was disbanded in order to
mainstream women in all the other committees. After that was
stopped, our next meeting in South Carolina, we had 46 men and 3
women on the 3-day agenda. We never heard a word about women.
It was a return to 1972. Of course, I came back and mounted a
PAGENO="0097"
91
campaign. At the next meeting there's Carol. But it shouldn't take
that.
What have we learned from all this? To put it as briefly as possi-
ble, I think we learned training programs, in and of themselves,
don't get results. I think we learned mainstreaming has not
brought women into the system. I think we have also learned that
program initiatives directed to women entrepreneurs are simply
not enough of a priority in the agencies to bring about bottom line
result, and that frequently the staffers who run those programs are
not part of the senior management team. They are seldom part of
the senior management team. They are seldom in position to make
women's business enterprise a priority within the agency.
So, after 13 years we have sort of come to the conclusion that we
need congressional mandates and oversight in order to move
women business owners into the economic mainstream.
I know, Mr. Chairman, you say what can we do about it? You say
that at every hearing I have ever been to. We think we have some
answers to that, what Congress can do. We think that in order to
make real progress, we definitely must have it-we need an
amended Equal Credit Opportunity Act. That is all there is to it.
We need a women's business owners policy council that reaches
across the Federal Government and has the commitment of the
highest level officials. It should target goals, measurable ones, re-
sults for each agency. We need Congress to mandate each depart-
ment and agency to develop plans to include women in the con-
tracting and procurement, i~ policy making, international trade, in
outreach, in advisory committees, in commission appointments, to
use every opportunity available to open their system to women
business owners. We need Congress to oversee the plans, the imple-
mentation of those plans, and the results.
Thank you. That is exactly 5 minutes, so I will stop.
[Ms. Hager's statement may be found in the appendix.]
Chairman LAFALCE. Thank you. I regret Ms. Bulow and Ms.
Snyder have not arrived yet. Since they haven't, we have some
questions for the two of you.
There are some statistics here that are pretty impressive. There
are some figures that do look good or could be bad depending upon
the interpretation, for example, the procurement figure. In 1980, it
was only .37 percent. Today it is approximately 1 percent. I am
wondering, though, if that is really keeping in pace with the in-
crease of women in the business community.
Let's say it was .4 percent or 1 percent. Have the number of
women businesses that could take advantage of the Government
contracts increased at an even higher percentage of that? We are
starting at a ridiculously low base, so if the base was so low to
start, should we be at 2 or 3 percent?
What yardstick should we use to determine the accuracy of our
efforts and the adequacy of the results which differs from the ade-
quacy of our effort. These results may have come about only
through arduous efforts on the part of individuals in Government.
My probable assumption is that they came about without all that
much effort on the part of Government officials.
88-199Q-55~4
PAGENO="0098"
92
Ms. CROCKETT. With regard to the figure of 1 percent in propor-
tion to the number of the growth of women in business, generally I
agree it is not proportionate.
Chairman LAFALCE. What would proportionate be?
Ms. CROCKETT. Comparatively, we would like them to do equally
well as men. That would be our goal. So, I would say we would like
to see it be half. That would be ideal.
Unfortunately, if I may add that most women-owned firms in
this country today are a year old or less. They have one to two em-
ployees, or under five employees generally, and really are not yet
in a position to compete for these prime contract dollar awards.
We hope that the numbers of individuals who are going into
manufacturing and construction will be able to achieve greater
dollar awards and that service businesses, when they grow--
Chairman LAFALCE. Ms. Crockett, let's just focus on procurement
at this point. Tell me. what process has been historically used for
determining what goals should be for each agency.
Ms. CROCKETT. The process is that the Federal departments and
agencies submit to the SI3A their goals, and what percentage, and
so forth, that they intend to achieve. The SBA looks at the past 2
years records. " .
Chairman LAFALCE They don't have any set asides?
Ms. CROCKET~. No; we do not. We have goals.
Chairman LAFALCE. What is the process. for determining' those
goals? To what extent is your office involved in determining what
goals should be for each of the Federal agencies?
Is that your responsibility'under the law?
Ms. CROCKETT. Yes; it has been.
Chairman LAFALCE.' That is the process I want to hear about.
Ms. CROCKETT. The goals that are submitted to the agency are~~re-
viewed by my office. The goals are submitted officially to the Office
of Procurement Assistance.
Chairman LAFALCE. Somebody else suggests the goals?
`Ms~ CROCKETT. The informatioll is sent to us by the departments
and agencies as to what the goals should be. We look at the past 2
years' record of accomplishments and try to move that forward. In
fact, we~ have been successful in this effort and overall procure-
ment.
Chairman LAFALCE. Do you have a flowchart for each agency as
an appendix which would indicate what their percentage of con-
tracts were and what their percentage of dollar amounts were for
women-owned businesses in 1982 and 1983, and do you have that
compared `to the goals?
Ms. CROCKETT. Yes, Mr. Chairman; we do. I would be happy to
supply that for the record.
[The information maybe found in the appendix.]
Chairman LAFALCE. Do you have that with you?
Ms. CROCKETT. I do not.
Chairman ,LAFALCE. I wish I had it now, because that is very im-~
portant. Has that been included in any type of report that has' ever
been submitted to anybody? .
Ms. CROCKETT. I don't believe it was in' the Interagency Commit-
tee report. However, it has been in the executive summary which
PAGENO="0099"
93
was distributed to members of the Interagency Committee and to
the various departments and agencies.
Chairman LAFALCE. Was that included in the President's Small
Business Report?
Ms. CROCKETT. It was not,
Chairman LAFALCE That is rather disturbing to me, too This is
an important issue, and it has never been included in President
Reagan's Small Business Report. It has not been included in the
one report that was made by .the Interagency organization. Is that
correct?
Ms. CROCKETT. May I correct myself? It was, I believe, for 1986
included in that by--
Chairman LAFALCE Was there an interagency report9 My staff
told me there was only an interagency report in 1987
Ms CROCKETT There was one in 1980 and one in 1987
Chairman LAFALCI~ 1980 and 1987?
Ms. CROCKETT. That is correct, and there will be one in 1988.
Chairman, LAFALCE. I am surethere will be. Did the 1987 report
have this data regarding goals, procure~nent,~et cetera?
Ms. CROCKETT. Are you speaking of the Interagency Committee
Report?
Chairman~ LAFALCE. Yes.
Ms. CI~OCKETT, Yes; it did.
Chairman LAFALCE I a~n talking about the manner in which it
is presented, so we can see progression, so we can see goals, et
cetera.
Ms CROCKETT By year, it did not
Chairman LAFALCE. I am not talking about 1 year.
Ms CROCKETT It did not break out the agencies by year
Chairman LAFALCE I am looking at a document dated March
1988, a procurement and management report for women owned
businesses for 1987. Is this something that has been prepared every
year?
Ms CROCKETT Yes, it has, or at least since I have been involved
in the program.
Chairman LAFALCE Do you think that you could try to get me
those reports for each year from 1980 to the present7 And then
could you also try to give me a year by year comparison, a progres
sion chart, so we can see where we have been, where we have gone
on a year-by-year basis in this regard?
Ms. CROCKETT. Absolutely.
Chairman *LAFALCE~ Does such a ~document exist someplace al-
ready?
Ms CROCKETT We would have to compile that, but yes, all the
information exists to my knowledge.
Chairman LAFALCE Yes, I think that would be helpful
[The information may be found in the appendix]
Chairman LAFALCE Well, what goes into determining the goals7
You said 1 percent So, I would assume that moat agencies would
average out ~to about a 1 2 percent goal or 1 1 percent goal What is
the goal for most agencies? What is the average goal for the Feder
al Government?
Ms. CROCKETT. I think that probably depends greatly on their
projects,
PAGENO="0100"
94
Chairman LAFALCE. Forget about each individual agency. What
is the aggregate goal for the Federal Government with respect to
procurement?
Ms. CROCKETT. We do not base it on aggregate goals. We base it
on an individual goal based on the past performance.
Ch~iirman LAFALCE. I don't know if I am going to be at a disad-
yantage. Do you have an extra copy of this? Do you have one now?
You just have this one copy?
Mr. GALLO. Mr. Chairman, could we also have a copy of that?
Chairman LAFALCE. I have to Xerox it, but you should get one.
Mr. GALLO. Thank you.
Chairman LAFALCE. I am looking at fiscal year 1987 goals and
fiscal 1987 achievements. I guess there are discrepancies here. AID,
for example, had a 3.6 percent goal, a 1.7 percent achievement
level; On the other hand, Department of Comi~ierce had a 2.8 per-
cent goal and had a 5.4 percent achievement level. Maybe that is
testimony to Ms. Bulow's efforts. 1 am not sure. We will have to
distribute this report. Maybe we are going to have to sit down sepa-
rately, Ms. Crockett, and determine how these goals were estab-
lished, but only after we see the progression year-to-year.
Who within each agency is responsible for seeing to it these goals
are accomplished? Who within AID?
Ms. CROCKETT. We deal with the Director of the Office of Small
and Disadvantaged Business Utilization. Members on the Inter-
agency Committee also have input into~ that goal process1
Chairman LAFALCE. Unless either Mr. Lancaster or Mr. Gallo
have questions of either Ms. Crockett or Ms. Hager now, it would
be my intention to hear from Ms. Snyder, who just came in.
Mr. GALLO. I do have some questions.
Chairman LAFALCE. Then we will hear from Mr. Gallo, and we
are Xeroxing a copy of that report.
Mr. GALLO. Thank you, Mr. Chairman. I want to thank you, Mr.
Chairman, for having this hearing, because I do think we are talk-
ing about a subject matter that is important to this country. It is
putting emphasis in an area where emphasis should certainly be
put.
I believe Ms. Hager indicated some areas that need expansion or
certainly more effort in dealing with finances. I don't think there
is any question that women have had greater difficulty getting
access to credit.
At the same time, I think perception is also very important in
dealing with these issues. I lQok at some of the statistics that I
have dealing with the facts and figures, IRS statistics.
I, too, would like to ask Ms. Crockett, on the goals that I see
here, it seems to be impressive as far as the increases going from
the year 1979 to the year 1986, dealing with trends in Federal
prime contract award activity to women-owned small businesses.
It would seem to me very clearly that each year the goals that
were set were exceeded in many cases by a healthy margin. To
have that mean something to me, the question is who sets that
goal, who says that goal is the one that you are supposed to
achieve? In many cases, in every case you have exceeded that, or
the women have exceeded it.
The question is, who sets that goal?
PAGENO="0101"
. 95
~ Ms. CROCKETT. The Office' of Women's Business Ownership estab-
lishes that goal with the various departments and agencies through
the Office of Small and Disadvantaged Business Utilization within
those agencies.
Mr. GALLO. Are~ those realistic goals?
Ms HAGER They are realistic, and that is what is happening
Again, 1 percent over this long period of time, I don't think is very
impressive.
Mr GALLO You indicated in the early seventies, there was liter
ally no effort in getting women involved in business owned oper
ations..
Ms. HAGER. And getting women in businesses involved in pro-
curement. That i~ correct.
Mr. GALLO. When I look at the 1986 figures-.
Ms. HAGER. I think we have to compare~the rise in the goal with
the rise in the increase of women-owned businesses and the success
of those businesses They are sky rocketing Procurement is just sit
ting there From that standpoint, I think there is a bit of a prob
lem.
I basically, personally, and from a policy standpoint there has
come up and said it must be x goal or y goal or any of those things
I think it is important that the program or the procurement works
in a way that really works, it is not sort of a false kind of thing
But it hasn't I mean it is not It is not moving very quickly It is
certainly not moving with the way the businesses are growing and
the way the businesses are developing I still think that a major
piece of that is skepticism I think a major piece of that is out and
out they don't want to do it We have ~lways shied away for the
set.asides and all those kinds of things
The truth of the matter is, after all these years, I think there
ought to be a mandate for set asides I take a funny approach at
some of these things, like perhaps, let's set up now a mandate for
set asides that takes place 3 years from now if they can't figure out
how to do it, only if they can't figure out how to do it I think there
are incentive kinds of programs that could take place that make
some sense if the procurement policy was changed or some of the
regulations were changed in a way that would build in incentives
from the private sector, it could make a lot of difference
If a prime contractor in a bid got one extra point over and above
the points you can get on the programmatic side, one extra point
for subcontracting with a women owned business, a minority owned
business, one extra point for dealing with small owned business,
you can be sure in some of the competitions that are really tough,
the big ones, something like where they are neck and neck, they
will find them They will find proper ones The market will take
care of itself.
I think there are lots of sort of different kinds of approaches
But, in fact, the approaches that are taking place now, I just don't
think are adequate I don't know how you can really say that if the
businesses are growing three, four, five,, it has grøwn at various
times faster than men and' the procurements stay'the same, some~
thing is wrong there It doesn't seem to be something we as busi
ness owners are able to do ourselves.
PAGENO="0102"
96
We have been able to do a lot for ourselves and to make a lot of
different things happen. I mean the preschools are open; we are in
the trade associations now; we made an enormous difference in the
White House conference. We are integrated. We have made an
enormous difference in the climate for women business owners for
ourselves to work with the press and working with lots~~of different
groups. But we cannot seem to crack procurement particularly and
sort of get ourselves involved in the economic policy of the Govern-
ment.
Mr. GALL0. I think a part of this hearing, hopefully, is to explore
those areas and make some improvements. I know in my dealings
with both SBA and the Department of Commerce in dealing with
exports, we have had tremendous cooperation with both agencies in
bringing about very successful seminars. We are having one on
May 18 in which half of the participants. are women. To me, al-
though we are not dealing with a procurement process, you are
dealing with involvement in women-owned businesses.
In the State of ~New Jersey, women-owned businesses are increas-
ing two to one .over men. So, there are some fantastic things hap.
pening.
I think it is important to note that some of the information SBA
has been providing-they have not been blowing their horn
enough-are positive improvements. To have n~ore dollars commit-
ted to those areas could help bring about Federal program develop
ment and leadership to that end.
Ms. Crockett, do you feel the conferences are of value to the par-
ticipants?
Ms. CROCKETT. Yes; I do; We cosponsor a great number 6f confer*
ences. In the last 18 months alone, 29,000 women attended theim
At our Financial Decisionmakin~ Conferences, 93 percent of the at
t~ndees said it was beneficial to them to attend; 70 percent indicat-
ed they would make changes as a result of the conference informa-
tion they obtained.
Ms. HAGER. We go to conferences, we go to the training pro-
grams, seminars, conferences. We do our homework. I think the
conferences and training programs are very valuable, really terrif-
ic, whether they be procurement, or export, or whatever.
At some point we have to look at the bottom line, which is not
how many people go to conferences but how many go for procure-
ment or export. There has to be some measure beyond going to con-
ferences and exports. I do applaud those, though.
Ms. CROCKETT. I think the overriding factor in procurement and
receipts has to do with the age of the women-owned businesses
today. They are very new and very small. As individuals increase
the size of their firms, they will be competitive, and they will be
earning more in terms of receipts.
Many receipts that we capture today for sole proprietorships are
really part-time businesses, where the individual may be working
full time and establishing the business part time. It takes time for
viable receipts to show. It is only a matter of time.
The energy, the drive, and the competitiveness are there, and it
will occur.
Mr. GALLO. You mentioned you constantly monitor and provide
information to women business owners.
PAGENO="0103"
97
What do you see as the current issue to be of benefit to the
women business owners?
Ms. CROCKETT. I think there is a great need for or benefit to long-
term training and counseling. I think beyond the conferences, we
can do more of this. We can offer that currently from SBA pro-
grams in SCORE, the SBDC's, and the American Women's Econom-
ic Development Corporation [AWED], a nongovernmental organiza-
tion, which offers quality long-term training and counseling pro-
grams.
In fact, I have encouraged AWED to become a national organiza-
tion.
Chairman LAFALCE. Ms. Patrick's group?
Ms. CROCKETT. Yes.
I think it would benefit women business owners to have a nation-
al newsletter with information on all events, issues, and legislation,
et cetera. That could be provided by the private sector. I have al-
ready talked to individuals who think they can provide that sort of
service.
Another area is the need to capture subcontracting information.
But there is a greater need, however, and that is to assist women
business owners to be cleared on the bidders' list for these prime
contracts, and we can do that through SBA educational programs.
Mr. GALLO. Has there ever been an analysis in dealing with the
charge-off rate for men and women?
Ms. CROCKETT. The overall charge-off rate in direct and guaran-
tee loans in the time period 1984 to 1987 was 4 percent overall. For
women the charge-off rate was 6 percent. To me, that indicates
that women need more assistance in financial training and plan-
ning.
I read the testimony from yesterday concerning the Touche Ross
Michigan study. What was not in the testimony, but contained in
the report was that 43 percent of the individuals who were turned
down for a loan did not even have a business plan. These were es-
tablished businesses. So, it points up that we need this type of edu-
cation.
Another factor that plays into this is that the smaller the busi-
ness, the riskier the loan, and the newer the business, the riskier
the loan. Women-owned firms tend to fall into both categories.
Chairman LAFALCE. Our next witness is Ms. Susan Snyder, presi-
dent of the Pathfinder Corp.
We will put the entire text of your remarks in the record. You
may read it if you wish, or you may have it included in the record.
TESTIMONY OF SUSAN SNYDER, PRESIDENT, THE PATHFINDER
CORPORATION FOR INTERNATTONAL TRADE
Ms. SNYimIL Mr. Chairman and members of the committee, my
name is Susan Snyder. I am president of the Pathfinder Corpora-
tion for International Trade, a firm in its tenth year specializing in
export trade and overseas business development.
Pathfinder functions in diverse business sectors from waste man~
agement, to consumer goods, and professional services, Our clients
include companies of all sizes; the majority come from Europe and
the United States.
PAGENO="0104"
98
Before founding Pathfinder, I worked overseas for 8 years for a
major foreign-owned multinational corporation, first as market
strategist for development and diversification and then as head of a
subsidiary company's worldwide export organization. Our objective
was marketing sophisticated electronic instrumentation and inte-
grated systems. My primary focus was in European and East-West
trade.
My comments to you today are made in the context of this expe~
rience as a woman in business.
Unlike my colleagues here' this morning, I have not participated
in formulating or implementing policy or programs supporting
women entrepreneurs. Nevertheless, an understanding of the im-
pulse driving women entrepreneurship is useful if policy is to be
truly effective, and I am honored to have been called to provide a
view from this perspective.
It is appropriate to note also that my perspective excludes having
conducted business with the beneficial aid of a support program for
women business owners. It is gratifying to see the attention being
focused on women in enterprise by the Committee on Small Busi-
ness.
Descended from American settlers whose women worked by ne-
cessity alongside their men,, I was, however, fortunate to have been
raised in a family that believed in encouraging its daughters to at-
tempt excellence in whatever field of chosen endeavor and to do so
at the limits of the boundary of what is practicable. My education
was obtained at a liberal arts college in New England, a seven sis-
ters school, which' is the oldest continuing institution for women's
higher education. This strong tradition, quiet yet persistent, has
equipped me with the internal resources necessary to venture into
modern business in a man's world. That it is a man's world has
never been a subject of doubt for me.
When I was a sophomore in college, I was hired for summer em-
ployment by a Fortune 50 American corporation. My friends from
the still-male Ivy League were enrolled in the company's summer
management training program, positioned as future executives on
the fast track. I was employed in the duplicating department oper-
ating a photocopy machine. Recognizing this uncomfortable fact,
the company enrolled me in a program learning to operate state-of-
the-art typesetting equipment. I was appreciative for such a ges-
ture of thoughtfulness.
The anecdote is not presented with irony or animus. A summer
episode, it appears to' be of little lasting harm. It ranks among the
mildest of the difficulties I have encountered in business. The spon-
taneous effort at justice during an era when women's issues were
almost nonexistent was even surprising.
But the tale serves as a case in point, illustrating why women of
various backgrounds have found it strategically wise to short~cir~
cuit the corporate mainstream and develop business activity as en-
trepreneurs.
While in the corporate context, I neve~r occupied an existing job.
During my employ with large corporations, American or foreign,
my jobs were of my own design and earned through my own
powers' of persuasion. These deals were made on the basis of my
receiving a lowered pay scale in exchange for the enviable right to
PAGENO="0105"
99
enter the control room, participate in the game with an appropri-
ate title, and obtain the opportunity to succeed or fail on the basis
of performance.
The vigor and success of women entrepreneurs is explained in
part by their intense desire to depart from ordinary or staff func-
tions and to compete in business, incurring all the challenges and
risks that entrepreneurship entails. These conditions provide the
rationale for my decision to leave the protected environment of
blue-chip corporate enterprise and become an entrepreneur.
Fortunately, I am still too young to indulge in this biographical
commentary for the purposes of reminiscence. My aim has been to
use experience as a launching point for characterizing the enor-
mous resilience, tenacity, and purposefulness of a labor pool avail-
able to the United States whose energies and talents are underuti-
lized at a time when American economic competitiveness is being
severely tested.
Aside from the issues of fairness and equal access which have
been raised elsewhere in these proceedings, it is my opinion that
the broad public interest would be served by supporting women en-
trepreneurs. To ignore this resource or to permit it to be handi-
capped through indifference would be a breach of leadership when
the public interest should be served.
It is my experience that many women entrepreneurs, rather
than being a group requiring remedial help, represent a valued, dy-
namic resource in pursuing vital American economic interests. I
believe this fact exists in the area of trade where our negative bal-
ance of payments is a source of grave concei'n to thoughtful Ameri-
cans and internationalists as well.
The trade situation can be summarized briefly. In 1960 the
United States occupied 25 percent of world trade in manufactured
goods. In 1970 America's share declined to 21 percent. In 1980, not
only had this share diminished to 18 percent, but the United States
lost its position of world leadership in manufactured exports. If the
United States had maintained its market position,, it would have
entered an additional $60 billion to $90 billion in export sales, re-
ducing our annual trade deficit by about half.
In overview, this trend is understandable. As our multinationals
matured, their extensive operations became increasingly integrated
in local economies, and production sources were diversified. This
trend reflects the normal cycle of multinational activity. Unfortu-
nately, our leading trading partners were poised to take up the
trade slack with smaller and less cumbersome, more aggressive
companies.
Small- and medium-sized American companies can provide simi-
lar trade impetus. A recent survey by Touche Ross has found that
4 out of 5 new businesses nationwide are women-owned. It is a
matter of simple deduction to observe that such a group presents a
wellspring of talent and drive for trade-related business activity.
Quantified information on women entrepreneurs in trade is rare.
Relying on empirical fact, I can speak of one case first-hand.
Pathfinder survived an arduous startup period. We chose not to
operate within programs because we felt that finding access was
too problematic and the probability of obtaining assistance too un-
predictable to count on.
PAGENO="0106"
100
Functioning in an elite arena of international finance and negoti-
ation, we have leveraged our assets to the max, taking less in order
to compete successfully. Without significant financial reserves, we
called upon borrowed power to. legitimize our efforts. The process
has been laborious but worthwhile.
In the fragmented consulting arena, the challenge we now face is
how to acquire critical mass and assume leadership in a field which
has enormous potential as the world becomes a global market. We
feel this sense acutely as major developments occur in Europe with
1992 approaching and as East-West trade emerges in Soviet Europe
with the trend toward Glasnost.
At this stage in our corporate existence, we take pride in having
helped American businesses to export, succeed at joint ventures
with international partners, or expand through subsidiaries. Our
results are accruing, seemingly too gradually.
I am persuaded that the overall trade result can be multiplied by
the efforts of many small and medium business participants to
yield a measurable benefit to America's trade performance and its
continued position in world economic leadership.
To maintain our economic vitality, we need successive cycles of
vibrant, aggressive companies. With four out of five new companies
started by women entrepreneurs, this valuable resource holds po-
tential.
Survival aside, my interest as a small business owner has been to
develop the capital . reserves necessary to build our organization
into a recognized, forceful, significant, albeit small player in the
area of international trade.
Looking at the essence, rather than the letter of policy, the pri-
mary means, in my judgment, for increasing women entrepreneur~
ship is through open access. From our standpoint, we do not need
aid per se. We are entrepreneurs willing to take risk positions in
our business activity. However, we do require equal access, as
would any firm, if we are to succeed.
Such access is needed in two critical areas: For business credibil-
ity and operational success, access is needed to persons holding de-
cisionmaking power, who will lend an egalitarian ear to one's busi-
ness premise; and for financial success, access to Government pro-
curement is a vital necessity.
In order for women to be enabled to make the contribution they
wish to make, these elements are critical-equality on economic
and operational playing fields. Other specific issues .have been
raised during these hearings. In sum, women entrepreneurs need
the assurance that they will be included in the Nation's business
process. Consistent, predictable access in the Federal arena would
be a substantial gain.
In the exchange of ideas about Government's appropriate role
ranging from interventionism to total passivity, it has. become evi-
dent that basic leadership in policy matters is our Government's
responsibility.
The difference between laisser faire and laisser aller is also be-
coming distinct. Laisser aller, allowing policy to float in any direc-
tion, is naive. Laisser faire, letting business proceed, requires a
freedom that only Government can insure.
PAGENO="0107"
101
I think that women entrepreneurs simply ask for the ability to
be permitted laisser faire in business with the assurance that bar-
riers are dissolved.
Thank you.
[Ms. Snyder's stateme~t may be found in the appendix.]
Chairman LAFALCE. Thank you very much, Ms. Snyder.
Before we go to the continued questioning, we will hear from Ms.
Kay Bulow from the Department of Commerce,
Ms Bulow, you know the rules of the game We c~n put your tes
timony in the record But you have a very short statement Why
don't you go ahead and read it
Ms. BULOW. Thank you, Mr. Chairman.
TESTIMONY OF KAY BULOW, ASSISTANT SECRETARY FO!~
ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Ms. BULOW. My name is Kay Bulow, andi am Assistant Secre-
tary for Administration for the U.S. Department of Commérce~
I am very pleased to be asked to speak today on Federal efforts
and initiatives on behalf of women owned business, because I have
made increasing procurement from women-owned business one of
my top priorities.
Moreover, the entire Federal Government has shown a steady in
crease in procurement from women owned business Since 1979,
Federal procurement from women owned business has risen from
$181 million to over $1 5 billion in 1987 While this is still far too
low, it represents a steady and significant increase by all depart-
ments.
This achievement has been the result of major efforts in many
areas. The major procuring agencies have women business repre-
sentatives who initiate workshops, conferences, and outreach; pub-
lish directories of women business owners and handbooks contain
ing agency procurement information, offer counseling to women
about Federal contracting, and meet on a regular basis to study
methods of solving common problems In our Department, and I
am sure in many others, we supply a bidders' list of women owned
businesses whenever an appropriate procurement requisition is re
ceived.
As I see it, the biggest single problem facing women owned busi
ness in dealing with t ie Federal Government is determining which
procurement offices have a need for their goods and services, and
then getting started with a broad marketing strategy
There are some 3 7 million women owned businesses in the
United States Our job is to reach out to these businesses and help
them become suppliers to net only the Federal but also State and
local governments It is a massive job, but we are making a start
For example, I organized an outreach program for the Depart-
ment of Commerce to add the names of women-owned businesses to
SBA's Procurement Automated Source System [PASS] which is
used as a bidders' list by all departments. At that time, there were
less than 10,000 women-owned businesses o~ the list, and we raised
that to 30,000.
Examples of other outreach efforts were three Megamarketplace
procurement conferences for women in 1986 and 1987, cosponsored
PAGENO="0108"
102
by Commerce and the National Association of Women Business
Owners, in which all Federal departments participated with excel-
lent results.
I believe that women should begin by marketing their capabili-
ties to the small purchase offices within the Federal Government.
This is a lucrative marketing area for small businesses and pro-
vides a foot in the door which can lead to opportunities to bid on
larger contracts. For example, we have just issued two contracts to
women owned businesses which, with options, can total $9 5 million
and $1L9 million respectively.
We need better data on small businesses which are women-
owned, and the Office of Federal Procurement Policy [OFPP] has
just directed that the Federal Procurement Data System [FPDS]
will break down procurements to women-owned business by small
business and by others, which will give us a much better idea of
the type of women-owned businesses we are dealing with.
As I n~oted, there has been a steady and significant increase in
procurement awards to women owned business But increasing
these awards is a slow process. Very `often, years elapse between
marketing an agency and signing a contract. Acceptance of women
as viable contractors has been difficult, but it is happening.
It is essential that we continue to expose women business owners
to the Federal marketplace by providing annual conferences and
encouraging their attendance at the congressionally sponsored Fed-
eral procurement and export development conferences and other
similar events.
Finally, although I have been speaking solely of Federal' procure-
ment, there is another major potential market for women in State
and local government procurement, and one ~which they should be
encouraged to aggressively pursue.
That concludes my statement. I will be glad to answer any ques-
tions.
Thank you, Mr. Chairman.
Chairman LAFALCE. Thank you, Ms. Bulow. I thank you and `Ms.
Crockett for your own individual efforth, especially as it relates to
the Megamarketpiace.
Maybe that is because you have been in the Megamarketplace in
cosponsorship with others. Maybe that is the joy of cosponsorship;
then if it is bad, you can blame somebody, and if it is good, you will
be praised.
A few years back, I had the goal of seeing enacted into law
Public Law 95-507, which created the requirement for the best
effort subcontracting. We have about 1 percent in Government con-
tracts presently going to women-owned businesses and 99 percent
going elsewhere. But these 99 percent going elsewhere do a lot of
subcontracting. We have a very fertile field there, it seems.
What are we doing to aggressively pursue and measure the par-
ticipation of women-owned businesses, as prime contractors and as
performers of a portion of the subcontracts?
Ms. CROCKETT. May I respon4?
Chairman LAFALCE. Sure.
I think we have an Achilles' heel here. Let's resolve to do some-
thing about it through my continued foresight and your enhanced
abilities in that field.
PAGENO="0109"
103
Ms. CROCKETT. I have spoken with the Office of Small and Disad
vantaged Business Utilization Directors As Federal forms were
being revised, I had asked that we include reporting information
on subcontracting with major prime contractors by women This
was not considered possible in the long run I did query several
major prime contractors.
Chairman LAFALCE Do we not require by law that best efforts be
made not only for minorities as traditionally defined, but also for
women?
Ms. CROCKETT. Yes.
Chairman LAFALCE Do we not include in the contracts with the
primes a requirement that they use their best efforts not only with
respect to minorities as traditionally defined, but also women?
Ms. CnOC1~ETT. Yes.
Chairman LAFALCE Do we not establish goals with respect to mi
norities for subcontracting purposes?
Ms. CnocK~TT. Yes,
Chairman LAFALCE Is it true that we do not establish goals with
respect to subcontracting with respect to women?
Ms. CROCKETT. This office does not.
Chairman LAFALCE. Is that not a gross inequity?"
Ms. CROCKETT. I don't think we need necessarily to establish
goals First we need to find out how much subeontracLing is being
done by the primes with women business owners before we can
make any public policy decisions
Chairman LAFALCE. Why don't we compromise and say we
should do both simultaneously?
Ms.. BULOW. Since I am in procurement, let me tell you what we
do in Commerce.
Chairman LAFALCE. I think we can do tremendous things with
subcontractors, and I know we have to do it.
Ms. BULOW. Well, let me say two things.
In subcontracts, the Office of Small and Disadvantaged Business-
es also works with them on a voluntary basis to give equal consid
eration to women business owners who are part of the set aside
Chairman LAFALCE Isn't there an inherent conflict there?
Ms BULOW I don't see an inherent conflict They are a small
business, and there is an overall'goal. `
Chairman LAFALCE But they have a difficult time achieving
goals for minorities Don't they really have to have somebody else
speaking up on behalf of women? Otherwise, might not OSDB feel
that they are robbing Peter to pay Mary?
Ms BULOW The OSDB speaks on behalf of minorities and
`women. We have a fairly successful, track record.
Chairman LAFALCE Let me continue to interrupt you
In your testimony you mentioned that the major procuring agen
cies have women business representatives
Ms. BuLow. That is correct. ` `
Chairman LAFALCE Is the major women busmess representative
in these agencies someone different than the OSDB?
Ms. BULOW. Generally they are a member of the OSDE, Office of
Small and Disadvantaged Businesses. `.
Chairman LAFALCE They would be a lesser official within that
office?
PAGENO="0110"
104
Ms. BULOW. That is correct.
I would have to take exception to a lesser official. It is a member
of the staff.
Chairman LAFALCE. I think it is a fair statement. You may take
exception.
Ms. BULOW. I would have to take exception because of the indi-
vidual who works for me.
Chairman LAFALcE. When you say somebody works for you or
under you, they are not generally on the same level. But reasona-
ble people can differ on that.
Ms. BULOW. Another thing we do is The niegamarket contractors.
We go after the primes to represent their businesses at the mega-
marketing places to the women business owners.
Chairman LAFALCE. I think that is good. We have hadthree Me-
garnarketplaces. So, obviously, we have to go beyond that.
Ms. BULOW. There is one scheduled for Chicago this year, too.
Chairman LAFALCE. What I am talking about now is looking
toward a means to pursue additional subcontracts on each and
every contract, because it is already in the contract with the prime,
correct? So, every prime has a legal obligation to at least make best
efforts.
Now, the question is, should we have goals for prime contractors.
Since we have goals for minorities with respect to subcontracts, it
is difficult to understand why we should not have goals for women.
Is there a legal requirement for goals with respect to minorities
insofar as subcontracts are concerned, or is this something that has
been done administratively?
Ms. CROCKETT. That is statutory. That is my understanding of it.
Chairman LAFALCE. Is there any legal requirement for goals
with respect to subcontracts for women?
Ms. CROCKETT~ Not to my knowledge. I would like to capture the
information that is currently available before we make any policy
decisions as to what the next step is.
Chairman LAFALCE. Let's talk about measuring whatever efforts
exist. Theoretically best efforts are being niade because that is a
contractual obligation. We have some means of measuring the best
efforts with respect to traditional minorities, but we have no means
of measuring the best efforts with respect to women.
Ms. CROCKETT. Subcontracting information, no; we do not collect
that data.
Chairman LAFALCE. Have you ever asked or has Ms. Bulow
asked, has the issue arisen at the interagency council as to wheth-
er or not we should collect this type of data?
Ms. CROCKETT. I have indicated earlier that I did talk to the
council of OSDBU's when a particular Federal reporting form was
being revised, and asked that this information be included on that
form.
Chairman LAFALCE. What was the result of that?
Ms. CROCKETT. The result of that, after considerable debate, was
that they did not feel that it was feasible. As a result of that, I con-
tacted several major primes.
Chairman LAFALCE. What would be so unfeasible about it? It
seems to me it is a simple request.
Ms. CROCKETT. I agree with you, Congressman.
PAGENO="0111"
105
Chairman LAFALCE. Was this issue addressed by the interagency
council on women's business activities?
Ms. CROCKETT. A corollary to that has been addressed, and that
is when we considered the issue of goals for Federal prime contract
dollars to be made as part of the performance goals or objectives of
the employee.
Chairman LAFALCE. When is the next meeting of the interagency
task force?
Ms. CROCKETT. June 14.
Chairman LAFALCE. I think that would be a propitious time for
them to consider the letter they received from me, as chairman of
the Small Business Committee, requesting that they make an effort
to establish goals and collect data with respect to that.
Ms. CROCKETT. I am certain the committee will be happy to re-
spond to that.
Chairman LAFALCE. I have more questions but I will call on Mr.
Price at this time.
Mr. PRICE. Thank you, Mr. Chairman.
Ms. Crockett, your statement details a wide range of activities
having to do with economic opportunities for women entrepre-
neurs. There is a lack, though, in some cases, of quantitative data
as to how widespread these activities have been.
I wonder if you could fill in some of the gaps. You talked about
the efforts of your office to improve the skills of wome~i in market-
ing, finance, inventory control, and production, and stated that one
method used to develop these skills has been seminars.
How many of these seminars have been held? Is there any way
to gauge the extent of this activity as well as to identify the nature
of it?
Ms. CROCKETT. It is quite extensive because we deliver that
through our extensive field network of 85 offices. In the last 18
months we have sponsored conferences that have attracted 29,000
women. I think that is fairly significant.
Mr. PRICE. The meet the lenders programs. Do you have any
quantitative estimates of how extensive that has been?
Ms. CROCKETT. I will be happy to give you that specific informa-
tion for the record. It has been very successful.
Mr. PRICE. It would be helpful to furnish that for the record.
[The information may be found in the appendix.]
Mr. PRICE. Also, it would be helpful to know how many people
have been reached by these activities and the geographic distribu-
tion of those programs.
Turning to procurement, you list a number of activities aimed at
increasing woman business participation in procurement. You talk
about the effect of Federal prime contract goals, which a number of
witnesses have mentioned. What are those goals, and what are the
future prospects.?
Ms. CRocKErr. The goals are established individually with each
department and agency, depending on what their overall procure.
ment budget is. We look at the past 2 years' performance in estab.~
lishing goals through visits with the individuals in those depart-
ments and agencies who handle that and to aggressively increase
whatever is submitted by them. We have been suc~essfui in virtual-
ly all of our endeavors.
PAGENO="0112"
106
Mr. PRICE. What is the range of those goals, lowest and highest?
I see we have a chart that depicts that.
Ms. CROCKETT. Unfortunately, I don't have the same chart. It
varies with each department and agency.
Mr. PRICE. What about the workshops to acquaint women with
Federal business practices, you have no information on how often
and what the geographic spread has been.
Ms. CROCKETT. Yes; I will supply that for the record.
[The information may be found in the appendix.]
Chairman LAFALCE. Mr. Price, how many have you had in North
Carolina, and why don't you do one tomorrow?
Mr. PRICE. The testimony we have reêeived is that this procure-
ment problem is widespread. Often outreach efforts on the part of
agencies and efforts on the part of the Small Business Administra-
tion to encourage participation and give accurate information can
be very, very important. It would be helpful to the committee, I be-
lieve, to have information about how widespread these efforts have
been.
Do any of the other witnesses have any experience with exposure
to the outreach efforts by the SBA, particularly the efforts to en-
courage procurement participation? Ms. Hager, I know you were
rather skeptical of these efforts or said they were not successful.
Do you have any reflections on this?
Ms. HAGER. I think they are successful. I think for what they are
set up to do that they are successful. As I said, the women do
attend. We think they are well represented. That is really not an
issue, I think they are very well attended. Basically, the point I am
trying to make is not to criticize the Government programs but to
say, I guess, where I disagree is that we should be happy with
where it is, with where we are in procurement.
I think we are not. We don't disagree with the Government pro-
grams. We think it. is terrific, but I think we are going to have to
work together to make it better.
Mr. PRICE. You do say the bottom line is that while there are
more ar~d more women trained and knowledgeable about contract-
ing, they are still not getting enough contracts. Is the problem that
the programs are not adequate or that we are not targeting them
sufficiently? What specifically i~ your critique if you say these pro-
grams on the merits are quite good?
Ms. SI~YDER. May I add something? I agree with Ms. Hager that
what is being done is being done well. Education and counseling
are being well done, but expectations should not be unrealistically
high. Our firm provides such service on a private basis, and. we feel
the same frustration, perhaps, the public sector feels, which is that
these vehicles can only have a limited result. We leave program
participants well-informed, but the hardest part for participants is
putting what they have learned into effect. They are useful, but
only as a means of awakening interest and providing a degree of
education.
The problem at that point is to take what has been learned and
implement it. I think it unrealistic and ill-advised to believe that
educational programs will be sufficient. I think it is naive, and I
think the people attending the programs afterward. say, "Fine, but
PAGENO="0113"
. ~ . 107
what can you do for us next?" The ultimate test for participants is
enacting what they have learned and making money from it
Mr PRICE As far as Government and public policy is concerned,
what does that next step loo~k like?
VMs. SNYDER. To be able to do business with and in the Govern~
ment and to be able to have access to the procurement dollars. that
are quite substantial.
Mr. PRICE. Are there legal barriers?
Ms SNYDER Our business includes substantial activity in Gov
ernment. Few of the jobs we have done, have been on official
projects We developed them ourselves in anticipation of needed
work We find that such success is primarily a question of accept
ance and attitude. Thus far, we have never encountered a situation
where someone wished to work with us and then determined that
* they could not.
Ms. HAGER. I would absolutely second that. It is much mare ac~
ceptance and attitude. There are certainly plenty of situations
where the women are not qualified. There is nothing in it for the
OSDB. There is no incentive for them to deal with women. They
don't get any points for doing that.
If the subcontracting were done, it would make a tremendous
deal of assistance. It is hard to deal with skepticism. I was not
being facetious when I said some of the training dollars maybe
should go to contracting officers to get them to deal with women,
on opening up procurement It is not just that the women owned
businesses are all small, but they are all sole proprietorships Their
sales receipts are growing three times faster than men's. Five years
ago there was a bid through the Commerce Business Daily, going
in and investigating a financial situation with a vested financial
Government negotiator, and the bottom line, sitting . between my
lawyer and an accountant, and I knew it was all over when out of
the blue he asked me who took care of my children
Ms SNYDER In business, if you are going to succeed, whether you
are male or female, you have to pursue the main chance Especial
ly in small business, and large business as well, you cannot hitch
your fortunes to vague possibilities.
You have to estimate where you think you have a 999 percent
chance of succeeding Our strategy, and this is simply that of our
firm, has been not to sashay around with the thought of possibly
obtaining business possibly on the basis of our being a woman
owned company We targeted areas where we determined We had a
very high probability of sales
Frankly, we aren't interested in filling someone's dossier, specifi
cally, we aren't interested, and this sounds rather harsh, in filling
out forms and participating in the bidding process just to provide
one of three required proposals to insure that someone's dossier fol
lows regulations when Someone comes to check to see if there has
been discrimination Such pursuits are not good, smart business
Ms BULOW Can I comment on that?
Mr. PRICE. Certainly. ~* * * **
Ms BULOW I agree with what is being said here to the extent
finding where the opportunities are Procurement, when I started
in business, to me was a fairness issue I felt the wOmen business
owners deserved as much opportunity to find out what the Federal
PAGENO="0114"
108
Government was buying and get their swing at that like everybody
else, which is why we started doing the few Megaimarketplaces.
There is direct reach out of these.
We have identified in all the Federal Government what people
buy, what they sell. We provide this to the women entrepreneurs.
We have tried to open up the Federal procurement process to the
best of our ability.
In doing the megas, we have created an awareness in conjunction
with NAWBO, Small Business Administration, the Department of
Treasury, and every major Federal agency has been a very active
participant in these. This wasn't true in 1983 or 1984. The level of
activity has increased substantially as we have done these, and
they need to be continued.
We are developing an inventory of what Government buys so
that Susan Snyder can get a booklet that will tell you exactly, Gov~
ernment~wide, what is being brought where, so she can target her
own market.
The unique thing we tried at mega was to schedule appoint-
ments.
Chairman LAFALCE. Shouldn't that Government booklet be avail-
able to all businesses indiscriminately, whether they are male,
female, minorities, et cetera?
Ms. BULOW. The Government booklet created on the opportuni-
ties?
Chairman LAFALCE. No; the booklet that explains the contracts
that are available.
Ms. BULOW. Sure, it is.
Chairman LAFALCE. All right. Let's go on. I am going to have to
leave here in 5 minutes.
John, do you have any quest.ions?
Mr. HILER. Thank you, Mr. Chairman.
I am going to play a little bit of the devil's advocate here. Just
bear with me. Separating our procurement activities, the Federal
Government buys enough, does it correctly or incorrectly, separat-
ing out that and looking at the great bulk, of 3.7 million women-
owned businesses, a fraction of which have ever called the SEA to
assist them, or the Department of Commerce, or something, a
couple of figures that can challenge my mind. Women-owned busi-
nesses, I believe, are the fastest-growing segment of small business~
es in America. Dollars of sales are growing dramatically.
It would seem to me that the barriers to access and the barriers
to success for women in businesses must be falling down at a rapid
rate to have that type of rapid development. Why is that statement
right or wrong?
Maybe go to the private sector first here, then go to the Govern-
ment?
Ms. SNYDER. Why-the question was why, if given the success of
women in s~nall businesses, the rate of their increase and the in-
creased rate of their income, isn't this a sign that barriers are fall-
ing to women in business? Is that your question?
Mr. HILER. Yes.
Ms. SNYDER. I would take it from another viewpoint, being the
devil's advocate for the other side.
Mr. HILER. Sure.
PAGENO="0115"
109
Ms. SNYDER. Since the ~960's, when women began to feel that
higher education was a normal and expected thing, the number of
women qualified to enter the workforce and eqwpped to compete in
corporate activity has, in my opinion, increased substantially From
a simple Darwinistic perspective, there are more of the species
trying to enter the business arena From that standpoint, I don't
think the numbers necessarily prove that barriers are falling I
think there are more Women knocking at the barriers. I think
there are more women qualified, driven, motivated with the desire
to try to make it in business, and, thus, there are more women suc-
ceeding. Although the numbers may look, I suggest that the pro~
portions are static for all intents and purposes.
You could take a very primitive view that the strongest will
make it The point of my testimony is that we should take a more
enlightened view, if only in the national interest, because in this
particular stage of our economic history, women owned businesses
have a great deal to offer the United States
New, dynamic businesses are needed to span~ the trade gap. If
four out of five new businesses are women owned, it is evident that
women are a useful economic source. The creativity these women
represent, their expertise, could be extremely valuable. So, why not
find a way to encourage the momentum, not subsidize it necessari-
ly, and, at the least, allow it `unfettered movement. Such policy is
in the national interest.
Ms HAGER I agree with you that the barriers are falling with
the exception of the two areas of procurement and equal credit op
portunity I think barriers are certainly coming down in those
areas, but we have a long way to go in those areas
Mr HILER If you look at the long term health of women owned
businesses in America, I hope it doesn't depend on the Federal
Government's purchases. The Government's purchases are a small
fraction of a $4 trillion economy.
Ms. HAGER. It obviously doesü't depend on that.
Mr HILER One of the testimonies I heard in the last day or two
has suggested that a disproportionate share of women's businesses
are ~n the service retail area Defining service Is broad) but that is
whem e there is a tremendous amount of growth in our economy To
say that women are going into an area in business broadly defined
where there is tremendous growth and don't seem to be going into
an area as rapidly where there isn't growth, I don't perceive that
as negative, which I gather from testiumony yesterday might be neg
ative. ` `
The procurement dollars, even if we had extraordinarily Success
ful procurement practices at the Federal level, that would be but
an extraordinarily small dent in those 3 7 million women owned
businesses, wouldn't it2 I am playing the devil's advocate
Ms HAGER Women's businesses will not succeed or fail because
of procurement, but ~ is still not acceptable that all of that is
going to men. `
Mr. RILER. That is accepted.
Ms SNYDER The point about access to credit is important be
cause the issue ~s one that also has national significance and is
worthy of' being considered separately from the issue of procure
merit. `
PAGENO="0116"
110
Mr. HILER. It has a lot to do with general difficulties in gaining
credit for all small businesses, doesn't it?
Ms. HAGER. Some of it does.
Mr. HILER. There are two kinds of problems. One is general
access to credit and equity for-I come from the foundry business.
That is the business I grew up in, and 80 percent of the capital that
goes in the foundry industry comes from two areas, retained earn-
ings or capital that the owner or manager brings in. Only 20 per-
cent of the capital comes from outside ownership or comes from
banks or something. Four-fifths of the dollars come from what the
person has been able to earn on their own or what they brought
into the ball game to begin with.
I think that is true of most businesses. General access, and
coming up with new instruments for increased access to equity, I
think these are things that will help all business, including women-
owned businesses.
Ms. HAGER. I absolutely agree. I think they will help all busi-
nesses, including women-owned business.
I think there is an extra barrier for women, women-owned busi-
ness, when you go to deal with the bank. I am not talking about
getting startup funds or things nobody gets. I am talking about re-
alistically, lines of credit, things like that. There is an extra barrier
for them.
Chairman LAFALCE. I am going to intervene because, unfortu-
nately, I am going to have to be leaving momentarily. I want to
make a few points and ask a few questions.
In your attachment to your testimony, Ms. Bulow, you state that
there was assigned a women's specialist position at the Office of
Small Disadvantaged Business to manage Commerce's women's
business program. You say Department of Commerce [DOC] i~ the
only Federal agency with this full-time position. Is that correct?
That is in your a~achment.
Ms. BULOW. If it is in my attachment, it is correct.
Chairman LAFALCE. That is one of the problems. DOC is the only
agency with this full-time position. I would praise DOC, but we
have to ask if it is good for DOC, why isn't it good for all agencies,
too. I am going. to have to pursue that. Maybe that is something
else that can be brought up in our Interagency Task Force.
I would like to make another point, too. I had heard of Ms. Phil-
lips before I made inquiry as to what has happened to this inter-
agency group, and who is the chairperson of it. Maybe that is a
problem too. Maybe the chairperson should be some person of
greater visibility to give it and its mission more stature. If you
have visibility, you, therefore, might bring with you the require-
ment for better accountability. Whether it would be Elizabeth Dole
or Peggy Heckler, someone of adequate stature to. give that mission
its proper stature.
Yesterday, I suggested that one of the things we needed was not
just a program for women, but programs in the existing trade asso-
ciations and education programs, and that they be so structured,
although the programs would be for all, they might be of special
benefit for women. For example, the American Banker's Associa-
tion program on lending practices might focus more on soft assets
as opposed to hard assets in terms of lending credit.
PAGENO="0117"
111
That could be very interesting4 I think that is going to be incor-
porated at their next conferer~ce, which will take place in June in
Boston, in which I will be participating.
Something else too. On the Whole subject of goals, someone once
said that happiness is directly proportionate to one's expectations
And, therefOre, if we set very low goals, it would be easy to be very
happy and have great success, or proclaim great success. Now if we
set unrealistic goals-for example, I voted against that provision
which eventually became section 1207 that called for 10 percent of
all DOD contracts to go to minorities-that would have created
automatic, absolute, certain unhappiness Unbelievably unrealistic
How do you determine what is the proper goal-one that is at
tamable if you strive mightily, but not so low' that you can achieve
it easily and not so high that you are going to become absolutely,
impossibly frustrated? I am not sure about methodology that has
been used in the goal setting process with this fostering of procure-
ment.
I note there ate some agencies whose goals and achievements for
1988 are lower than goals for 1987.
Ms. Crockett, we are goihg to have to sit down in the future and
go over these on an agency-by-agency basis.
Ms CROCKETT Our goalmg is done prior to the achievements of
the previous year coming in, so we really don't have that year's
achievements as a basis in negotiating.
Chairman LAFALCE. Sure: Sometimes, by establishing very high
goals, even if they are unrealistic, you do bring with you tremen
dous frustration But you also push individuals to levels that sur
prises the world.
For example, didn't we have a legislative requirement for AID
with respect to contracts for women? Aren't they now closer to
about 4 percent whereas the average is about 1 percent?
So, if we are going to err~ perhaps we ought to err on a higher
goal, perhaps, tnan a lower goal We ought not to take too much
solace in the fact we have 1 percent.
My next point is we are addressing ourselves to women business
owners But as I understand it, your organizations are also con
cerned about women in business as opposed to women business
owners My question is, do you have programs specifically designed
to be of assistance or to look at the special problems of women in
business as opposed to women business owners?
Ms CROCKETT Are you defining women in business as working
for women owned fir~~'~
Chairman LAFALCE. No.
Ms CROCKETT Our focus is primarily on women business owners
Chairman LAFALCE. All right, fine.
The next question is, suppose I am the President, January 1989,
and I call you into my office, and I say to you, Kay Bulow, Depart-
ment of Commerce, everybody says the Commerce reports are the
best show in Government Ms Hager, founder of NAWBO, and you
are a critic, and Susan Snyder, you work for those Fortune 500-
you have had experience in the private sector What have you tried
to accomplish that you have been unable to accomplish?
What have you asked for from your superiors that you have not
been able to get, and what would you ask for now? What program
PAGENO="0118"
112
would you want, so that at the end of my term in December 1992, I
could look back and say that we did more for women in business
and women business owners than any other administration ever
did? How would you answer that?
Ms. CROCKETT. As I mentioned earlier, more long-term training. I
think that is the most important aspect of success.
Chairman LAFALCE. I am going to ask Ms. Crockett and Ms.
Bulow to flesh out their answers in writing on that question, OK?
What you have asked for and haven't gotten, and what you would
ask for, if I were President, and if there were no 0MB, and you
had direct access. Ms. Hager and Ms. Snyder--
Ms. CROCKETT. There is always an 0MB.
Chairman LAFALCE. Not in my administration.
Mr. HILER. That will be part of the record of the committee?
Chairman LAFALCE. Absolutely.
[Ms. Bulow's response may be found in the appendix.]
Chairman LAFALCE. To the two Susans, any comments you would
like to make now on that?
Ms. HAGER. Sure. I would like to see a committed administration
in your administration. I am sure that would take place as it does
now. I would like to see more procurement dollars going to women,
both in primes and in subcontracts. I would like to see equal credit
opportunity across the country.
Ms. SNYDER. Rising to meet the chairman's challenge, I would
probably offer total unhappiness by setting very high standards.
My interest would be consistent with my testimony to see women
so integrated in the procurement process in the United States that
the subject would no longer be a special issue any longer.
Chairman LAFALCE. Amen. That is the goal. The goal is not to
have any special programs for women. That is the goal, too, with
respect to minorities. We ought to remember though, that these
are means to an end. They ought not to be permanent, perpetual.
We are playing catchup football right now.
The~who1e idea is not to play catchup football in the future. But
we would be pretty stupid, or naive, or permanent devil's advocate
if we didn't realize that there is an imperative for catchup football
right now.
The committee will adjourn, and I thank you all very much.
[Whereupon, at 11:00 a.m., the committee was adjourned, subject
to the call of the Chair.]
PAGENO="0119"
NEW ECONOMIC REALITIES: TIlE ROLE OF
WOMEN ENTREPRENEURS
TUESDAY, MAY 17, 1988
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m., in room
2359-A, Rayburn House Office Building, Hon. John J. LaFalce
(chairman of the committee) presiding.
Present: Chairman LaFalce.
Chairman LAFALCE. The Small Business meeting will come to
order.
Today's hearing is the fifth in a series of hearings designed to
address issues affecting women-owned businesses. The committee
has examined problems re1~ating to Government procurement,
access to credit, the effectiveness of public policies and programs,
and the accomplishments and contributions to the economy by
today's business owners who just happen to be women.
Representative Silvio Conte could not be with us today, but he
has submitted a statement. I ask unanimous consent that it be put
into the record.
[Mr. Conte's statement may be found in the appendix.]
Chairman LAFALCE. We have invited witnesses today to discuss
the changing nature of the workforce and its implications for
women entrepreneurs. We will hear from Bickley Thompson, direc-
tor and senior editor of American Demographics for an overview of
statistics and projections for the future; Jeannette Scollard, presi-
dent of SCS Communications, entrepreneur, author; lecturer, and
financial counselor featured on ABC's Home show; and Beth Wray,
president of Business and Professional Women, USA. She is also
Dean of Students at North State College in Aberdeen, SD.
But before we hear from our witnesses, I want to acknowledge
the continuing intere~t in these hearings expressed by the National
Association of Women Business Owners, NAWBO. We have ar-
ranged for a viewing of an 8~minute video entitled, "Against all
Odds."
We will view the video tape later because our first witness, Ms.
Townsend, has some time constraints. Therefore, I am going to call
Ms. Bickley Townsend to the witness table. We will hear from Ms.
Townsend, and then we will hear from the other panelists and view
the tape.
I hope you will be able to stay with us a little longer.
(113)
PAGENO="0120"
114
TESTIMONY OF BICKLEY TOWNSEND, DIRECTOR, RESEARCH
AND EDUCATION, AMERICAN DEMOGRAPHICS; INC., ITHACA, NY
Ms. TOWNSEND. It is a pleasure to be able to participate in these
hearings, even briefly, and especially at the invitation of a fellow
upstate New Yorker.
Chairman LAFALCE. Where are you from?
Ms. TOWNSEND. Ithaca. I have been asked to summarize briefly
the changes that are occurring in the American workforce which,
as we know, are ver'y rapid and very profound, and some of the im-
plications and challenges that those changes mean for employees,
for the economy, and for Federal policy in the years ahead.
If I had to sum up the trends we see in one sentence, I would say
that America's wórkforce is becoming steadily older, on the whole
better educated, although with a caveat which I will go into in a
minute-more racially diverse and, of course, more female.
Let me ~cuss each of those trends briefly.. Ever since the first
baby boomer ~~rned 40 in 1986, we have heard probably more than
many of us would care to ~ the aging of the American popula-
tion. Although, I must say Ameri'mn Demographics is partly to
blame for the media coverage since we put out the press release on
that.
Chairman LAFALCE. Did you coin the phrase, the graying of
America?
Ms. TOWNSEND.. That is another one. I think we have heard some-
what less about a concomitant trend which is that America's labor
force is also aging.. The average worker today is 35, and by the year
2000 he or she will be a distinctly middle aging 39.
Now, this is happening partly because of the aging of the baby
boom. But there is another important reason, and that is the baby
bust, that very small generation born in the late 1960's and 1970
when families were down-sizing from an average of four to about
two children. Those young people are reaching adulthood now and
coming on line as workers..
Our 18- to 24-year-old population is going to decline by one-fifth
between 1960 and 1995. I would like to emphasize one reason why
America's workforce is not aging. It is not aging because older
workers are remaining on the job for more years. In fact, just the
opposite is occurring because older workers are, in fact, taking
early retirement in record numbers.
One third of men, aged 55 to 64 are no longer in the labor force
at all as participating members. That is double the proportion of
men that age who were working just a decade ago. This rising age
of the workforce is a two-edged sword. It has positive aspects to it.
1~he prospects of a somewhat older, more experienced labor force
could herald a big productivity bonus for the economy, one that
could give our economy a boost that we could rea~y use in the next
few years.
But on the minus side, an aging population also means a slower
growing workforce. Between now and the year 2000, our labor force
is going to grow at the slowest rate in history, except during the
Great Depression.
Now, of course, there will be a lot of regional variation in that
decline, but overall, what it means is a period of tighter labor and
PAGENO="0121"
115
a threat of wage inflation as scarce entry level workers are able to
bid up their price. This shrinking labor pooi is going to be a par-
ticularly critical problem for retailers, food marketers, and other
businesses that rely on entry level workers.
Larger employers are already easing the crunch by substituting
technology for labor. For example, you have seen those beverage
bars in McDonald's where you have to pour the cokes yourselves
instead of having a counter worker do it. Small businesses can't
take advantage of high-technology solutions as these as easily as
can large corporations.
This is an issue your committee might want to take up. Other
issues for Federal policy include retraining of older workers and in-
centives to attract retirees back into the labor market, if only for
part-time or temporary jobs.
Turning to education, the overall trend is that America is becom-
ing a steadily better educated society, and part of the reason for
that is again the baby boom. Half of all baby boomers have gone to
college for at least 1 year and one-quarter have a college degree.
The baby boomers, of course, are also the generation that closed
the educational gender gap. Women have made tremendous strides
in education in recent years and they show up most strongly
among those younger baby boom women, the ones now 25 to 34,
who just about have the same levels of education as their male
counterparts.
Now, this is happening for two reasons: Not only are more
women going to college than at any time in our history, but also,
for the first time in recent memory, fewer young men are complet-
ing college. The trend toward a more educated workforce is a good
sign because most of the fastest growing occupations that we see
between now and the year 2000 now will require at least some col-
lege.
In fact, there is a new study by the Hudson Institute called
Workforce 2000, which concludes that by between now and the
year 2000 for the first time in history, a majority of all new jobs
will require post secondary education.
But I mentioned earlier that there is a caveat to this better edu-
cated picture. Statistical averages mass the fact that too many
young people are failing or being failed by our educational system.
We have a persistently high rate of school dropouts, particularly
among children from low income and minority families. These are
children who already have the fewest advantages in life.
We need to do everything we can to help convince young people
to stay in school and ideally to go on to college. Besides increasing
the number of years of schooling our young people receive, we also
need to improve the quality of that education. We know that the
jobs of the future are going to require much greater literacy and
much better quantitative skills than many of our children are now
receiving.
Educational reform has begun, but we have a long way to go to
rebuild the educational standards and basic skills that fell by the
wayside in the 1960's and 1970's. The National Commission on Ex-
cellence in Education found, among other things, that 40 percent of
recent high school graduates were unable to read at the ninth
grade level.
PAGENO="0122"
116
Productivity losses caused by poorly educated workers are cost-
ing American businesses an estimated $25 billion each year. That
is a cost that the small business owners can ill-afford to pay and
money that could be invested in greater productivity and economic
growth.
Sam Ehrenhalt, the New York regional commissioner of Labor
Statistics, summed up the policy ~implications of this trend recently.
He said, "Ultimately the quality of the labor force may become the
limiting factor on the New York City economy. That is why, in my
opinion, improving educational outcomes now ranks as the city's
number one economic development effort." I believe that conclu-
sion holds true not just for New York City, but for the country as a
whole.
Let me turn to the third trend, and that is our workforce is be-
coming far more racially and ethnically diverse. Workforce 2000
made a number of interesting projections, but one in particular
stood out. For the rest of the century, this study concluded, native
born white men will make up only 15 percent of new workers.
For an economy for which traditionally white males have been
the backbone, this trend signals a whole new world ahead. One in
five Americans today is black, Hispanic, Asian, or another minori-
ty. The impact of this diversity will be certainly felt in the work-
force, more dramatically in some geographic regions than others. It
is only a matter of a year or two before New York City has a ma-
jority minority labor force.
A number of other cities are also at or approaching the point at
which it is no longer appropriate or even accurate to refer to non-
Caucasian ethnic groups as minorities. Some of these cities include
Los Angeles, Detroit, Chicago, Philadelphia, Miami, a lot of cities
in Texas, and, of course, here in Washington, DC.
The growing racial and ethnic diversity of our workforce will put
greater demands on employers. There will be more training needs,
more language problems, greater responsibility for employers to
avoid violating provisions of the immigration reform laws. But it is
also a two-edged sword. Many new immigrants have already
proven that they are at least as hard-working and enterprising as
their predecessors from earlier generations.
So, we can expect that the growth of immigrant minorities in the
workforce will have a positive effect on the economy. The increase
of black and other native born minority workers will mean contin-
ued issues of an affirmative action and equal access to employ-
ment. Where these minorities are concentrated in disadvantaged
areas, it is going to take special efforts in education, vocational
training, and economic opportunity to bring more and more minor-
ity workers into the mainstream of the economy.
I have reserved for last, the trend that is of greatest interest to
these hearings and very probably the single most important trend
that has ever taken place in the American Iabo~r market That i~
the enormous influx of women into the paid labor force in recent
years.
Already, women account for nearly two-thirds of all new work-
ers, and they are 45 percent of the workforce, up from 89 percent
just 15 years ago. More than 7 out of 10 women in their prime
PAGENO="0123"
117
working ages, age 25 to 54 are in the labor force and that is going
to rise to more than 8 out of 10 by the year 2000.
Women's work patterns across the life cycle have also changed
dramatically. Women, until the mid 1970's, used to drop out of the
labor force in their child-bearing years so that fewer women
worked in their 20's and 30's than at other ages. But this pattern
has completely changed. Today, more women work in their child-
bearing years than at any other ages.
When you chart labor force participation by age, women's pat-
terns look very similar to men's now. Women's occupational
choices are also becoming more similar to men's. Consider the in-
roads women have made into many once male preserves. Women
today are 20 percent of all medical doctors, double their proportion
in 1972; 20 percent of all lawyers, compared to 4 percent in 1972;
and 7 percent of all engineers which may not seem like a lot,
except that they were fewer than 1 percent of all engineers in 1972.
Meanwhile, men represent a growing share of telephone opera-
tors, nurses, and typists. So, male and female work patterns are be-
coming more unisex, and combining work and family has become
the norm for most women, as well as most men today.
The majority of mothers are now in the paid labor force, includ-
ing more than half of all new mothers who are back at work before
their baby's first birthday. So, it is no wonder that family issues
related to employment, such as parental leave, child care, and flex-
time have moved front and center on the policy agenda. Even so
staunch a traditionalist as Senator Hatch is sponsoring child care
legislation, and he defended his bill by saying no matter how much
some people might want to go backward, America is not returning
to an Ozzie and Harriet world.
America was founded on innovation, and our system of govern-
ment was even called the American experiment. Today, I would
like to suggest that we are embarked on a social and economic ex-
periment almost as fundamental as that undertaken by the first
settlers to our shores. The premise of this experiment is that men
and women can coexist as truly equal partners in the family, and
in the factory, in the boardroom as well as in the bedroom.
There is no precedent for the new work and family forms we are
forging. Yet, today, as then, a great deal rests on the outcome of
this experiment. The well-being of our Nation's children, the value
of women's investment in human capital, even America's competi-
tiveness could depend on whether this experiment works.
I urge you to do all you can to ensure its success. Thank you.
[Ms. Townsend's statement may be found in the appendix.]
Chairman LAFALCE. Thank you very much, Ms. Townsend.
There were so many insights that I wish to pursue. For the most
part you picked 1972 as a base year. Any particular reason for
that?
Ms. TOWNSEND. I think there happened to be good data for that
year. The economic censuses are taken in years ending in 2 and 7.
Chairman LAFALCE. Fine. The two concurrent phenomenon that
I am interested in analyzing a little more-women are increasing
as a percentage of the workforce at a much greater rate than pro-
jected now, double the rate, although it will not be as great as it
was from 1972 to the present. There is also data in here regarding
PAGENO="0124"
118
the, if not illiteracy of the workforce, educational inferiority of the
workforce.
Forty percent of high school graduates aren't able to read at a
ninth grade level. I think you have other statistics regarding the
poor educational quality, despite the fact that the proportion of
adults who are high school graduates has risen, despite the fact
that these jobs will require higher educational attainments.
I wonder if this breaks down, however, along male/female lines.
I only know from my own experience, and I look back to grammar
school days, and we had a reuniOn not too long ago. I looked at the
literates and illiterates. The females were the literates and the
males were the illiterates. It was true then-that was a long time
ago-with a few exceptions.
Do we have any data on that?
Ms. TOWNSEND. Well, there are a couple of responses to that. I
think girls often do get better grades in school than boys because
they tend to follow rules more.
Chairman LAFALCE. Superiority of the species, I understand.
Ms. TOWNSEND. Boys have higher high school dropout rates, but
girls also have, high dropout rates fQr different reasons. The
number one reason girls drop out is pregnancy and four out of five
girls who become pregnant in high school drop out.
That suggests a whole intervention strategy there for females
that obviously does not apply to males in the same way. The oppo-
site trend is that boys do tend to score higher on quantitative tests
and do better in math aild science, at least on standardized tests.
Traditionally, girls we~'e not encouraged as much as boys to
pursue science and math. Clearly, when you look at the jobs of the
future, we need to encour~ge both sexes to do better in both quanti-
tative and verbal skills.
Chairman LAFALçE. I~o you know if there is any breakdown
about educatioil attainments, based upon gender?
Ms. TOWNSEND. On performance?
Chairman LAFALcE Yes.
Ms. TOWNSEND. Yes; the Center for Education statistics has that.
Chairman LAFALCE. They have all of that.
I am not going to ask anymore questions right now, because I am
advised that you had to leave at 10 o'clock.
Ms. TOWNSEND. If you have any additional questions, I would be
happy to submit answers. Thank you.
Chairman LAFALCE. Thank you very much.
Counsel advises me that it would be appropriate now to view the
tape prepared by NAWBO. Whoever is responsible for that, why
don't you put it on.
[Whereupon, a video tape entitled "Against All Odds" was
shown.]
Chairman LAFALCE. Thank you very much. My congratulations
to NAWBO for that very fine production. As the credits were being
given, I noticed two things. It was obviously produced and made ex-
clusively by women.
Also, I see that Amy DeLouise, the daughter of our staff assist-
ant,' Dick DeLouise, had a hand in the writing and producing of it,
a major hand. Let us return to the traditional format of the hear-
ing and call our next two witnesses to the table now.
PAGENO="0125"
119
I would ask both Ms. Jeannette Scollard and Miss Beth Wray if
they would come to the witness stand at the saine time
Jeannette, good seeing you again Our first witness will be Ms
Jeannette Scollard, who is known for many things, as I mentioned
in my introductory remarks Since December, most notably, for
being a principal speaker at a forum I had in my congressional dis
trict on women in business
I thank her for that~ Jeami~tte. . .
TESTIMONY OF JEANNErj~E REDDISR SCOLLARD, PRESIDENT,
SCS COMMlJNICATIoNs,~N~w YORK, NY
Ms. SCOLLARn. Mr. Chairman, I am going to talk to yoU about
some of the changes in the American business place. There are
some fairly dramatic changes and women are a very important
part of these transitions~ which are all more apparent to me be
cause of several jobs I hold as a very avid entrepreneur with about
eight com~panies, as author researching my third book on women
entrepreneurs for Macliliflan Publishing, and as resident financial
expert for ABC television's Home show~.
My work certainly keeps me in touch with the heartland of
America. I would like to spotlight three major trends in the Amen-,
can workforce. They represent substantial changes, `and women are
a pivotal factor in all three of them: I ~will briefly ôall these devel-
opments to your attention, and point out some of the challenges
they present, and suggest some of the ways in which Congress can
provide important assistance
The first and most important trend is the brain drain of women
from the traditional male dominated corporate arena What you
find is the cream of women executives are leaving the larger corpo
rate structures and opting to start businesses of their own There
are two reasons for this brain drain. `
One is, the higher up a woman moves in the business hierarchy,
the more sex discrimination she is likely to encounter I know I
have been there In the late 1970's, I was the first and only woman
officer in the history of a 100 year old blue chip multinational
I learned first~hand what it is like to reach the crystal ceiling,
and the male establishment denies it exists, but it is the point at
which a woman will not be promoted no matter how she performs
I don't see any improvement today in this tacit discrimination, but
we refuse to be so easily dead-ended in oi.ir careers
Women realize that not one single woman is among the power
brokers in the financial community, and there still is no ladies'
room at the New York Stock Exchange Women realize that they
must move into another milieu away from the older boy network
which so successfully has exclude4 them They have figured out
that if they want to be president, they are going to have to own the
business theniselves, hence, the exodus from corporate life in entre
preneurship.
Not only can women make as much money on their own, they
can be in control of their lives This brings me to the second factor
that makes entrepreneurship attractive to women We carry the
lion's share of the responsibility for our husbands and children, but
the corporate structure was designed for men who had wives.
PAGENO="0126"
120
Well, women don't have wives. We are the wives. The only way
that a woman can have it all, as men do, is to take charge of her
destiny. If she is the boss, she gets to write the rules, new rules.
She can design her schedule around her family's need. She can del-
egate to her assistants when Johnny is sick, instead of calling and
apologizing to her boss.
When she likes, she can take the office to the nursery or the
nursery to the office. She can do this without losing one iota of pro-
fessionalism. We are seeing this extremely capable segment of our
workforce abandoning the corporate halls and creating a most ex-
citing and vibrant part of our economy, new businesses that create
new jobs for our workforce.
I think we are only at the beginning of what is becoming a
groundswell. You would be surprise4 how many women executives
still in corporations are harboring ~dreams of escape. When I am
interviewing for my books, women say, "Jeannette, I am not going
to be here when you do your ne~~t book. I am going to be out on my
own." They keep their jobs for the short term as they secretly build
a framework for their long-te.rm~ future enterprises..
They plan to escape the confinements of being second class citi-
zens in a man's world and create brave new worlds of their own.
We should focus on two important ramifications of this change in
the marketplace. One, the exodus of senior women is depriving tra-
ditional American business of a power source of fresh insight and
ideas.
Much of corporate America is in dire straights right now and can
ill-afford so crippling a brain drain. I would suggest that Congress
vigorously encourage corporate America to promote its talented,
capable women. As it stands, now, the outlook for women in the
1990's in corporate America is far bleaker than it was in the 1970's.
To be blunt, many corporations have already hired their token
woman, who may have left in frustration, and now the corporation
feels und~r no pressure to replace her. The attitude is, "We had
one, and she didn't work out, so you can't say we didn't try."
There is another interesting ramification of the exit of women
from male-dominated corporate America, and this is more pro-
found. Women's ideas are lost and so is the impact of their man-
agement style. Women's management style tends to be more appro-
priate to social realities and economic contingencies of today. It is
more open, subject to give and take, and responsive to the attitudes
and insight of their subordinates.
Moreover, women managers tend to inspire more loyalty and
have earned a reputation among their male superiors for being far
more loyal than counterparts. Transfer this management style to
the unique advantages of entrepreneurship, and you have an inter-
esting combination here.
As you know, one of the key strengths of privately held business
is that it has the privilege of thinking long term. Such a business is
not at the mercy of investors who think short term and are preoc-
cupied solely with the price of their stock and dividends which
must be paid next quarter. Since an entrepreneur must answer to
no outside interest, she can plan for the long term. Therein lies
much of her business' future strength and the future of success.
PAGENO="0127"
. 1?i
To summarize, we have a new management . style that inspires
job satisfaction and a setting where a long term view ~s possible
Thus, women entrepreneurs can provide ~ fresh new environment
which might compare f~avorably with the much touted Japanese
style. ~ ~ ~ ~ ~
We are much more in keepuig with the trends than is the more
rigid and increasingly outmoded approach. of our traditional, but
beleaguered American business.
What is the major challenge facing these women9 Money
Women entrepreneurs typically have more difficulty than their
male counterparts in raising capital
Banks routinely discriminate against women American bankers
simply have not kept up with the changing nature of the work
force, and very few of them recognize what an important market is
emerging in women owned businesses, and very few women have
the ease and success that we saw in the video tape of Ms Rabit
Most of them don't know their banker, and haven't seen them
socially, and are unlikely to get that support We really need help,
and Congress can provide it You in Congress must help us open
the eyes of the banking community to the major economic trend of
the 1990's You must encourage them to give women a break You
can mandate incentives to encourage banks to stop discriminating
against women owned businesses
The second trend I would like to call your attention to is as a
result of the take over mania that currently possesses corporate
America, which I see continuing for at least the next 5 years We
are seeing an extraordinary consolidation of major companies as
they take turns swalléwing each other up.
The mergers have a direct result on. the workforce because they
eliminate jobs Combined companies have redundant jobs How
many accounting and personnel departments does a single business
need? Mer~gers result in massive Gut placement of middle manage
ment Middle level management iS fired or forced into early retire
ment.
Corporate America may not have many jobs for out placed 50
year old managers, but entrepreneurial America sure does These
experienced managers are a ~ potential source of assistance~ for
the traditional underitianaged entrepreneurial `struëtures.
The challenge here is twofold. First of all, the out-placed manag-
ers need to be educated about the opportunities in the world they
know little about~-small business They need to be trained in the
lean cost efficient management style indigenous to small business
Then the banks have to take women business owners seriously and
fund them as they create new jobs for an idle reserve
Once again, Congress can be of great assistance in providing a
solution We need educational and job placement programs to fa-
cilitate the recycling of these seaeoned managers to help the usual
ly understaffed entrepreneur, and we need incentives with regard
to banks for funding payrolls, expanded to include otherwise un-
productive members for a displaced management community
The final trend I would like to bi ing to your attention is the
entry of housewives to the workforce and the return of women who
took time out of the formal workplace to raise children Tradition
ally, these women woul4 have worked at lower ievels i~~cqrpoi~ate
PAGENO="0128"
122
America, and they would have been asked how fast can you type,
and can you operate the Xerox machine.
But ~s entrepreneurism increases, they are instead starting their
own business, frequently selling the skills they learned in the
home. They sell their housewifery skills. One of my favorite compa-
nies is a company called, "Rent a Yenta" in New York, and it is
housewives that do what housewives do. They will pick up your
grandmother at the airport, throw a party, clean your house, what-
ever ~ou need that is legal or honest, and they have a good busi-
ness.
Businesses like this are springing up all ovei~ the country. House-
wives selling housewife skills to women like me wh~ don't have
time to do it for ourselves Also, cooking skills are sold, and we
have seen many women-owned businesses start in the kitchen.
Usually these businesses are started with very little money,
under $500. Most of these businesses operate from the home.
Once again, these women business owners need assistance. They
need to learn more about business and business-like procedures,
about marketing, and about recordkeeping They need access to
small amounts qf capital.
What can Congress do?
Encourage the banks again. Persuade them to set up depart-
ments specifically oriented to investing in tiny emerging business-
es. I can't think of a better investment. Moreover, we need more
basic business classes to help these women, and the tax laws should
be redesigned to encourage a small business person operating from
her home. There is no reason why she should be penalized because
it is more efficient and cost effective to keep the business at home.
Finally, simplify the paperwork necessary for small businesses
that employ only two or three people. Encourage the small busi-
nesses, because many of the greatest success stories in American
business began in the home. As a matter of fact, Henry Ford began
at home. He started tinkering in his backyard.
In short, these trends, the brain drain of female executives out of
corporate America, the out placement of mostly male middle man-
agers in corporate America, and entry of housewives and full-time
mothers into entrepreneurial America are all challenges which can
be met with basically the same solutions, increased knowledge and
access to capital. You in Congress have the power of authorizing
various agencies to fill these educational needs I have brought to
your attention and of persuading the banks to give, women an
e4ual chance.
You can legislate tax incentives to help small business grow into
bigger ones. As reported to you earlier, by 1990, half of the new
business startups in this country will have been initiated~ by
women. What we need now is to form, conscientiously, an environ-
ment where these enterprises can flourish, creating new jobs and
contributing long-term American benefits to the American ecbnO-
my.
Thank you for the opportunity to bring these issues to your at-
tention.
[Ms~ Scollard's statement may he found. in' the appendix.]
Chairman LAFALCE. Thank you very much.
PAGENO="0129"
123
Next we have Ms. Beth Wray, Preside itt Ôf~Bu$ifles$ and Pthfes~
slonal Women U S A
TESTIMONY OF BETH WRAY, PRESIDENT, NATIONAL FEDERA
TION GI~' BUSINESS ANI~ PROFESSIONAL WOMEN'S CLUBS, INC
[BPW/USA]
Ms WRAY I am the president of the National Federation of Busi
ness and Professional Women's Clubs, Inc I want to thank you for
giving Business and Professional Women U S A this opportunity to
present testimony to the committee on issues certainly of great im-
portance to BPW, women's business issues.
I would like to summarize my remarks and then submit our full
testimQny for the record.
Chairman LAFALCE Without objection, so ordered
Ms WRAY I would also like to commend you, Mr Chairman, for
once again demonstrating yQur commitment to a very proactive ap
proach to the needs of America's small businesses Hearings such
as these really provide all of us, whether it be Government, private
sector, or education in the nonprofit community, *with food for
thought and certainly recommendations for action. I thank you for
that opportunity.
BPW is the oldest, as well as the .largest, organization in. Amer-
ica dedicated. to. the needs of working women. We are 125,000
women and men from across America, business people and entre
preneurs who are in business..
Our role is actually twofold Promoting women's roles in the
workplace and helping business to adapt to the social and economic
climate created by women's changing role One third of our mem
bers in BPW are employed in or are owners of small businesses,
and many others serve these small businesses either as bankers,
computer specialists, accountants, telecommunications experts-po-
sitions of that nature.
As business Women, we deal daily with the impact of the chang
ing labor force and the changing economy on the bottom line As
women, we know our personal reactions to these changes and what
we need from our employers and our Government, as well
As citizen lobbyists, we have a unique, broader perspective bol
stered by research We believe that the systematic entry of women
into the workforce has created a revolution in our economy, our
businesses, and our society Certainly, it is as profound as the
changes brought by the industrial revolution
You have heard throughout these hearings so eloquently today
from my colleague from American Demographics about the increas
ing number of women in the workforce These numbers have had
dramatic effects on businesses in two ways The changing needs of
their changing workforce and a very different business climate in
which to operate~. . .
The American labor force is being transformed by the incorpora
tion of women into the labor force and the percentage of workers
who have parental roles without someone at home to assume full
time family and household responsibilities Because of this, the
needs of families are going to play an increasingly larger role in
recruitment efforts, benefit plans, and productivityincreaseg.
88~-].99O-~88.-5
PAGENO="0130"
124
Employees, and particularly women, can't leave their problems
at home, as their employers might prefer, because, increasingly
there is no one left in the home to take care of family and house-
hold needs. The productivity of the American labor force will
depend on business policies that allow~ for balancing work and
family responsibilities of the mother and the fathers who increas-
ingly share at least some of the family responsibilities.
Demographic shifts as large as these also create new demands on
the economy. Just as the baby boom led to an increase in public
schools, health care services, and the growth of child-related indus-
tries from Gerber, to Mattel, to Walt Disney, the incorporation of
women into the labor force has created dramatic changes in the cli-
mate in which business must operate.
One of the most dramatic consequences' of the changing work-
force is `the growth in business and services once provided by home-
makers, such as child care. The incorporation of women into the
labor force has also made people time'póor and willing to purchase
setvices and products that compensate for lack of time. Cleaning
services, microwave' ovens, VCR's and take-out' and home-delivered
food services have all exploded in response.
The rhythm of life Clso means people no longer shop during
working hours. About 70 percent of households have no adult at
home to shop, go to the bank, pick up the dry cleaning. Stores have
changed their hours, and there has been a dramatic growth in per-
sonal shopping consultants and shopping through mail order cata-
logs. These combined forces have created a climate for American
business in which' they must adapt or die.
For example, if we can take a moment to look at the American
tradition, the Fuller Brush Co., both their products and their `mode
of delivery had to change. Women and men i~oW use Vanish drop-
ins and Scrub Free instead of specialized brushes and elbow grease
to clean their homes. The American woman isn't at home to
answer the door when the Fuller Brush man arrives.
Fuller adapted. It now specializes in beauty care brushes and
sells them by mail with a telephone, order system personed by
female customer sales representatives.
Small businesses have always been the first to adapt to changing
demographic and economic shifts. In this major shift, they are not
different. We know anecdotaUy that small businesses `have made
some of the fastest adaptations to the 1~amily needs of employees.
Our small business women report starting onsite daycare centers,
implementing parental leave policies, and doing flextime arrange-
ments to keep valued employees.
The increasing presence of women as business owners is a major
change. The' women now own an estimated 25 percent of the Na-
t~on's small businesses, and we are the fastest growing segment of
the small business world.
In 1982, despite significant barriers, women-owned firms generat-
ed receipts of $98.3 billion and paid over $37 billion in Federal
taxes.
The policy innovations demanded by changes we have outlined
are as broad and as far reaching as the changes themselves. Not all
the changes are governmental. Many can, must, and are being
made by the private sector itself.
PAGENO="0131"
125
Economic theory indicates that the business sector will adapt to
demographic change given enough time
We applaud those businesses who are at the cutting edge of that
change, such as Hallmark, Payless, Cashways, and others cited in
the May issue of Savvy Magazine as best U.S. companies for
women.
I would also like to submit the article from that issue of the mag-
azine citing these best U.S. companies for women.
[The article may be found in .the appendix.]
Ms. WRAY. Sometimes, American -society does not have that
much time, and it is under those circumstances that Government
needs to intervene, either through provision of information to
make change possible, funding assistance to alleviate the economic
cost of the change, or sometimes direct intervention to set a stand-
ard below which American society will not fall.
The changes we have described create three specific areas these
hearings should address: - - -
The adaptation of businesses to the family needs of their work
ers; the adaptation of businesses to the changing economic climate
created by the massive demographic changes taking place; and the
specific needs of the increasing numbers of' businesses
In the area of family policies, some corporations such as those we
have already cited have been pace setters
Small businesses are also experimenting with creative ways of
providing such services. - -
These private sector initiatives are to be applauded, and we be
lieve more will occur as time goes on.
However, the very posit of efforts by businesses points up a spe
cific need for data and assistance by the Government.
In our continuing research, we have discovered there is almost
no research available outside individual large corporations on
family policies
Most of the information available on which policies work, which
are cost effective, boost productivity, and increase retention and re
cruitment is anecdotal and specific to the corporation doing the
study. - - - - - - -~
It is in America's business self interest to have these answers,
and it is especially in the interest of America's small businesses
These are the first to have to adapt and the last to be abl~ to
afford the research that would help them do just that
Therefore, we propose a study be undertaken under the auspices
of this committee to determine what America's small businesses
are doing to provide for the family needs of their workers, to docu
ment policies which are working, to set up demonstrstion projects
to test various responses to the needs of employees, and provide
quantitative documentation of effectiveness and cost benefit to the
employer, and to establish the number of workers actually covered
by such enlightened employees. -* - -
Because there are cases where specific results are needed~ BPW
continues to support legislative priorities such as the Family and
Medical Leave Act an4 pay equity legislation, and we certainly
hope that members of this cQinmittee will join us in these various
efforts. - -
PAGENO="0132"
126
In the area of the changing economic climate and the resulting
business climate~ we believe data is even more needed.
The pace of thange in our society is not abating. It is now
normal and will continue, but we do not yet understand the full
impact of the changing workforce and the changing family on our
economy.
Today, our small businesses, from which our future large busi-
nesses will grow, are trying to make their way in the most dra-
matically changed economy since the industrial revolution. They
are trying to make their way without a road map.
Imagine how much more productive they would be, how many
more new small businesses would survive, and how many more jobs
would be created if they could have access to the sort of planning
projections currently available only to farsighted corporations.
We call, therefore, for a second study to detail the changes in the
workforce and the economy which will be ~caused by the changes in
the workforce, with special attention to the adaptations which
small businesses must make.
This study should protect workforce changes to the year 2010,
dissect and describe specific economic needs of markets produced
by those changes, and issue recommendations for small business
adaption.
These studies will give small business the edge they need to
make it in our dramatically changing. economy.
Finally, we believe there are policy efforts needed by America's
most dramatic economic force, worner business owners.
We do make progress against all odds, to quote Julian Roe, the
president of NAWBO, and we believe timely information must be
geared on women business owners and accurate information made
available to women business owners about Government programs,
and procurement, and contract procedures.
NAWBO has an jnteresting idea with its women business owner
Federal initiative, and we will be discussing this with them at
length.
Our legislative priority is passage of a law to ensure women
equal access to commercial credit. This right has been guaranteed
for personnel credit since 1974, and it is a disgrace that we do not
have the same, as business women.
We commend you, Chairman LaFalce, for your efforts in this
area and are eager to work with you to pass the needed bill.
The changes facing business, especially small businesses, are pro-
found.
Business, Government, and society can respond with hand wring-
ing, denial, and stopgap measures designed only to meet needs so
pressing they cannot be denied, or we can meet the future with
foresight, a sense of challenge, and see these changes as the oppor-
tunities for progress in economic gain which they are.
We believe the businesses which will survive are those who hit
the latter route, and we are working within the system to forge
that route.
We ask your help to provide the data, the legislation, and the
support needed.
Thank you very much.
PAGENO="0133"
127
[Ms. Wray's statement, with attachment, may be found in the ap-
pendix.]
Chairman LAFALCE. Thank you very much, Ms. Wray.
I want to thank both of you for your excellent testimony. We are
going to have one more day of hearings on the subject of women in
business, and women business owners in particular. Then we are
going to wrap it up and draft a report and legislative recommenda-
tions, which may include the necessity for additional studies and
reports, as some of you pointed out.
But you have been very, very helpful.
I found your testimony informative, interesting, and insightful
and look forward to working with all of you as individuals and cer-
tainly look forward to working with you as president of the Nation-
al Federation of Business and Professional Women.
Ms. WRAY. We would welcome that opportunity.
Chairman LAFALCE. Surely, as I have been working with
NAWBO.
I want to thank you very much.
The committee will adjourn until Thursday morning.
[Whereupon, at 10:40 a.m., the committee adjourned, subject to
the call of the Chair.]
PAGENO="0134"
PAGENO="0135"
NEW ECONOMIC REALITIES: THE ROLE OF
WOMEN ENTREPRENEURS
THURSDAY, MAY 19, 1988
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
Washington, DC.
The committee met, pursuant to notice, at 9:40 a.m., in Room
2359-A, Rayburn House Office Building, Hon. John J. LaFalce
(chairman of the committee) presiding.
Present: Chairman LaFalce; Representatives Hayes and Camp-
bell.
Chairman LAFALCE. The Small Business Committee will come to
order.
Today is the sixth, possibly the last, not definitely, of our present
series of hearings on women's business issues. Women are succeed-
ing in business, but to borrow a phrase from the video presented at
our hearing 2 days ago, they have succeeded against all odds.
In these hearings we have explored the impressive contributions
women can make in a wide variety of trades, once they overcome
skepticism and prejudice. As myth busters, women have become
manufacturers, steel producers, architects, and engineers, owners
and operators of successful businesses in virtually every industry
classification.
We have also examined matters relating to Government procure-
ment for the reason that women have virtually been shut out from
contracting opportunities, receiving less than 1 percent of the Fed-
eral procurement dollar.
Other issues brought before the committee include access to
credit, the changing nature of the workforce, and the effectiveness,
or lack thereof, of public policies and programs designed to encour-
age and enhance women's business ownership.
Our economy needs the talent resident within the female half of
our population, but in order to release those reserves it will be nec-
essary first, to compensate for the cultural and educational handi-
caps suffered by women over the years.
These hearings have indicated that there is a broad perception
amongst women that they lack equality of opportunity, and rightly
so. Socially acceptable roles Of the past have provided little encour-
agement or training for the management or leadership roles
women must assume as heads of their own firms.
Today, we will look to the future. We want to document what is
needed to overcome the feminine hähdicap, prepare women to meet
(129)
PAGENO="0136"
130
the challenge, and maximize their economic potential, and there-
fore, most importantly, the economic potential of America.
We have a prestigious panel of witnesses this morning. We will
hear from Ms. Beatrice Fitzpatrick, president and chief executive
officer of American Women's Economic Development Corporation
[AWED], perhaps the most successful management and training
program ever devised for women business owners.,
Mr. Martin Mayer, the husband of Karin Lissakers [laughter]
and the token male at our six hearings thus far on women in busi-
ness. Incidentally, in his own right he has also been a journalist
and author of best selling books on the American economy such as:
"The Brokers," "The Schools," "The Lawyers," "The Builders,"
"Madison Avenue USA," and others.
I believe yesterday he' `cam~ out with a new book entitled, "Mar-
kets."
Mr. MAYER. Thank you.
Chairman LAFALCE. I expect a free copy for that.
We also have Ms. Esther Shapiro, best known, perhaps, as the
creator-owner and coproducer of Dynasty, winner of the Golden
Globe and People's Choice awards.
Ms. Ann Ascher, president of Ann Ascher, Inc., member of the
President's Council on Private Seótor Initiatives, founder-member
of the Los' Angeles Music `Center, a superb business woman and a
strong influence in promoting women as players in today's econo-
my.
We also `have with us Ms. Laura Henderson who is president of
Prospect Associates, a small business that is growing large, who
will be representing, once again, as our final witness, NAWBO.
I want to welcome them to Washington and express' my apprecia-
tion for their efforts and contributions on behalf of this important
issue.
Is there any member of the panel who has a statement to make?
I do know we have a statement that Representative Silvio Conte
would like to make. He is not here. I ask unanimous consent that
it be put in the record. So ordered.
[Mr. Conte's statement may be found in the appendix.]
Chairman LAFALCE. Before we go `to our regular witness list `and
before we hear the testimony, we also have with us today Congress-
woman Connie Morella. Connie, I am going to ask if you will come
up here for a second, if you would.
First, to' make any statement that you would like to whatsoever,
and second, although Ms~ Laura Henderson will be our last witness
today, she is fortunate in having ~ou as her Congresswoman, and
you might want to say something.
TESTIMONY OF HON. CONSTANCE A. MORELLA, A REPRESENTA~.
TIVE IN CONGRESS FROM THE STATE OF MARYLAND~
Ms. MORELLA. Mr. Chairman, you read that just the wa~y I gave it
to you, thank you. [Laughter.]' ` `
It is a pleasure to be here today before your Committee on Small
Business, and to know that thi~is one~in a long series of meetings
where you have focused on women in small business which is so
PAGENO="0137"
131
critically ~important, and the fact that you have spent the time
doing it indicates your true commitment
Yes, indeed; this ~is a very prestigious panel representing women
entrepreneurs who have done it the hard way and who can share
their experiences and their recommendations for the legislative
body, for Congress to do something about it
Of course, I am. here not only to applaud them and to applaud
you for the hearings and what the results will be, but also because
it is a special honor to always introduce a constituent, and it is a
particularly special honor when you are introducing a constituent
of whom you are so proud and admire in terms øf what she repre-
sents for the entire community of women business owners.
So, Laura Henderson, although you are last listed, when I intrO-
duce you, I know I am talking about what the other members of
the panel have also accomplished in their field
She is president and chief executive officer of Prospect Associates
which she founded in 1979 That is in Rockville, MD, Montgomery
County It is one of the fastest growing health communications and
biomedical research firms in the United States, and it provides
services to the Federal Government, to private industry, and has a
very large staff and sales. All of them have contributed to the eco-
nomic well-being of our area and our country.
In 1988, prospect was selected by Montgomery County as its Out-
standing SmaU Service Firm of the Year It also recently won the
1988 Maryland Award for Economic Excellence, the only one that
is awarded highest recognition, given by the State for economic de
velopment In addition to that, she has been well known in the
business community, has been an especially active spokesperson for
the small business community, and has served on numerous com-
mittees.
Among her unique accomplishments is to have been appointed as
the first woman to serve on the United States Chamber of Com-
merce Procurement Council, attesting to the success of her compa
ny, Prospect Associates She has recently become a member of the
Committee of 200, and this membership, as you know, requires a
woman to own and have control over a business with annual sales
in excess of $5 million.
I know that she is testifying on behalf of NAWBO, a very active
organization of women business owners I am familiar with many
of the people who belong I just wanted to add as an aside, she has
also been involved, as many of the women business owners have, in
trying to do something with child care The Congressional Caucus
for Women's Issues actually issued a child care challenge to public
and private companies throughout the Nation for innovative child
care projects Montgomery County Maryland's Office of Economic
Development nominated Prospect Associates for its innovative
child care, and I think this also indicates another one of the obsta
des, as you mentioned, against Etil odds~ that they must also con
front and try to solve
So, it is my pleasure to introduce Laura Henderson as she re
fleets women throughout the Nation I thank you Mr Chairman
You are doing a good job
Chairman LAFAtCE Connie, would you introduce me all of the
time in the future?. You do a great job.
PAGENO="0138"
132
I know Connie a number of different ways. First of all, as a
Member of Congress. But second, we are both members of the Con-
gressional Caucus for Women's Issues, and you know what we do in
that respect. But we are also members of the Italian/American
Legislators' Club, and if you do not know what we do there, we
have one thing in common. We come from all over the country and
have different perspectives, but we love the same food. [Laughter.]
We get together about every month or so and eat that same food.
Ms. MORELLA. Not only that, we talk with our hands. [Laughter.]
Chairman LAFALCE. Connie has many credits that she can point
to, but 1 think she should be most proud of the fact that despite the
fact that she is from Maryland, the Italian/American organization
in the city of Buffalo, NY, where I come from, this past year hon-
ored Connie Morella, by coincidence, as their Woman of the Year
and gave her the Queen Isabella Award. [Laughter.]
I would be very remiss if I did not do one other thing. Since
Connie is introducing her constituent, I have a constituent in the
audience tonight, and I had the pleasure of having dinner with her
and her husband last night, Ms. Marilyn Holinbrook who is here
watching her first congressional hearing. Marilyn, welcome.
With that, it takes a lot of time for Congress to get to business
doesn't it? Let us get to business, and let us have as our leadoff
witnesses, the star of this morning's USA Today publication with
her picture on the front page of USA Today, both of you. Oh,
Esther was on the front page and you were on the inside. Oh well,
what are we. going to do about that Bea? I'm sth~prised at you.
* [Laughter.]
* Ms. FITZPATRICK. I defer to a better woman.
Chairman LAFALCE. We're still going to have you lead off, Bea.
Ms. FITZPATRICK. Thank you.
Chairman LAFALCE. I had the pleasure of coming to know Bea, I
think it was in 1980 when, at that time, we were working on
women's issues and women in business in particular.
Ms. FITZPATRICK. Were those the last hearings that were held on
that subject?
Chairman LAFALCE. Until I became chairman of the full Small
Business Committee, right. [Laughter.]
Ms. FITZPATRICK. Things have changed in the last 8 years.
TESTIMONY OF BEATRICE A. FITZPATRICK, PRESIDENT AND
ChIEF EXECUTIVE OFFICER, AMERICAN WOMEN'S ECONOMIC
DEVELOPMENT CORPORATION, NEW YORK, NY
Ms. FITZPATRICK. My name is Beatrice Fitzpatrick. I'm president
of the American Women's Economic Development Corporation, a
nonprofit corporation which was founded in 1976 under a grant
from the Federal Government, U.S. Department of Commerce Eco-
nomic Development Administration.
I would like to thank Chairman LaFalce for his very deep and
sincere interest in promoting the welfare of women business
owners, because he has the vision to understand the importance
that women business owners hold for the growth and development
of small business in our country, particularly in the coming centu-
ry.
PAGENO="0139"
133
We also would like to thank the committee for its past support of
our organization and for making our existence possible.
All over the world today, nations of every political persuasion,
nations as diverse as African countries, Sweden, Russia, China, are
urging their citizens to become entrepreneurs. Whatever their po-
litical persuasion, they cannot deny the economic benefits of an en-
trepreneurial economy.
At the same time this is going on all over the world, in the
United States there has been a phenomenal growth of women as
small business owners. We all know that women started in the last
20 years going into the workplace in increasing numbers, and as
they have gone into the workplace, been forced to go in, in order to
support their families, they have come to learn or feel that the best
way they can solve their socioeconomic problems is to go into their
own business. There is nothing unique about this. Waves of immi-
grants from all over the world have come to this country and come
to the same conclusions, and helped enrich this Nation.
Women who are native Americans in the sense of participating
in business at the level of their ability are really equivalents to the
immigrants who came to these shores. These women are coming
from a different culture, a different kind of understanding of life
than people who have been in business for a long time would have.
They come with great skill, they come with great talent, they come
with energy. These are not alienated people. These are not people
who feel hopeless. These are people who are full of hope and
energy for themselves, their families, their Nation, and the future.
The things they bring with them are incredible talent and the
ability to do something particularly well, well enough to make
them feel that they can overcome all the obstacles that have exist-
ed for women as business owners in our country and succeed. They
are driven by necessity. They are driven often by desperation. They
are women of all kinds. You have minority women who feel that
the only chance they have to work at the level of their ability is to
go into their own business. You have women who are displaced
homemakers, who stayed home, and raised a family, and suddenly
find, after having done that, that they must go to work in order to
survive, and they have been out of the workforce so long they
cannot get a job anywhere near their level of skill or ability. There-
fore, they come to the, conclusion that opening their own business
is the only way for them to work at the level of their potential,
which after all is the American dream, that people get the opportu-
nity to work at the level of their potential.
You have younger women who are single heads of households,
and are raising children alone, and who feel, OK, if I have to raise
the kids and make a living for them at the same time, I will start a
business in my home, keep one eye on the kids, and one eye on the
business, and support us in that way.
Then you have women who have reached the top level in their
corporations, women of extraordinary achievement in the business
world, who are deciding that the only way they're going to get the
authority, responsibility, and financial reward which they feel
they're entitled to, is to go into their own business~ So, from all di-
rections in American life, women are coming to the conclusion that
small business ownership is the answer to their problems.
PAGENO="0140"
134
This is an exciting development for our country, because every-
one knows that the majority of new jobs are created in small busi-
nesses. With large corporations downsizing the way they are and
are going to continue to do, the hope for new job creation in this
country is with small business.
Now, if the most important new factor in the picture of small
business ownership in this country is this emergence of women,
this drive and determination of women to realize themselves, to
take advantage of the American dream and make it their own,
then the country has an obligation in its own behalf to pay atten-
tion to what is going on and to see what can we do to support and
assist this exciting movement.
It is our experience that the thing women who are going into
business want the most is training in the business end of business.
Most women come into business knowing the creative end of their
business and are highly skilled at it. They have had very little op-
portunity to learn the business end of their business.
Almost every woman who has ëome into our training program is
terrified of finance. Now that is not genetic. You are not born
being afraid of money. Something goes on in this culture that says
to women it is not feminine for you to worry about large sums of
money. It is not appropriate for you to do this. We have helped
45,000 women in every one of the 50 United States since our found-
ing in 1976, and if most of the women you see are afraid of money,
this is something that society does. Women need an opportunity to
learn everything about financial planning and control which they
have to know to run a small business.
To allow women to go into business ownership with all the poten-
tial they have for economic expansion and not teach them the rules
of the game of doing business' is like sending young people out look-
ing for jobs without having learned how to read and write. To me
it's the exact equivalent.
So, if anyone is very serious and concerned about the potential
for our economy that women offer, it is incumbent on us to provide
the information and knowledge that they need to succeed in bnsi-
ness. We are not saying here is some poor decrepit group of people
who have no skill, no talent, and give them some kind `of a welfare
program to make it possible for them to live. We are saying here is
extraordinary talent. Here is extraordinary energy. Here is ex-
traordinary potential for our country, not only economically, but
socially. Give them the tools they need so they can function at the
level of their ability ,in the same' way we say we want' this for all
people.
Therefore, we ask that the Congress of the United States begin to
make money available, and not only money, but support programs.
Now, we used to be totally federally funded. We don't get one
penny of Federal funds at this time. That's fine. We are doing a
good job. We could do 10 times as much as we are doing with a
little bit of Federal support.
We urge the Federal Government to make the kind of training
that we have developed with the support of the Federal Govern-.
ment, available to women all over this country. The return on in-
vestment will' be incredible. Women in our program create an aver-
age of 2.2 new full time and 2.3 new part time jobs over the
PAGENO="0141"
1~35
number of employe~s t~y had before they came into our training
program Their sales increase over 121 percent Their profitability
increases
What happens to their families and their own self image and the
contribution they make to the community is multiplied Women
are undertaking to help other people who would otherwise have to
go on welfare or have to get helD themselves. So, the Investment in
helping women be successful in business is one of the best invest-
ments this country can make~
We have developed a proposal requesting $4.5 million from the
Federal Government and pledged, as a condition of that money,
that we will raise an equal amount, $4 5 million from the private
sector, and ?et about $14 thillion in contributed goods and services
from the private sector, in order to establish regional management
training and technical assistance centers for women all across this
country.
To ask for the establishment of four regional centers for women
business owners in a nation of our size is~-
Chairman LAFALCE; Just a second, Bea.
The bells have just rung indicating that there is an extremely
unimportant vote, a motion to approve the Journal. That would
delay our operations by usually at least 20 minutes, so I would
think the other Members would want to go make the vote I am
making the deliberate judgment that I am going to miss that vote,
that this is more important, and we will just continue You can join
us when you. will.
If any reporter here wants to criticize me for an absentee voting
reco~'d, it is a question of priorities.
Ms. FITZPATRICK. The women of this country will thank you.
[A short recess was taken.}
Chairman LAFALCE. Please continue.
Ms FITZPATRICK We think the establishment of four regional
management training centers, one in the Northeast, one in the
Midwest, One on the west coast, and one in the South, is the mini
mum that the Federal Government coi~ild do to make this kind of
training available nationally We would, over a 3 year period, serve
67,000 women in a variety of programs, and they in turn would
create and maintain a minimum of 22,000 jobs so that the cost to
the Federal Government of this program would be $67 per woman,
or $217 per job created or maintained, which is by far the cheapest
job creation and maintenance program that the Federal Govern
ment or any other Government supporte
I think women would ania~e you with the results that they can
achieve with relatively minor investment, but serious, well thought
out investment, in their successful future We would like to work
with you to make possible the harnessing of the private sector and
the public sector in a partnership to support this movement of
Women into business ownership
We urge Congress to take this very seriously We ask you to do
this, not just as a favor to the women of this country, but as a
favor to the people of the United States, and to the growth of our
economy, and to the support of the entrepreneurial foundation of
our country and its successful future for all its citizens
Thank you very much~
PAGENO="0142"
136
[Ms. Fitzpatrick's statement may be found in the appendix.]
Chairman LAFALCE. Thank you very much, Ms. Fitzpatrick.
Our next witness will be Mr. Martin Mayer.
Mr. MAYER. I have no statement to distribute to you.
Chairman LAFALCE. You have never been at a loss for words.
Mr. MAYER. You said I was the only man testifying in 6 days. As
men will--
Chairman LAFALCE. Against my will, but at Ms. Fitzpatrick's in-
sistence. Come tutti gli uomini, as your caucus n~jght say. I have a
tendency to give personal statements anyway, and this is a person-
al statement, and therefore, I don't think that important to get ab-
solutely exact On the record. It is by nature background, but in this
matter I think background is extremely important.
TESTIMONY OF MARTIN MAYER, JOURNALIST/AUTHOR, NEW*
YORK, NY
Mr. MAYER. My name is Martin Mayer. I write, mostly about
business subjects and banking these days. I have had two connec-
tions with Government. In this decade, I was a member of Presi-
dent Reagan's National Commission on Housing, and back in the
1960's, for 6 years I was a member of the panel on Educational Re-
search and t~evelopment in the Kennedy and Johnson White
House.
The connection I have with Mrs. Fitzpatrick goes back to those
days when I was chairman of the local school board on the east
side of Manhattan, and she was president of the PS-116 Parents
Association. It was by some margin the best parents association in
the district, indeed, quite possibly in the city. When she became co-
ordinator of the Head Start Program, also in the 1960's, she ran
the best Head Start Program in the city.
There are very few people in the world who have really interest-
ing ideas. That is sort of sad. One runs around and one interviews
a lot of people, and interesting ideas are not there in great quanti-
ty. Of the small cohort of people who have interesting ideas, there
are even fewer who have the wit, and the drive, and the moxie to
carry them out. Mrs. Fitzpatrick has done this repeatedly in differ-
ent contexts, with different human, financial, and physical re-
sources, actually within my sight. I've seen her do it.
One of the things that banking and politics have in common, it
seems to me, is that in both of them you really have to place your
bets essentially on individuals. One of the things that recommends
AWED to me is that Bea gives you unusually short odds that the
money will be well spent and that results will come out of it.
It is. a remarkable experience to go into an AWED gathering.
The room absolutely crackles with energy. When you see it, mci-
dentally, in a big ballroom in one of their annual big meetings
where you may have a couple of thousand women, the energy is
almost too much for the room to contain. There is a vast variety of
womankind in the room, all races, all creeds, all colors, all shapes
and sizes, all ages, and all ambitions. They are there for a purpose.
You have a wide variety of talents present, too. They are concen-
trated and they are demanding.
PAGENO="0143"
137
It can be said, I think, that when they come to AWED, they
know what they need, and they have gotten past the stage, most of
them, of knowing only what they want. Therefore, they are much
more responsive, and they are much more able to grasp what is of-
fered.
We are dealing in these rooms with people's dreams, but you are
dealing with people's dreams in a second stage after they've had to
become hard headed about it, because they found that while they
may have dreams, dreams don't get you there. You're going to need
a wide variety of skills. You're going to need things that you didn't
know you needed when you had the dream and when you started
to think of yourself as someone in business for oneself.
One of the fights that Mrs. Fitzpatrick's board has had with
her-we've had several over the years-was over our insistence
once that she start an alumni group and ding dong her graduates
for money. If we were going to go out and try to help her raise
money from foundations and from corporations, there had to be a
demonstration that the people who had been through the program
were willing to contribute and were willing to make this statement
that what they had gotten from it was worthwhile.
Mrs. Fitzpatrick remembered these women essentially as they
were when they arrived in the program. They were people who had
a struggle. They were sweating through the rudiments of account-
ing. They were laboring with the mysteries of merchandising. They
were absolutely consumed by their own needs, and they were
people who needed a lot of help.
What we said was, well if they've got the help they're over some
of that now, and they should be grateful, and they were. Letters
went out and checks poured in. The group had done better than
Mrs. Fitzpatrick thought. Many of these people, indeed, were not
struggling any more. They were successful, they had businesses, it
was operating, and they were delighted to help their successors. As
she said at breakfast, the one mailing brought in $69,000. it is not
that much money, but this was still a relatively immature organi-
zation. It still has only a limited number of graduates, and we are
not talking about people who can give in the thousands mostly.
You are talking about people who sent $100 here and $50 there be-
cause they had it, they wanted to make a gesture, they wanted to
help the others who were coming along.
She did better, in fact, than the colleges do and the colleges have
been working on alumni associations for years. We are still push-
ing her to work on the alumni. It takes an investment. This has
been a bare bones shoe string operation which has not been able to
make a major investment in this sort of fund raising. But every
time it has called upon alumni, every time it has called upon the
people who have been through the program for their assistance, it
has had a demonstration of its. own success from that call which is
very impressive and rather moving.
You mentioned, Mr. Chairman, cultural and economic disadvan-
tages that a number of women have had, and one does indeed feel
this. But I would like to say that from a public policy point of view
one of the major attractions of AWED it seems to me, is that it
does not require credentials. There are fewer and fewer institutions
PAGENO="0144"
138
in this society, there are fewer opportunities offered to those who
want to come along and try to take them.
When I was in the education business, I was increasingly dis-
turbed, and I am still, though thank God I have got: off that fly
paper, at what had happened in this country to change the image
of education from one of an educational ladder that people could
climb, to one ~of. educational barriers that kept you `out:öf things if
you didn't have the proper credentials. This has `happened in our
lifetime. It is bad for the schools, it is bad forthe soci~ty.
There have been fewer :and fewer opportunities for battl~field
promotions in this country~ You eannot get into corporate training
programs without certain pieces of paper. What these pieces of
paper require primarily, they also take a certain amount of brains,
and skill, and talent, but what they require primarily `is what we
used to call `sitzfleisch, the ability to sit down und take instruction,
and be a good boy or girl, and hang' around and follow the rules of
some educational institution, rules Which are made for an average.
If you don't fit into that mold andY you leave, there is a punishment
which you are told all the tithe that may follow yo~ the rest of
your life. AWED does not ask about people's crede~itials. It offers
an educational ladder. It offers an educational ladder that is tai-
lored to something that people want, that they know the~ `want,
and that they will work for. It is unthreatening. You don't~have an
examination at the ends It is unfake. It's not something Where you
have to accept somebody's assurance that if `you do A, B will
happen to you, which may or may not be true since really all any-
body can do is teach What somebody learns remains his own busi
ness. So, the central fallacy of ~ducational theory is that' because
you teach it, people `learn it. They may or they may not, and the"y~
may learn something quite different from what `you are teaching.
These people, as I say, know what they need, so they know what
they have to learn, `and they are very helpful to those who advise
them and counsel them. The role of counseling In what AWED does
has been enormously important, and the fact that the counselors
are themselves practitioners, people who are active i'n the business~
es that these people want to go into. This means you' get an effi-
ciency which is quite unusual in an educational enterprise as a
function of how people get into these things.
What you learn is validated by your perforniance, which is the
best way to learn. It's the way you learn how to play a musical in-
strument. It's work. You have a certain number of failures. But if
you feel yourself getting better you have this increase in energy.
One of the reasons that I think there is `this kind of energy in the
AWED operation is people sense that if they do what they're work-
ing at they get better at it, and that is, after all, What they are
there for. There are no artificial criteria. You really can make
measurements of your own performance in ways that are unusual
in more formal structures.
I believe in education, but it does have ` awful empire-building
tendencies, and it has a tendency toward self-satisfaction, and it
has a tendency to measure inputs rather than outputs. One of the
nice things about AWED is that it really is, `if one may use an
awful sort of cliche, output oriented. It is for real.
PAGENO="0145"
139
To some extent Bea lucked into this, because she couldn't afford
anything else. She couldn't go out and buy teachers, she couldn't
go out and buy educational expertise. She was reliant upon volun-
teers to come in and help these women, and upon the experience of
the volunteer that this was something they very mach wanted to
do.
You started off by making a virtue of necessity, and it turned out
that you were making a virtue of a comparative advantage. The or-
ganization is now committed to it, and one of the things it is not
asking money for is to pay people to be professional trainers. They
have a certain number of people you have to have, obviously, to co-
ordinate programs, but the important work is going to continue to
be done by volunteers.
When you talk about private/public sector there is some tenden-
cy to think gee, it's money. But it is not money. It is a matter of
the will to do something.
Finally, I feel strongly that not only is there the larger scale eco-
nomic value of having women go into entrepreneurial situations,
there is also, in this country, a deep and growing need for neigh-
borhood enterprise, for locally based enterprise. I gave a talk on
Monday of this week to the Shopping Center Convention out in Las
Vegas-24,000 people registered in that convention. I guess there
was a black face or two. There were a handful of women. Basically,
the people who are developing and working in shopping centers
were my hosts, and they are good guys, and one is not trying to
stand in the march of progress, but one of the things shopping cen-
ters do is that they make the neighborhood enterprise more diffi-
cult. It is a danger to this society.
We need something that feeds in neighborhood enterprise, feeds
in neighborhood stores, feeds in neighborhood service operations.
One of the advantages that you get from tapping into this commu-
nity is that women are more tied into this neighborhood, as against
the traditional male situation where people leave the home, and go
elsewhere, and return at night. This provides an opportunity to
participate in the revitalization of many of our urban neighbor-
hoods that are now deeply troubled.
So, it Seems to me that there is a public policy issue that does
transcend some of the economic things, that we are talking about.
We have seen that in what Bea has done in New York. What you
get from it is a modern version of the yeomanry which was so im-
portant in the development of the theory of this country's Govern-
ment.
I think this should be part of your deliberation and consideration
when you think of where the Small Business Administration,
indeed, the Congress should put money. There are great resources
of women who want to be in business, want to have their own shop,
and as a freelance writer I have this strong feeling anyway for
people who do not wish to be responsible to large organizations and
want to go do their own thing.
This organization has been quite a spectacular success in New
York and in the outreach that it has done. The question of whether
it can be generalized geographically is something that you cannot
answer until you try it. I think you have to do it one step at a time.
PAGENO="0146"
140
Bea is asl~ing for four centers. If we could get funding for one or
two for the first year, I would, as a member of her board who does
not wish to see her drop dead traveling around; be just as happy.
But I think you have to get started with it. I think you have to
move one step at a time, see how many times you can clone the
Mrs. Fitzpatricks of this world, how wide the span of this sort of
effort is, how large a cadre of volunteers for this very exciting work
you could find in. various places in this country. It isn't much
money. It would be, to a large degree, supported by the private
sector. And yet, as so often happens, without some sort of push
from this remote center of the country, it gets to be more difficult
to do. I should think it would be worth your efforts to move it
along into its next stage.
Thank you.
Chairman LAFALCE. Thank you very, very much for your re-
marks.
I was going to go iii order, Ms. Shapiro, Ms. Ascher, and then Ms.
Henderson. Ms. Henderson, you have to leave by 11:15, is that cor-
rect?
Ms. HENDERSON. 11:15 or 11:30.
Chairman LAFALCE. Then we probably still can go in order.
Our next witness is Esther Shapiro who was on this morning's
front page of USA Today. I have in front of me an article, the front
page, of New York Magazine not too long ago. Esther Shapiro and
her empire. The real star of Dynasty. Ms. Shapiro is surrounded by
Linda Evans, John Forsythe, and Joan Collins. They, of course, are
relegated to the background. [Laughter.]
We are delighted to have you with us, Ms. Shapiro.
Ms. SHAPIRO. That article really spoke about the entrepreneurial
side of me which is what I thought you might be interested in~
TESTIMONY OF ESTHER. SHAPIRO, CREATOR-OWNER/COPRO-
DUCER, AARON SPELLING PRODUCTIONS, LOS ANGELES, CA
Ms. SHAPIRO. Mr. Chairman and members of the committee, I am
both honored and grateful for the opportunity to be here this
morning, and to speak to you on the subject of women entrepre-
neurs and their economic potential.
I am pleased to be able to introduce myself to you as a woman
entrepreneur, one of more than 3 million in our country. It is a
designation I take pride in.
I am heartened by the fact that every year there are thousands
of women newly adopting that title, and I hope that thousands
more will have the same chance because of the work of this com-
mittee.
I am reminded of how 28 years ago at the beginning of my
career, I attended my first general meeting of the Writers Guild of
America. I looked around the hall at the membership present,
about 2,500 screen and television writers, and it did .not escape me
that the vast majority were men. Only a handful were women. I
was young. I had, I think, even then an entrepreneurial spirit that
was a gift from my immigrant parents. Or, perhaps, it was just the
damn fool fearlessness of youth. But for whatever reasons, I en-
PAGENO="0147"
~14~i
tered what Was tru~i~~ i~n's world :wjth~üt a setise of~1in~iithtjons,
and with my husband Richard, I went to work
I created stories focusing on the besiGged Teenage a1coho1i~s,
battered wives, victims of racial hatred Later as ~ vi*~e president at
ABC, one ~f the few female vice ptesidents at a major network at
the time, :i was the executive in charge of deve1opi~ig such projects
as "Women's Rooxn,'~ "Masada," "Friendly Fire," "East of Eden,"
"Ike," "Inside the Third~Beich," ai4 "Winds of Wa r."
I left the network to become cocreator, coexecutive producer, and
most important, coowner of Dynasty, oiie of the most popular
dramas in the history of television, seen weekly by an audience of
150 million people worldwide
During this period~I becan~e the~ seniOr vice president of Creative
and Corporate Affairs for the largest independent production corn
pany in Hollywood, with whi~ch my compth~ty was partnered This
past television season, I served as executive producer on the pilot
for Heartbeat, a 1~ho~ur drama about a group of female physicians
who run their own clinic All told, I have been involved in the de
velopment of over 500 hours of creative product
Chairman LAFALCE. Do we think that pilot is going to~be a, regu-
lar run?
Ms SHAPIRO It has been on for 6 hours now, and I 1~hmk we will
find out by Friday.
Chairman LAFAI~OE. Great. I haven't ~en it. I hope I have the
opportunity~
Ms SHAPIRO That show was, incidentally, inspired by my asSo
ciation with Bea Fitzpatrick in which I saw a number of women's
clinics springing up acrossihe country, and S~ràh' Davidson, the
noted novelist, had the notion, and together we fought that one an4
got it on the air.
Chairman LAFAL~ii~ As soon as I saw that Dynasty had an audi
ence of 150 million-~..--
Ms SHAPIRO A hundred networks
Chairman LAFALCE The ne~~t time you need a walk on, a Con
gressman walking on somehow, I just wanted you to know---
Ms SHAPIRO President Ford and Henry Kissinger were very
pleased to do it, and they did it
Chairman LAFALCE As president of the College Dramatic Socie
ty. [Laughter.]
Ms SHAPIRO They did it at scale Ver7 cheap, $825
Chairman LAFALCE I~m very cheap Ill do it for nothing [Laugh
ter.]
Ms SHAPIRO Today~ there are no longer the numerical dispari
ties evidenced years a~o Many women have begun to play impor
tant roles in the entertainment industry Po cite a few, Marcy
Carsey is coexecutive producer and coowner of the Cosby Show,
which has already earhed more than $800 million in syndication
sales, the highest in television history Suzanne DePasse is presi
dent of Motown Productions Sherry Lansing is coexecutive produc
er of Fatal Attraction, a theatrical film that has grossed more than
$150 million to date Dawn Steel is currently president and head of
production for Columbia Pictures
But such Success Stories do not reflect the entire picture, I'm
afraid, Thereiia~~stjll never been a fe~naie president of a network
PAGENO="0148"
142
television division, and the chances of one emerging are slim. The
number of actual owners or ~chief executive officers in the enter-
tainment business is equally disheartening. Men still decide to a
large degree what the American public watches in movie theaters
and on television This is particularly ironic in light of the fact that
women comprise 52 to 54 percent of the national population,. and
that the 18- to 55-year-old female viewership is the demographic
most eagerly sought by the networks and'advertisers.
I was asked to be the keynote speaker M the annual American
Women's Economic Development Conference. 2 years ago.. Frankly,
I didn't know what to expect. I had read with great interest the
AWED charter, and I was fascinated with their `goals and~ inten-
tions, but nothing could have prepared me for what I was about to
witness, Mr. Chairman.
It is hard for me to relate today the feeling that I got when I
looked out into that gathering of nearly 4,000 female entrepre
neurs, sensed their dedication to the very best ideals of the Ameri-
can business community, and felt their commitment to being a con-
tinuing and growing part of that community.
I had spent much of my professional life in pursuit of that elu-
sive commodity called a hit, and I knew almost instantly that
AWED was an organizational blockbuster.
When I was asked to join the board of AWED several .months
later, despite the geographical distance-I live in California-a
husband, two children, and a production company, it was an offer I
couldn't refuse.
Here was an organization that paralleled my own beliefs and at-
tempts to help women to become the best professionals they could
be. Here was an organization which benefited women from every
walk of life, not just those who went to Ivy League schools or were
born to wealth, but those who, based on ability alone, had the po-
tential some day to become leaders in a wide variety of fields. Here
was an organization that exploded the myths and put the lie to the
stereotypical attitudes that say women can't add and subtract, that
they're afraid to take risks, that they're not strong enough to com-
pete in business, that tears are a sign of instability, that women
need to be taken care of by men or Government.
Women, by virtue of their management of the family, the house-
hold budget, the moral values of the home, were already halfway to
becoming good business managers. Here was an organization that
trained women to market their ideas, their products, their skills, to
deal with cost structures, and cash-flows, and the complexities of
business life. I had participated in their workshops and found them
exhilarating. The staff, headed by Bea Fitzpatrick, was superb.
Most impressive of all was AWED's stunning recordof success.
While the national rate ~of small business failures in the first. 5
years is a disheartening 4 out of 5, here was an organization that
had fewer than 5' failures for 1,000 women trained. Here was an
organization with a pilot program that could help women across
the country become business people, entrepreneurs, more produc-
tive Americans.
Inherent in AWED's hope for the advancement of women is our
belief that our success will not be a female success, but rather a
human one. We want that success to come not at the expense of
PAGENO="0149"
143
men, but rather as a result of a partnership between men and
women. It is my hope that the partnership and the values that
AWED espouses will be part of a new movement, one for the 1990's
and beyond, which will create new possibilities for millions, men
and women, who can't see their way to them now.
The writer of Ecciesiastes urged that, "Whatsoever thy hand fin-
deth to do, do with all thy might." As women, we have used our
hands to bathe our children, to help our husbands, to soothe the ill,
to minister to the wounds of war. What we now ask is for the op-
portunity to use our hands to help ourselves as well.
What we are asking for from this committee and from our coun-
try is not a handout, but a hand up. "Give me a fish," it is said,
"and I will eat for a day. Teach me to fish, and I will eat for a
lifetime."
We greatly appreciate the initial help AWED has had from Con-
gress, and we have already gone into the private sector and found
additional funding, but more help is needed if this program is to be
expanded and if women across the country are going to be taught
to fish the abundant waters of American business. Women need
the continued help of organizations like AWED, and AWED needs
the continued and now extended financial support of Congress.
With that help, the story of women's entrepreneurship in the
1990's will be the accounting of a great multiplier effect through
which women build on their achievements of the past to create new
opportunities for themselves, for other women, for our country, and
for the world.
Thank you very much.
[Ms. Shapiro's statement may be found in the appendix.]
Chairman LAFALCE. Thank you, Ms. Shapiro.
Our next witness will be Ann Ascher, president of Ann Ascher
Inc., I believe of both Los Angeles, CA, and Washington, DC, and a
member of the President's Council on Private Sector Initiatives.
Ms. Ascher.
TESTIMONY OF ANN ASCRER, PRESIDENT, ANN ASCHER, INC.,
LOS ANGELES, CA
Ms. ASCHER. Thank you and good morning. It is a pleasure to be
here today.
American women represent one of our country's most underuti-
lized assets. If their talents, energies, and skills can be properly
harnessed, women entrepreneurs could form businesses, employ
people, and add to the capital base and tax revenues of our Nation.
Already, we see this phenomenon occurring. Women owners rep.
resent a large number of the new businesses being created today.
However, many are doomed to failure. They bring creative ideas,
energy, and enthusiasm to their business formation, but many to-
tally lack comprehensive business skills. They are thus unable to
compete in today's sophisticated and fast paced business climate.
If women choose to become entrepreneurs, they must compete in
the world as it is, and not in the world as they would like it to be.
Thus, I urge the Committee on Small Business of the Congress of
the United States House of Representatives to provide funding to
form public/private partnerships with the goal of providing nation-
PAGENO="0150"
144
wide high quality, comprehensive, long-term management training
and technical assistance to women entrepreneurs.
Without such structured programs, just throwing money at the
problem of women business owners is a waste. In the long run,
such public/private partnerships are a bargain. They result in suc-
cessful businesses, new jobs, capital formation, and tax revenues.
For this purpose I strongly endorse AWED, a New York-based
nonprofit, which has been successfully training women entrepre-
neurs for over 10 years.. It has been a pioneer in an 18-month tech-
nical assistance program as well as a business roundtable program
for businesses annually grossing over $1 million. Its yearly confer-
ence on entrepreneurship has attendance of over 3,200 women, rep-
resenting 3 countries, 37 States., and 757 cities and towns across the
United States.
AWED would successfully instilute and augment such a pro-
gram. It also is well-connected to the private sector, since it is es-
sentially privately funded.
I firmly believe that the private sector must be the leader in this
endeavor, for the . private sector knows what business is all. about
and has tremendous benefjts to reap if more successful businesses
form in our country. However, the private sector needs the help of
the public sector in providing some funding to accomplish such
technical assistance.
As an example of positive benefits for the private èector, a bank
that supports a management training facility with funds and prac-
tical experience has a tremendous return on its investment when
these women-owned businesses are successful and bank at their
bank. That original investment can pay dividends for decades to
come from more than just one original entrepreneur.
The public sector's benefits accrue from having more people em-
ployed and increased tax collections. This is a positive partnership
for all, and I cannot underline that enough times.
As we approach the last decade of this century, let us harness
the skills, talents, and energies of our population. This is a great
country that must be competitive and productive to be number one.
I can think of no better natural resource than our American
women, who can and will add to the strength and fiber of Ameri-
can businesses in the 21st Century.
Thank you.
Chairman LAFALCE. Thank you very much, Ms. Ascher. I certain-
ly applaud your call for a public/private sector partnership with
respect to the promotion of women in business. I know that in your
testimony you speak, number one, on your own behalf, and number
two, as a member of AWED's board~
When I said earlier that .1 anticipated that this would be the last
hearing, perhaps, what I had in mind was if the council to which
you belong, the Council on Private Sector Initiatives, as a council
believes that there should be some private/public sector partner-
ship in this endeavor, we would have a new hearing, to hear the
official position of that council, or if some representative of the ad-
ministration such as Viôe President Bush ~would wish to call for
such an initiative. We would surely be glad to have another hear-
ing for him or a `representative. .
Ms. ASCHE1~ Thank you very much, Congressman.
PAGENO="0151"
145
~ Chairman LAFAI~CE.~ Thank you. * ~ ~
Our last witness is going to be Ms Laura Henderson on behalf of
the National Association of Women Business Owners At this time
I would be remiss if I didn't say that our first witness at the first of
the six hearings, was the president of the National Association of
Women Business Owners, Ms Qillian Rudd, who is also in attend
ance today, It was Ms. Rudd and NAWBO who were the prime
movers in suggesting these hearings I am very, very grateful and
indebted to them for all the work and assistance they have put in
to making these very successful hearings.
Ms. Rudd, Ms. Charles, the counsel. I also see in the audience
someone who I'm sorry we didn't have testify because she has testi-
fied before. Congress so often in the past . on so many different
issues Since I see her here, I will recognize Ms Virginia Littlejohn
whose counsel on these and other issues has always been invalu
able Surely, Ms Littlejohn, if you have any personal statement
that you wish to make, we would keep the record open for you to
submit it at any point in time
With that, the mother of a 3-week-old----
Ms. HENDERSON. A 4-week-old.
Chairman LAFALCE. Congratulations.
Ms. HENDERSON. The sleepy, mother of a 4-week-old.
Chairman. LAFALCE, ~Ms. Laura Henderson.
TESTIMONY OF LAURA HENDER~ON, PRESIDENT AND CHIEF EX-
ECUTIVE OFFICER, PROSPECT ASSOCIATES, ROCI(VILLE, MD,
ON BJ~IIALF OF THE NATIONAL ASSOCIATION OF WOMEN BUS!
NESS OWNERS
Ms. HENDERSON. Mr. Chairman, members of the committee. it is
a pleasure to appear here today on behalf of the National Associa
tion of Women Business Owners, and I share some of the pleasure
of being at the table with Bea, who is an honorary member of
NAWJ3O and shares many of the same beliefs that we, as an orga
nization, do, and the strength of the woman entrepreneur
As you have heard, I am president and chief executive officer of
Prospect Associates We are a company that dQes health communi
cation and biomedical research for both the Federal Government
and the private sector.
Prospect employs over 150 people, and we are a very fast growing
company We have average growth in the last 8 years of 85 percent
minimum a year Our sales last year were over---
Chairman LAFALCE Are you public yet?
Ms. HENDERSON. No; I still own all the stock. I keep saying we're
a high-risk company.
Our sales last year were over $7 million, and we anticipate sales
for next year of over $9 million I, being the optimist, think $10
million, but I only publicly say $9~
I am here today to present ±`~AWBO's recommei~dations, and
these recommendations are recommendations that affect women
business owners, and recommendations on issues affecting the
entire business conunulaity But I am also here as a tired mother of
a 4 week old because of my own personal feelings about the contri
bution that women can make to: the future Of our country. Our
PAGENO="0152"
146
country needs new ways of doing things. We need innovation and
creativity. We need an emphasis on quality. We need to ack~owl-
edge as a country the changes that have occurred in our economy
and our workforce.
We are now a world economy. We have moved from an economy
of products to an economy of services, based, quite often, on knowl-
edge. Today, as entrepreneurs and as people who run businesses
and people who manage, we must manage today for work we'll do
tomorrow that we don't even know about. We must be able to
change constantly, to move, and to provide the latest and the high-
est technology.
As we look to the 21st century, we look to a very different work-
force. We look to a workforce where women, minorities, and immi-
grants will play a much more important role. We look to a work-
force that is much smaller. We move, as employers, from a buyer's
market, I think, to a seller's market. We are beginning to already
feel that squeeze. We are moving to an era where our workforce
may not be trained and may not be ready to deal with the issues
that we, as employers, need assistance in. So, we must be willing to
train, retrain, and educate.
We hear a lot about the disadvantages of women and the prob-
lems we have, because we don't know the way men do it. I person-
ally believe that in our current climate, that is the best asset that
women are bringing to the market. John Nesbit has said that
women will play an important role because we have not had the
creativity and innovation bred out of us.
Women are managing their companies differently. Many com-
pare our style of management to the Japanese successful manage-
ment approaches. I compare our style of management to the old
American way of doing things that somehow got lost and the Japa-
nese adopted.
I know that in my own company I've done it dramatically differ-
ently. Our company does not focus on profit, but I hasten to add we
have never had a year where we didn't have profit. Our company
focuses on quality, on people, and on creating an environment
where the best and the brightest in our industry ~ant to work. We
receive hundreds of applications for employment, because we do it
differently.
When I started my company, and I discussed some of my strate-
gies for running a business with other business people, the nicer
ones called me naive, Pollyanna. The ones who were a little bit less
nice sometimes called me crazy, insane. They said things like,
"You'll learn."
But 2 weeks ago, the Governor of Maryland gave to Prospect its
one of four economic development awards, and these awards were
awarded to companies for being the best that they could be. In
doing this, they cited our holistic management approach and our
innovative employee programs, entrepreneurship, and stretching
our employees to do more than the average company would allow
them even to think of.
Also, many of the people who called me naive, who called me
stupid, are not in our industry any more because their companies
went out of business.
PAGENO="0153"
147
Over the past few weeks you have heard of the contributions
that women are making to the economy. You have heard that
women entrepreneurs are the fastest growing sector of the entre-
preneurial community; that we own 25 percent of small businesses;
that we are playing a key role in the shift of the economy from a
manufacturing base to a knowledge-based economy.
But you have also heard that we have more to offer. Our ability
to contribute, to contribute to job creation, to innovative, new, and
more humanistic management approaches, and to the American
economy as a whole, is being impeded. It is being impeded by bar-
riers which include access to capital and to credit; access to the
largest market in the world, the Federal Government, as well as
State and local governments; misleading and the absence of accu-
rate data on women business owners; the absence of a public-sector
support for governmentwide programs; and as we have heard much
this morning, the lack of effective and sustained technical assist-
ance programs. These barriers prevent women business owners
from being the economic catalysts that we might otherwise be.
To assist in removing these barriers, NAWBO has developed a
set of recommendations which are described in great detail in my
written testimony. These recommendations are designed to assist
women business owners to reach their potential. Not because We
are not good, we are very good; but rather to remove the barriers
so that we can be as good as we are.
Obviously, I would bore you to tears if I told you about the 40-
some recommendations that we have made, so I would ask that you
refer to our written testimony. But I would like to just touch on a
few of the recommendations in each of the areas that I think are
especially important.
When Gillian Rudd opened the hearings, she told of a recommen-
dation that NAWBO was putting forward which was to establish a
woman business owners policy council at the Department of Com-
merce which would be responsible for establishing a government-
wide program to encourage full participation of women business
centers in the free enterprise system.
We see this council chaired by a member of the Cabinet, and co-
chaired by a woman business owner. They would develop a 4-year
plan of action, and they would develop specific agency plans. I can
tell you personally, as a woman business owner who historically
has done between 85 and 95 percent of her business with the Feder-
al Government, the agencies are not doing much for us.
That brings us to our second set of recommendations which are
in the area of procurement~ Throughout the hearings you have
heard the problems and the frustrations that women have faced as
they have tried to do business with the Federal Government. To
look at the viability of organizations that are almost totally ex-
cluded from the largest market in the world, one has to say it has
to impact on us. We get less than 1 percent of all procurement,
over $10,000.
* I once did an analysis. I took the s:ales I had one year and divided
it into the amount of money women business owners got, and I de-
termined that the dollars that were awarded that year would have
funded 50 companies with sales of my company's size. That is one
per State, a very appalling figure. *
PAGENO="0154"
148
We need public policy that will support our emerging entrepre-
neurial sector. I feel very encouraged and delighted that this com-
mittee recognizes that and has spent 6 and possibly 7 days looking
at this sector. NAWBO has struggled long and hard with the con-
cept of how we get Federal procurement dollars to women. It does
not matter how good the programs sound and how good they look if
they do not put dollars into the coffers of the women business
owners.
However, we have always, as women, been independent, and we
have wanted to make it on our own, to prove ourselves. I think
little girls are taught that individual effort is the most important
thing. We have a tendency to say if we work hard and do a good
job it is going to be recognized. But after the number of years that
the Federal Government has said that they are, in fact, encourag-
ing and facilitating women-owned businesses to do contracting with
the Government, we do not see any increase in the dollars going to
women and percentages.
So, we have proposed a two-phase program. Phase one would
look at improving the general procurement climate for access for
businesses that have not done business with the Government
before, and especially in the area of professional and technical
services where so many women have their companies. We have in
phase one recommended specific programs for women business
owners.
But we have also recommended a phase two. If the procurement
dollars and the percentages going to women do not increase after 3
years of phase one activities, NAWBO believes that it will be neces-
sary to establish a set-aside program for large and small women-
owned businesses to get access to the Federal marketplace.
The highlights of our recommendations in phase one, in kind of
the general improvement of the climate area wOuld be one, to es-
tablish a blue ribbon commission, and I might say this was a rec-
ommendation that NAWBO took to the White House Conference
on Small Business, and it came out in the top 20 recommendations.
The blue ribbon commission would look at public policy as it re-
lates to innovation, quality, and competitiveness. Then' they `would
take a very strong feeling that came out of the White House Con~
ference, which was to review the small business set-aside program
to really look, innovatively and creatively, at how it could be done
better. All of us whQ have benefited from that program think it is
very good, but think there is tremendous opportunity for improve
ment. ` `
We would recommend that the Government revise and improve
the way that it purchases professional and technical services Our
contracting system is really based on how to buy airplanes; and:"
toilet paper, and test tubes. When you are trying `to buy something
such as was bought from my company, how to train health profe~-
sionals to deal with the issue of AIDS, you need a really different
way of doing it, and you need a specialized corps of contracting offi-
cials who can understand the subtleties and the difference in pro
posals, and the difference between quality and cost considerations
Another ~concern that NAWBO has is that set-asides are clus-
tered very much in certain industry~çategories. So, when~ compa-
nies grow, and when our best companies get Gut of the small busi-
PAGENO="0155"
149
ness size standard, they find that they arc totally cut out of the
market because whole sectors are set aside We ~l~o find that some
procurement areas are hands off for small busrnes~ We cannot get
in So, we would recommend strongly that set asides be spread as
. evenly as po~sibie a~ross all ~pro~ire~iient areas. * ` ~
Specialized programs in pi~ocurement for Women would include
creating an ad~rocate for women busihess OWners Within the agen-
cies to look at procurement opportunities and to put them together
with women business owners. We would also recommend a small
business preference procurement program that would give teëhni-
cal points to women-owned businesses and technical competition.
We would, with Chairman LaFalce, encourage incentives for prime
contractors to subcontract to women business owners.
I must be in probably a thousand women owned business subcon
tracting plans, and I don't think I've ever gotten any business from
any of them.
If at the end of 8 years we did not see a substantial äñd steady
increase in the dollars going to women business Owners, we would
then ask Congress to legislate a set-aside, and we would Want it to
be competitive, and to mimic the competitive process in open pro-
curement, except we would want it faster.
Another area of concern to NAWBO is in the area of data and
statistics. I always take this personally because every time we talk
about women business owners I am not included, because the defi
nition for the data collection does not include corporations So,
companies like my company áre~ not in~ludèd. We get a very
skewed view of what Women owned businesses are, how many
people they employ, what their revenues are~ Certainly, with thy
experience with NAWBO and the Committee of 200, I don't believe
the view that is given through our data as correct.
Therefore, we are recommeitding that Congress nandate the reg-
ular collection af reliable data on women business owners. We also
are very concerned about the standard industrial classifications,
and the fact that they do not reflect the changes to the services
sector, especially the professional and technical services area We
would encourage that Congress mandate a cha~ige to the SIC codes,
and, in fact, a replacement for them
The third thing we are recommending is a private funding corn
mission on the changing American economy, with an emphasis on
services in the high teehnology.
Repeatedly through the hearings, women busine~~ owners have
talked about the problems of access to credit Without capital and
credit, women owned businesses will not be begun, and will not be
able to take advantage of the opportunities that aii~e there for them
The need was certainly underlined when a venture capital fund
was set up by the National Association of Female Executives They
set up a very small fund with very Small ceilings, I think about
$5,000 was available They expected a couple of hundred appli
cants They got 1,800 applicants for theSe dollars This shows there
are many women out there with ideas who are ready to start busi-
nesses, but who can't do it Just because of the inability to get cap
ital.
We would encourage Congress to enact legislation that would
ensure equal access to commercial credit for Women. We support
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150
H.R. 1879, which, the chairman and Congresswoman l3oggs have
sponsored. However, NAWBO would favor stranger amendments to
the equal credit opportunity so that no exemptions would. be given
from. the protections for commercial credit.
We would also encourage educational programs for lending insti-
tutions on how to review loan packages from soft asset companies.
One of the most serious problems that we have in the services
sector is that when we go in and talk to a bank, and they look at
our balance sheet, they don't see what our real assets are, which
are our people and our backlog. Therefore, we are at a disadvan-
tage if they're being reviewed on an asset-based basis. So, we would
encourage educational programs to be designed for lending institu-
tions.
Finally, NAWBO, I think, is special, perhaps not unique, in the
fact that it sees business responsibility being much broader and
much wider than what has traditionally been thought of as busi-
ness issues. We believe the small business community must partici-
pate actively in issues much broader than merely business issues.
The business must unite with Congress and with the president and
with nonprofits, to find solutions to major national problems.
When you start a company and you build it from scratch, and
you look down that road to the future of that company, you want it
to exist after you're gone. You want it to have a life after you do.
You cannot look at it in isolation. You must look at it within the
context of what is going on in the economy and in the world.
As such, NAWBO brings forth three recommendations that are
much broader than women-owned business issues. We recommend
that Federal policies be established that encourage savings and in-
vestment, and that we invest strategically in America's long-ne-
glected infrastructure; that we coordinate a campaign and partner-
ship between th~ private sector and the public sector to combat
substance abuse and AIDS, tremendously serious problems in our
country; and that we develop an initiative emphasizing the* impor-
tance of excellence in education at all levels, with lifelong retrain-
ing and policies that ensure readiness of our workforce~
* Probably the thing that touches my heart the most is my con-
cern about the future of our workforce and the problems of chil-
dren and women living in poverty. If we don't get our women out
of poverty, we don't get our children out of poverty. Our workforce
for the future will not be what this country needs. It's a terribly
important issue that every American should be concerned about.
NAWBO would like to thank you, Congressman LaFalce, and the
entire Small Business Committee, for holding these oversight hear-
ings. This is the first time that full committee has looked at the
issue of women business owners in oversight hearings, and we
thank you and applaud you for that.
The House Small Business Committee is at the forefront in con-
ceptualizing and shaping public policies that unleash the creativity
of capitalism and open new vistas of innovation and opportunity,
that train our workforce of today and tomorrow for constantly
evolving jobs of the future, that transcend narrow interest and na-
tional borders, and that foster trade and the spirit of international
cooperation, and strengthen the fabric of society, and enhance our
quality of life. NAWBO hopes and trusts that Chairman LaFalce
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151
and all of~the rn~znbers of the ~ Small Bi~iness Committee will con-
tinue to provide~ such vision and leadership as Congress addresses
the challenges facing Americ&s businesses, workforce, and citizen
ry as we stride into the 21st century Thank you
[Ms He~iderson's statement may be fouiid in the appendix]
Chairman LAFALCE Thank you very much, Ms Henderson We
are indebted to you, and as r said, we are. indebted to NAWBO for
their tremendous assistance over these 6 days of hearings on this
whole stthject of women in business
I am not going to ask tob many questions, but Srnce this is, in all
probability, unless the council wait1~s to come in with official recom
mendations, or Vice .Presi&nt Bush wants to come, the l~t ~ hear-
ing, let me just reflect a bit oh the course of these hearings.
I was truly upset to learn that from 1980 to 1987, when I became
chairman of the Small Business Committee, and I realized there
had been no hearings in Congress explicitly on this issue, and also
to k~arn that the Inter Ag~cy Ta~k Force on Women in Business
had not issued a report since 1980, despite the fact that they were
charged with the responsibility to issue annual reports I like to
think, perhaps, that is one of the reasonS we did get a report-I
think it was in November or December 1987-as brief, short, and
perfunctory as that report was
So, while I cannot at this time tell you that I agree exactly with
your recommendations regarding a Women's Business Council
within the Departm~ut of Commerce-I have some qualms about
putting anything within the Department of Commerce, or the
Small Business Administration, or what have you-I think the
office of the President sounds a little nicer to me
Ms. H.ENDERSON~ We would not argue. .
Chairman LAFALCE We want to see what we can do, and we
have given encouragement to the Inter Agency Task Force at their
next meeting which is going to take place on June 1~, to make up
at one meeting for what they have not done for the past 8 years
Whether that will happen or not, I don't know, but we will contin-
ue to encourage them~,
With respect to procurement, 1 percent of the Federal procure
ment dollar is grossly inadequate, yet at the same time we cannot
lose sight of the fact that in 1980 it was four tenths of 1 percent I
suppose it is a question of what your expectations are as to wheth
er you are happy Some might have had very low expectations and
might be happy that they have gone from four tenths of 1 percent
to 1 percent I think we should have greater expectations, greater
goals, greater desires, and, therefore, I am still very, very unhappy
at the fact that we have only 1 percent I think it is grossly mad
equate~ . .
Much more important than that, however, is the opportunity to
get a much larger portion of the Federal procurement dollar
through subcontracts I was very distressed to learn that no goals
have been established by any of the agencies with respect to sub
contract opportunities for women I have encouraged the Govern
ment to do that, and we might be mandating, legislatively, that
they do so, because we are talking about the rest of the 99 percent
of those contracts. I think there is a gold mine there.
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However, I also believe that procurement is something that most
business owners, women business owners included; did not partici-
pate in that extensively. Most businesses do not do business with
the Federal Government or other. governments. They operate in
the mainstream, private sector economy. We should be putting
most of our efforts in that area in the future, and we intend to do
that.
One thing we have suggested, I have introduced as the chief
sponsor along with Representative Lindy Boggs, the Equal Access
to Credit Bill Not only as chairman of the Small Business Commit
tee, but as a member of the Banking Committee, we are going to be
pushing that very aggressively, because I think that legislation is
very important.
As you know, we have had discussions with the. Federal Reserve
Board regarding their recommendations and.. actions taken thus
far. We will continue to have discussions with them to see what
changes they could make administratively, and what changes we
can make legislatively to clarify the law At the same time, there
are some pragmatic problems, and, therefore, I do not know that
we would be able to go as far legi~lative1y as NAWBO might desire.
I do not know that it would be wise, either. So, I do not want to tell
you that I agree with all of your recommendations.
I think too, that it is important that we understand that we are
not trying to be of help to women just so we can help women. We
are trying to be of help to women because, as we do so, we can. be
of great help to America. The energies and the talents and the p0-
tential of women constitute a relatively untapped gold mine within
America. If we can tap that gold mine, if we can unleash those re-
sources, we can do much to fulfill America's economic potential.
That is what we want to do.
I also think that politically it would be naive if both parties, the
Democratic and Republican parties, did~ not realize that both of
them have much more to do to tap that gold mine. I will be work-
ing with Senator Bumpers in trying to ensure that the Democratic
platform does recognize the special needs and special potential of
women in addition to the whole small business community, and I
would encourage the Republican party to do likewise. Ms. Ascher,
whatever you can do with Vice President Bush with whom 1 .know
you are quite close, we would appreciate . it. It would be helpful if
both parties had strong planks and then made efforts to fulfill the
promise, fulfill the potential.
Perhaps our greatest need is additional management assistance,
however, and training and counsel. In that regard, AWED has been
outstanding in .the past, and I think it would be wonderful if we
could replicate nationally what AWED has been able to do in the
local area, primarily the Northeast, primarily the New York City
area.
We have had not only private groups that provide excellent man-
agement assistance. We have had public~groups too, and public/pri-
vate groups. AWED was a public/private partnership until 1980 or
1981. I would like to renew that public/private partnership.
We have an excellent organization in the State of Michigan, for
example. Are you familiar with the BIDCO program, Bea?
Ms. FITZPATRICK. BIDCO?
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153 ~
Chairman LAFALCE. Yes; I think that iS what it Is called in the
State of Michigaft Ms Henderson, am I correct in that?
So, there are a great many different approaches that we might
be ~ able to take, and we will have to consider what approaches
might be appropriate as we ponder the testimony that we received
over the course of these 6 days and month and a half of hearings,
and as we try to come up with an action plan That is what we are
looking forward to as we sit down and study all the testimony that
has been given. ~ ~
What I would like the Small Business Committee to come up
with is not simply a codification of the testimony of the facts and
recommendations that the witnesses have made, but perhaps with
an action plan. I hope We might be able to come up with that
within a month or so Maybe we will use the occasion of some of
the speaking invitations that I have had to reveal those plans.
.1 think that is all I want to say.
Ms. SHAPIRO. Mr. Chairman, could I just add one thought that I
had?
Chairman LAFALCE, Sure, Ms~ Shapiro.
Ms. SHAPIRO. This is a little tangential.
Chairman LAFALCE. Am I going to. get that walk-on part on Dy-
nasty or not?
Ms SHAPIRO Absolutely It's a done deal [Laughter]
:We have talked a lot about partnerships here today, between the
private and the public sector, and between all of us who coventure
with other companies But I think if we get down to the most basic
one partnership that means more to me than anything is really my
family As I think of my husband, I think of all the men who are
partnered with women here and throughout America
One of the things that concerns n~ is that even as we find ways
to help people live longer, we don't provide them with the ways to
do anything meanmgful Especially women At the same time, soci
ety imposes on men a dictate that they must assume the total care
of their families Many of our most talented and productive men
are so stressed out that we have this alarming death rate of men in
their 40's and 50's I would like to say to you and to the committee
that we women want to share the burden
We want the men we love to stay abve to reap the benefits of
what they have worked for We would like them to enjoy their
homes, see their children grow and live out the full span of their
lives We don't want to hear about men dropprng dead at 45, and
50, and 55, because we have an attitude and a stereotype that says
men must shoulder the whole responsibiht~ Women do not need to
be taken care of that way We can share the workload, and we can
grow together~ I think this sharing will have an enormous effect on
the way our society looks at ageism, on how we evolve as role
models for our children, even, for example, young women who turn
to teenage pregnancy to avoid facing a future with no possibilities
I receive thousands and thousands of letters from young women
all over the country who say I want to grow up and be like you
Well, I never thought that would happen to me, but~ because it has,
I offer to you and to your committee all my human resources to
help women to become self sufficient I'll put myself on the line I
know .it~s hard,. and I know there is not~~a lot of money, but ~you
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know, my life-long attitude has been that unless it is almost impos-
sible, it isn't even worth risking~ I want today. to be a memorable
day, and I want us to find a way to go into business together and
let me prove to you that the women here who are in free enter-
prise know how to. do this. We can help make this thing happen. if
we all want it to. Thank you.
Chairman LAFALCE. That is fantastic enthusiasm. I believe,, too,
that you could do probably anything you wanted to.
Ms. SHAPIRO. I want plenty. [Laughter.]
Chairman LAFALCE. I understand.
Mr. MAYER. Congressman, on a much drier level, could I make a
comment?
Chairman LAFALCE. We'll defer to the husband of Karin Lis-
sakers; yes.
Mr. MAYER. That's right. That if, in fact, Ms. Henderson could
make women entrepreneurship the vehicle by which American
banks began to lend on a cash-flow, rather than an asset basis, it
would be perhaps the greatest imaginable contribution.
Chairman LAFALCE. That is a terrific suggestion, and that sug-
gestion was made at an earlier hearing, and we were very, very for-
tunate at. that hearing that somebody from the American Bankers
Association was in attendance. I made the suggestion that the ABA
should start discussing, as part of their educational programming
and training, how loans could be made on a cash-flow basis rather
than just an asset basis. I am going to be addressing that sugges-
tion amongst other issues at their conference on small business
lending in Boston in a few weeks.
These are the type of incremental things that can be done. If the
American banking community will start educating their lending of-
ficers about that possibility, that is more important than all these
procurement programs that we are talking about. I . don't mean to
denigrate them at all, but that would be extremely important, as
you point out.
Mr. Hayes, you may want to make a contribution to this. Thank
you.
Mr. HAYES. I certainly, Mr. Chairman, want to thank you for
having convened this hearing. 1 have listened with interest to some
testimony. I am being very candid, I do not know if I agree with all
the recommendations which you have submitted. I have not studied
them all.
My first inclination was to, when I left to go vote, was to not
return, because we had at the same time, as so often happens, a
meeting of the Congressional Black Caucus, and one of the issues
on the. agenda this morning with the continuation of yesterday's.
meeting was the set-aside program as it affects minorities. So, I
called my staff person and asked if he would sit in for me at that
meeting, because I wanted to be here to hear this testimony, be-
cause we do have a specific problem which I ~am sure is not going
to be a localized problem. It is one that is going to spread in other
areas.
As to the application of the set-aside program, in Illinois as it re-
lates to highway construction,' women have been used because of
action of this Congress, on pretty short notice, to include women as
a part of the minority on the 10 percent set-aside program for high-
PAGENO="0161"
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wayeon~truction. I ~fl .. k we ~have roughly around 15 percent in Ii-
linois. ~ . ~ ` ~ . . ~ ~ ~ ~ ~
But the troubling part of it, I ha~re rio problem with entrepre
neurship of women and being in business, but I think the way it is
being applied has to be correcthd and instead of women being a
part of the 1O~percent set-aside, we ought to make them a pàrt~of
the 90 percent that is still out there hanging and being used by
predominantly white men The front that has developed as a result
of this, some women being a part of the prograrti only in name for
the men who ai~e really the ones behind the seat, according to our
information, are the ones who have been real benefactors of the
procurement programs There is roughly $220 million involved in
the highway construction going on in the State'of Illinois and other
States.
When you set up the rule or the guidelines by which we operate,
I think it has to be with a degree of fairness and understanding
My concern is one that goes to the consumer level when you get
the little people How many jobs are provided I like the approach
that I saw in some of your testimony here The have nots, an awful
lot of people are out there out of work So, even in the letting of
contracts to minorities or women, I think it has to be done on the
basis of~what it is going to do for jobs and helping people who need
help.
I was wondering, Ms Henderson, in your recommendations there
are a couple of things that bother me a little bit If you would look
at your first section, point number seven, "Congress should enact
legislation eliminating Federal competition with the private
sector." I have nothing wrong with privatization-I think that is
what you are alluding to-as long as it does not adversely affect
people I have some problems here on this Hill The Government
used to be the one who ran the restaurant Now, it has become a
part of a private enterprise The food prices went up and the qual
ity went down, and the welfare of the people who work there is
always jeopardized So, there are areas where I think the Govern
ment's competing with the private sector is necessary
I have some problems with the airline companies What has been
done in terms of removing some of the controls, and what has that
done to the public? It does create some problems
I know you have a time problem You ~ndicated you have a 4
week-old baby~--
Ms HENDERSON I have a very hungry baby outside probably
screaming. .
Mr HAYES Can you tell me what you mean by that?
Ms HENDERSON Our concern is the Government is moving ixtto
areas that the private sector could provide services in or goods in
Especially in new areas which are being established We need to
look very carefully as to whether the goods and services are avail
able in. the private sector, and if they~are, not establish it as part of
the Government, but to purchase it from the outside
We feel that the private sector competition should encourage
competitiveness in quality and in cost But I ththk we have to look
very carefully at established programs and how we do it so it does
not impact on people. We are concerned about people, toot But~the
Federal Government is moving into areas that are established `in
85-199 0 88 - 6
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156
the private sector and where programs have not: existed before
where they could buy it from the private sector.
Mr. HAYES. Your point 16, you said direct all agencies to include
at least one bid from women-owned small business for all small
purchase orders under $25,000. Is that establishing a goal or some-
thing? -
Ms. HENDERSON. What we have been searching for is a way for
women business owners to get their toe in the door. This was kind
of a concept that if women could get these small purchases that
they would then begin to develop a track record and---
Chairman LAFALCE. It would be fair to say, Ms. Henderson, that
your presentations were more a wish list, and your wish list prob-
ably contained at least a few throwaways.
Ms. HENDERSON. A few.
Chairman LAFALCE. All right.
Mr~ HAYES. 1 didn't want to be that harsh.
Chairman LAFALCE. I'm not being harsh, I am being realistic.
Also, I am concerned about her 4-week-old baby, so let me just .in-
tervene and say let's not kid, ourselves. I think we have a million
things that we can and should be doing to assist women business
owners and women in business, and we are going to try to do that
However, with respect to set-asides, in my judgment that is- not
one of them. Set-asides are quotas. I do not like the idea of quotas,
generally speaking, although there are certain exceptions that we
should have. We have them, I don't think we should expand upon
them. I don't think we should be having quotas for women or set-
asides. -
Now, I distinguish between goals and affirmative action efforts,
however, and I think we oi~ght to.have goals, and they should. be
m~ch, much higher than they are right now In fact, in some in
stances they don't even exist, for example, with respect to subcon
tracting So, I think it might be difficult for this committee to
make recommendations that women should be participating in set-
asides, and I don't even know that you want it that much.
Ms. HENDERSON. We don't want a~ set-aside. However, we get to
the point--
Chairman LAFALCE. You want realistic action and the goals and
the affirmative action, and you want us to know that if we don't
make that realistic action that you might be revisiting us.
Ms. HENDERSON. Right. Also, the issue that women-owned' busi-
nesses face is that even when the desire of a procurement person is
there to help women, there is no mechanism, There is no way that
they can push things.
We get calls from people all the time saying because you're a
woman-owned business, I can sole source this to you. I laugh and'
say no you can't, then they go back and talk to their contracting
people. So, they start out and find a company that is qualified that
is woman owned, and they can't get the work to us. So, it is an
issue of even if the desire is there, how you get it there if there is
not a mechanism.
Certainly, NAWBO has never encouraged set-asides for women-
owned businesses. It is' not something we would particularly want
to see. However, if the percentage continues, and if the actions
remain lip service, then I think we `have to look seriously at some-
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thing more drastic that I don't think any of us would particularly
want to move to.
Chairman LAFALCE. I appreciate that comment.
Bea, for the last word.
Ms. FITZPATRICK. No; I just wanted to address something that I
thought was implied in some of Congressman Hayes' remarks.
I think it is crucial that women and minorities who have both
been excluded from the mainstream of our economy don't allow
fighting over some money, or contracts, or anything else to sepa-
rate us, because I think our common interests outweigh any kinds
of concerns. Most women in the United States do not want Federal
contracts. They really don't. Most women want a chance to run a
business in their own community. They just need the training to
make that succeed.
I don't think any programs that are developed for women entre-
preneurs should be allowed in any way to take anything away from
what has been developed for minority entrepreneurs through long
struggle of minority groups over the years. I think anything that is
done for women should be in addition to and should only be al-
lowed to be in addition to. If there is a local government that has a
10-percent set-aside for minorities and then wants to include
women in that 10 percent, they are helping set women and minori-
ties against each other, and I think we have to understand that is
political suicide for us to engage in.
So, I think it is very important for the Government not to pro-
mote anything that would in any way encourage women and mi-
norities to do anything except see that mutual growth is essential
for the growth of small business in this country.
Ms. HENDERSON. I agree. I believe strongly, and NAWBO believes
strongly, that we have some of the same issues. I have been in so
many meetings where they do, to get you off their back, start pit-
ting the minorities and the women against each, other. Send you
out of the room while the main discussions are going on, to negoti-
ate.
We have been supportive of minority programs and continue to
be.
Ms. FITZPATRICK. I just also want to say on this that a quarter of
our-I think I know the program you're talking about. It's the pro-
gram that is addressed only to low-income women. We just happen
to think all women need access to training and not only low-income
women. We also think that programs that are designed only for
low-income people do not get the kind of support in terms of length
of time or breadth of support as programs that are addressed to a
whole population.
So, just from a public policy point of view it is very important
that if you are going to do anything for women, whether it's in
management training or anything else, that it be for all women en-
trepreneurs. We have women coming in our training program who
are on welfare, who are unemployed, who are paid for by the State
of New York for us to train because they're in those categories, and
we also have women who are at the top of their profession who are
vice presidents in major corporations, and they are in training
groups together. What we find is that they have more in common,
and that the areas in which they have been short changed are
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more common than any differences they have because of back-
ground or anything else.
So, I think it is very important when you are thinking about pro-
viding management training for women that you do it for all
women, and not just for categories.
Chairman LAFALCE. Absolutely. No question about that in my
mind.
We are going to have to conclude.
One more thought. Mr. Mayer, you have written at least a dozen
books.
Mr. MAYER. Two dozen.
Chairman LAFALCE. `I have only read. three. "The Fate of the
Dollar," "The Money Bazaars," and "The Bankers." I hope to read
your book as of yesterday, "The Markets," but why don't you. make
your next book "The Hidden Gold, .Mine in America, Women~" I'll
take fall credit for you if you do~
Mr. MAYER. We'll give you a commission.
Chairman LAFALCE. You can coauthor it with your wife~ It is a
good idea, and I do want to see Karin on Third World debt issues.
Ladjes and Gentlemen, I think these have been terrific hearings~
Unless Vice President Bush `wants to com.e hack and testify, or
Linda Evans, orJoan Collins, this will conclude our hearings.
Ms. ASCHER. They're both business women. They both run a
number of businesses.
Chairman LAFALCE; We'll have a hearing if either Linda, or Joan
Collins, or both want to testify, any time. Polly Bergen started it.
We'll allow them. We'll have `Linda Evans, and `Joan Collins, and
George Bnsh on at' the same time.
[Laughter.]
Thank you'very much.
[Whereupon, `at 11:30 a.m., the `hearing was adjourned, subject to
the call of the Chair.]
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APPENDIX
Opening Remarks
of the Honorable Silvio' 0. Conte
Small Busir~ess Committee
April 2,1988
Thank you Mr. Chairman, you are to be commended for convening
this series of six hearings on Women's BusineSs Issues. There
are approximately 3 7 million businesses operated by women
today, accounting f or 27% of all businesses in America. They
are the fastest growing segment of America's business population
- growing at twice the rate of businesses owned by men.
In 1986, woman received 33% of all MBA's and 14% of the
engineering degrees. Also in 1986, 83% of female officers in
the Fortune and Service 500 were at the vice presidential or
above levels Additionally, 30% of managers 16% of lawyers
20% of doctors and 40% of programmers were female, Clearly the
accomplishments of women are spectacular but their potential
for small business and our country is even more awesome
While all businesseá ~ace~ the same start up problems, women
owned businesses have additional barriers primarily relating to
credibility and equal access to capital.
It is vitally importat~t that we as members of the Small Business
Committee double our efforts to advance women's participation in
business by eliminating barriers and developing their
participation in public and private sector activities.
I look forward to the testimony of our distinguished panel today
and to future participation in a program of initiatives that
will all~w women to achieve their personal and economic
potential. Thank you.
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JAMES H. BILBRAY (~) 1431 LONUWODNU HOUSE OFFICE BUILDING
ISV DISTRICT, NEVADA ~ (202) 225-5965
COMMITTEE ON DISTRICT OFFICE:
FOREIGN AFFAIRS ~I~P49' 1701 W. COCELESTOD. SUITE 300
Los VEGOS, NV 89102
s~~J~ss Congrt~ of tilt ~niteb ~tatt~ (702)
SELECT COMMITTEE
ON AGING Fou~e of ~epreSentattbe~
* INa~~ptngten, ~C 20515
April 26, 1988
CONGRESSMAN BILBRAY'S
OPENING REMARKS FOR THE SMALL BUSINESS COMMITTEE HEARINGS ON
WOMEN'S BUSINESS ISSUES
Mr.. Chairman;, 1 oongr~atulate you on your leadership to hold
hearings ~n women3s issues. While only one in every three
American women was employed thirty years , today~ over 50% of
American women hold jobs outside the home. In my Congressional
District in Southern Nevada almost 50% of the working for~e: are
women.
Though I realize these hearings are for businesses ope~ated by
women, these. figures are an indication that wornefl,Lwill continue
to. increase their participation ~ the business World not only as
employees but managers, presidents, and Owners.
As a lawyer involved with business over the past twenty years I
can remember the term NON TRADITIONAL used to describe areas
of business where women were not found in large numbers.
it was non traditional for women to be involved,jn construction,
engineering, or for that matter any field that was traditionaly
considered a man's field.
Fortunately for us as a nation we have progressed enough to
realize that no career field is exclusive to one sex or the
other.
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TESTIMONY Off (3ILLIANRUDD, PRESIDENT
NATIONALASSOCIATIO!405 WOMEN BUSINESS OWNERS
BIPORETHE
HOUSE SMAI.LBUSINESS COMMITfEE
APRIL 26,1988
My naméis GllUan~udd. I am a woman~businesa owner from Washington, D.C. Itis
with greatpride that I come before you today as PresldentoftbeNatloflal Association
of Women Business Owners of the Urilted States--'NAWBO."
N~~tWBO is anatlonal trade assoclasionofwomeflentrepreneuto. It was founded in
1974 and has grown to 38 chapters throughout the United States. his theonly
national organizatiOnthst*prns~stts the whole spectrum of well over'f million
women business owners across the United States. NAWBO is affiliated with women
business owners ln'22 oshercountries across the world through a 35-yearold
international organization of women business owners, Lea Femmea Chefs
DEntreprises Mosdiales (FCEM).
NAWBC) works so advance the interestsofwomenbusiness ownersthrough education,
mutual support, and collective efforts at the local, state, and federal levels
NAWBO deeply appreciates the opportunity you, Mr. Chairman, and the Committee are
giving womenbullness owners to present Ourcsse on theeconomiC impact women
business owners have made on the ~ationsl economy in the lastdecade sods half as
they have enteredhusisess ownership and continue to Cnter ata r4te that farexceeds
any other segmentof the Americanbuolsess community.
4galnst4llQ&Let
As I wayelna1iosal1~rand internationally, I have dlniost daily ~onversatlOns w5~h
womenbusineas owners. I hope that what I say today wlllreflectsvhat they teltme
and that! cancossvey to you the depth of theirfeelings.
Therein an enormous smountof pride among womenbusin5ss owners. We know that
we have made phenomenal achievements in the last decade or so, personal and
public--againstailodd.e. But thefeis anequal amount of frustratiotssnd anger--at
she barriers thatcontinue to impede ourbusinesa growth.
We hope that the witnesses you have oslledforsheae hearings `will demonstrate what
womenbusiness ownersare doln~eddhsvedone ovetthelsstlO-15 years, asinebave
grown toown, In sole pto~trletOtships alone, morethan one 4uasterOf the sallotf s
businesses-Over 3.7 million was The Small Business Admini5tfstlofl~O (SBA) figure for
soleproprle*orshipe forl9S8.
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Our PresenlAnd PotentldL Value To The Economy
The stories these witnesses tell Should demonstrate our tremendous present value so
the economy and ourpotential for makinginflnitely greater contributiom in the
years ahead.
Our present value-- a conservatively estimated impact of tome $250 billion annually
onthe economy--has been achieved with infinitesimal assistance or encouragement
from the public, major corporate, andfinancial sectors, and has frequently beensetet
with hostility, discrimination, and resistance.
Realizing our potential value to the economy lies in many ways in your hands,
gentlemen and gentlewoman. As youwiltsee, we are making some suggestions.
The Need for Tourh and Visionary Leaderyhinin the Business Commu~iiy
NAWBO strongly feels that we need leadership, tough and visionary, is the business
community --in both the public and the entrepreneurial sectors; We need leadership
fromyou to help those of un in the business community to grow, to be profitable,
productive, competitive, quality firma; to create more jobs in ourcommunitiès, and to
put more dollars in ourfeder~l, state, andlocal treasuries. Current estimates are that
women busineas owners now pay annually $37 billion infederal taxes and $13 billion
inlocal and state taxes.
NAWBO is deeply concerned with the country's disastrous international imbalance of
trade and with ourmountainous donsestic debt and wants to work to get the United
States off the trade deficit slide internationally and to reduce our domestic debt. We
women buuiness owners do not see oureconomicgrowth ass Social issue Qr a special
interest issue, we see it as part of a national economic issue,
Access p~~jnce~fjyes,t
Woman business owners use in all types ~f businesses and stall ~uoiness otages. Isee
from the list of witnesses today and tomorrow that you will be talking to women who
have seized opportunities, wrested with opposition, stepped around barriers--who are
competitive, profitable, who operate internationally and nationally, who are
innovative, who are entrepreneurial.
As I have said, they haveachieved their successes against all odtls.
But, NAWBO is not, neverhas, and is not now asking for handouts and set-uaides.
However, wewill no longerslepaside. We have morg thanprovedour worth,
mare than paid osrduen, in these lastlO years. Existing procurement, credit, and tax
policies are crIppling us, are threatening our stability, are stifling our growth.
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-Women business ownelS..slnd the~uIl range Of entrepiwneurs.- slust
have access to government dl$I~rs, to tech~tIcal aslistance, tofiIthncing.
We believe that the countryib at a cruciaI~ecO~tn*slc crossroads aftd all
of our taxpayers dollars, all otour gatel-flmeflt policies should be
focused on Incentives to Americasbusitless growth, to job creation, to
international trade.
4Jffa/nr New Studs ofWom~n.Owped~sslpen5at
Tomorrow, in these hearings, we will iOleahe thefindings ofarnitJt* new study on - -
the state of womenbusinesS owners O~ound thecountry--and wliatgovernment at
state and local levels is doing Is refers so women business owOers as Anierics'a
"hidden resource." lthlsksoitte of us--orlthoae bad days whenthe banker askp for
ourhusband to sign our business bankloan and t~teprocurenlent official relistis one
moretime that "them aPeno 4uali~led wliinanbusinssa owisers Out there"--tbilsk that
we are Americas buriedreaoOrC~'withfresKlhOvelfuli being thrown On us daily.
What the report will reveal is windosvdre$sin$, lip service, anda mere five
* continuingly funded women businesi owner prcvgram.rM.stdt~s Ond cities around the
country. A paltry hf~ort--and ansnl'sstunate waite of a valuable ecoaomic resource.
~fjoe State ol'~nsall~luninesu t988~?
As you are aware~ The Small Bsiineii Adnslnistiatlonfailed to document women
* business owners progress in theirsepott to thëPreildeht in 1988. NAWBO was amazed!
How c~ulda document that purported to' detail "The State of Small Business in the
United States" in 1988 leave out ~he fastest growin~segment of the small business
consnunity? We were toldby officials at SBA that no new information was gathered
in time--and that is why the women business ownetihipchapterwas dropped from
the report, and no risentionof"women-owned business" couldbe found in the index.
The fastest growingsegment of growth business in the American eConomy had been
made invisible! This omission raises serious questions asto tiB~'u commitment to
the growthof women-owned businesses. -
In partial defense of SBA, there is no utesrlegiaiative thandate fotthe agenry to locus
major attentiotiOr resources on women-owned busineiseo, but this dons not explain
the low andlowering level of attention thassye receive. What womenbuolnesu -
owners have at SBA--as we have slmostwithout exceptioningovernment sgenclei
around the country ~- is whet may be pesceived as w,indotedseSSlflg. Tokenoffl~ea,
with little funding and authority, slot of PI~, and one-nh4t c~OfedenceS uroundshe
country are nothel~1s1 wotlte4businesa Owneta. We need systematic contisstiing,
effective, anti quality teChnical assistance tobreak dowksbarrstrs thathinderour -
growth. * * *
jdfnPoruet `tsmallpndDLeeidvastayrdntustnesSf!t -
Let me just say, thatihls year NAWBO has droppedthe'words `smallbusineso" from
ourlsngusge --it has esme to be synonymous with disad+asltaged, non-groteds
business, whicblh nol~hat tee are about. - -
~ -~ -~,*;- - ~- -~,,c- ~ - -
PAGENO="0170"
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We believe that this Committee and the SBA shoiddbe two of the mostexcitingplaces
in Washington, DC The entrepretwusial community, the growth business
conunumty, the emerging business community, is where the action, the energy, the
excitement, the jobs, and slseinnovation are. The SBA should be~treain1ined, focused,
all the political programs that have been clumped into that agency in tern dumped
/ out. We need a strategic planforbusiness grow~h inthis cpuntry. If it cannos~e
done in the SBA then it mustbe done elsewhere and soon.
(ThvernmentPrm~ram/
In the secondpart of these hearings, I understand that youb5ve scheduled
government agencies tooutllne.th~ programs they have implemented to encourage
the growthof women business ownarsin thelast decade. Ido not expect much of a
catalog, and when progcams are mentioned, I askyôu toquery if tl~ey were a
one-ahoadeal, query thenumber of dolLars spent and the results, thenumber of
contracts that womenbusiness owners have seceived, query who staffs programs,
how many staff, whatthebudget is-in shoot, evaluate theirvilue,
I wouldlike to add a note olthaaka to the Department of Commerce, and to Assistant
Secretary forAdmlnistra$on Kay Btilow, who fortwo years has esiven mightily with
us inanationwide attempt to get more of the less thanl% of federal dollars, plus state,
local, and corporate dollars into women-owsedbusinesa by co-convening nationwide
procurement events fortwo years called "MegaMarketplace." And toThe Department
of Commerce's Office of Business Liaison and bet5rnational `trade Administration,
which has worked to include women bu~lnesa owners in boll' domestic and
international business efforts.
~ Te~lUo
iunderttand thatyou have wiselyplanned the last segment of the hearings to took at
ourfuture--what demographics are telling us, where our deficits are leading us, bow
apaucity of accurate statistics is harming national productivity, what policies
entrepreneurs and emerging and growth companies seed to enable them to grqw,
Stow we can keep the United States competitive andprosperous inthe years ishead,
This Is of niost vital concern to NAWBO--we want toplan for ourfsture and for the
future ofourchlldren, to know where we are going, --otherwise as baseball legend
Casey Stengel says" we may aedup somewhere else."
What flu ta~e t~'ent~sC nwiu~A~~ie~ean Businesses7
Asnericanpublic policy makera,,tbe ~sancial andcorporate sectors, and
entrepreateurial s~d growing buasseasiss need afonim is which tl~ work together,
where a broad spectrum of interest~ and expertise can mess--a 5~ational Strategic
/`lasnisg Commission For American Business Growth--that will recommend a mission
and vision statement for American business/government forthe next 5,10,15 years
and a plan of action,
We all do strategic planning in our own businesses. Other copntries do it.It isa
sensible, rational, path to take--to took at our resources, to look at our present and
future demographics and trends, to look at ncr present position, our weaknesses and
strengths is the global economy, to plan asatiosat path to prosperity.
PAGENO="0171"
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Sing Po~ln.The ort.Ter,n?
Here are the problems women business owners face:
no programs--technical and financial, or access
no recognition of our growing economic Impact on the national -
economy
no organized Systems of outleach to women business owners,
Here, we suggest, are some solutions
We believe these solutions take a stew and innovative approach to the needs of the
next decade, They are focused on access, business growth and stability, and econ~atic
development. We are norsuggesting new programs, we are suggesting:
o reallocation of exiseingresources, with no major new budget prQgrams
o a greater private sector role in publicsector programs and strong
effective public/private partnerships, particularly with major
corporations
o the development sf3-year federal model programs that canbe
implemented artist state and city lev~l through matching grant progranla or
local spending
o assuring that women-owned business emphasis is place4,~n e~sting
prsgralne.
How can wedo this?
We need your assistance to get us there, We steed attention from the top down.,.from
the House, from the Senate, and from the next President, whatever party. This is a
national economic issue to winch we seed innovative solutions,
4 Woman ~uslnex~Qwnfr Pjsd~s-al!nl1lative
We need a woman business owner effort that is inotitutionalizedacross the entire
federal structure ins way that wilt have long term and broad range impact--s Women
flusiness Owner Federal Initiative. The key to ito success is attention and commitment
from each Cabinet Officer, The White Iltipse, and Congres~ and the development of a
four-year plan of action (with astnual targets, goals, and measurable objectives) for
each agency, which can be consolidated into an over~l fgderal plan.
The suggested institutional meclsbnism to accomplish thin:
A Women Business Owner Policy Cs~uncll , eslabiished at the
Department of Commerce that will consist of key agencies, The White
House5 Congressional representation, women business owner groups,
and individsai women bssisess swnere. This Psiicy Council will
have a budget and staff to carry out its mandate.
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This mandate is to
o coordinate the actions of allfederal agendies and departments
o develop the federal comprehensive plan and specific program goals for
women-owned business programs
o work with statb/city/local plaisning and trade associations, such as the
National Governors Association, National Leagsse of Cities, National
Asspciation of Counties, etc. to ensure federal/stale/city/county emphasis on
this issue.
o establish agency performance goals, monitor, and report progress to Congress
and the President
o define the programs neededby women business owners and identify the
appropriate agency to develop such initiatives.
Specific emphasis will be placed on -
* capital
procurement
high technology
intersstional trade
technical assistance and training
The Departments of befe~nse andTransportation, The Office of
Productivity, Technology and Innovation, The Small Business
Developmeslt Cosporatiom, and the SBIR program.
Cabinet Women Business Owner Policy Tat/c Forces
I. Each Cabinet officerwould appoint a Women Business OwnerPolicy Task Force
under the Assistant Secretary for Administration to develop a4-year women
business owner actiOn plan, with specific targets, goals, and objectives for each
year. The accomplishments of lhegoats would be ln~luded in the merit
increasesof federal employees. 1~ecogzs.izing the barriers women business
owners face, restrictions on sole sourcing and otherprocurement incentives
will be established. There would be asunset provision to dismantle the Task
Forces infour years if goals and objectives are reached.
2. Bach Task Force would inclsde agency staff, individual wolnenbusineso owners,
and representation from wornenbusiness owner groups.
3. Each agency would allocate a specific portionof program budget~forthe
implementation of model programs.
4. Modelprograms would be fsnded for 3 years and through matchlnggrants in
subsequent years.
5. The TaskForces would make a pearly report to thePeesident onpro~ress and
future actions.
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6. The Small Business Administration would concentrate on outreach--through a
directory of women business owners, a newsletter, and outreach for programs,
would buildiocal conatiluency advisory groups, disseminate program
information,play an advocacy role, and establish a separate and appropriately
funded women business owner office with advisory councils on policy,
Legislative Oversight
Congress will review the federal initiatives each year, with oversight hearings at the
end of the four-year plan.
Tsp immediate Action Provrams
I. The Department of Commerce should refine and continue the sponsorship of
MegaMarketplace for another four years to widen the effort to bring mom
women into the procurement process at all levels nationwide. Monies should be
allocated for this effort and for surveys on the impart of MeguMarketplace on
women business owners and procurement officials, and results in number of
contracts and dollars.
2. As a part of The Department of Commerce's excellent initiative to `Export Now"
and because of NAWBO's extraordinary outreach to businesses in 22 countries
through its international organization, we suggest a special export program
targeted to women business owners--again for a four year period--where
we screen and select a numberof business owners, Commerce works with those
business owners to develop a strategic marketing and action plan, and provides
a range of technical assistance, while The Export Import Bunk provides loans.
Thele businesses' accomplishments, failures, and successes would be tracked
and analyzed over four years and would lead to the development of a longer-
term entrepreneurial export growth strategy.
NAWBO members are uniquely qualified for this program because:
1. of oar existing international business network
2. the fact that our members are heavily in the service sector--America's
cutting export edge
3. NAWBO set precedent when we led the first United Stases service
sector trade mission to Europe in 1985, and followed that up with a highly
successful health-care services trade mission to Japan.
4. With existing domestic barriers in procurement and credit, women
business owners at this point in time may have more opportunities
and access to markets abroad-- and the country needs this export push.
PAGENO="0174"
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snesotoapid New York
When NAWBO's executive committee Suet in Florida last month, we talked about the
future of womenbusiness owners, and the barritiru we have facedfsr so long and
continue to face in the political, business, government, and socialarenas. We formed
an Economic DevelopmentTask Force to define and work to establish policies and
programs that encourage and support the growth of women-owned businesses. Our
efforts will focus on California, Minnesota, and New York. -
Cho.rtineAmenca's Course For TheFulure
NAWBO is deeply concerned about America's prosperity in the future, since we and
star children will be living there. We feel that afslse sense of pro~perity exists in the
country, that our short-term, penny-wise, pound-foolish approach deeply endangers
our future.
At the 1987 White blouse Conference on Small Business, NAWBO delegates from across
the country developed sn issue book, "Framework For The Futui'e." We ore updating it
for release in May. It will be titled, "Framework For The Future ii: Is'.'estatg 4n
America."
We are calling for Americanbuolness and govtirnment so mske along-term
invettSuent in America. We are asking for a holistic approach to the entrepreneurial
agenda, a visionary approach, that looks at issueu of competitiveness--quality, design,
education, technology, research and development, financing and taxes. Our
government dollars should be spent nsw to catalyze growth.
As a country we des~efately need a business mission and vision statentent and a plan
of action. WiththC riglat people, the right team, the right vision, we can make oar
future prosperous, we can move out of our reactive, business-se-usual mode and
resume our place ma proactive, competitive, first class, world class economy again.
NAWBO commits itself totally so working with you so achieve this goal.
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POSITION PAPERS
SUEMITTEDBY
NATIONAL ASSOCIATION OF
WOMEN BUSINESS OWNERS
[NAWBO}
FOR 14OUSE COMMITTEE ON
SMALL BUSINESS
BEARINGS ON
WOMEN'S BUSINBS5 ISSUES
APRIL26,fl,~~j~n~yj0 1I,17,Arqfl~9 198*
44
PAGENO="0176"
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DATA AND STATISTICS
Since the end of the Second World War, the United States economy has
undergone major transformations from being primarily a manufacturing
economy to a services and information economy This transformation has
resulted from interactions among technological developments, systemic
shifts in the structures of industries and jobs, and changes in
population. These rapid changes require effective management, but it
is impossible to manage anything effectively if we no not understand
its dimensions. While the federal ~overnment pr9duces a multitud~ of
statistics as disclosed in Statistical Abstracts of the United State~
and other reports, comparatively little information is available on
economic growth, innovation and emerging sectors of the economy. The
very components of entrepreneurship.
Women are playing a key role in the transformation of the economy by
starting new business ventures in the services, information and high
technology sectors. A study of The National Association of Women
Business Owners (NAWBO) membership, funded by the U.S Small Business
AdministratiQn and released in 1984 revealed that members had
businesses concentrated in professional services as consultants,
accountants, and lawyers--and in communications, distribution, and
financial services ~1
Despite the growing interest that women are slarting such business
* ventures, solid information about the nature and scope of these firms
is nonexistent. Data on businesses owned by women is nonexistent by
the fact that national data only refJ~~cts information on sole
proprietorships. As a result, women-owned firms are viewed as being
inconsequential in size and impact. This misconception greatly
interferes with the ability o~ the women-owned business community to
* focus the attention of the government and private sector on its needs,
abilities and connributions to the economy.
Several factors contribute to the lack of data and statistics that are
available on women-owned businesses. One factor is attributed to
inconsistent data. There are four main sources of data on women-owned
businesses that are readily available to the public, They are: the
census of women-owned business; the statistics of Income for Sole
Proprietorships published by the Internal Revenue Service (IRS); the
statistics on self-employed individuals published by the 8ureau of
Labor Statistics (BLS) in the monthly publication, ~mplovment and
Earnings: and current population reports.
Unfortunately, the figures reported by these sources are not consistent
with each other. For example, in 1977 (the only year for which data
from all these sources are available), the Bureau of the Census
substantially undercounted the number of women-owned sole
PAGENO="0177"
i71~
proprietorships ir~ their Economic Census Federal, income tax returns
were the primary source of informationfor those reports, `Business
interests reported on the tax returns of married individuals were
attributed to the first taxpayer on the return, usually the husband.
In 1977, subsequentjy~ the Census Bu~eau reported appxo~Umate1y 700 , 000
women-owned sole proprietorships.2
In 1977, the Internal Revenue Service dxe'w a sample of tax returns and
from the sample estimated that thete wete approximately 1~9 u~illion'
women-owned sole proprietorships, indicating th~,t the Census Bureau's
figures had been off by approximately 12 million. The discrepancy
betweet~ the IRS and the Bureau of Census exists despite i4~e fact ths,t
the primary source of data for the 1977 census was the IRS,3
The discrepancy in the U~S and the Bureau of Census tuimbers may exist
because there is no uniform-definition of a "woman-owned"-btsiness.
For instance, the U.S Small `Business Adatinistration's Office of
Women' s Business Ownership defines a woman-owned husineis as ~one that
`is at least 51 percent owned, operated and cot~trolled by a woman -or
women.4 This includes control of operations on a day-to-day basis.
The Census Bureau consid'et's a busjnesa to be women~owned if the so1e~
owner of half or more of tbe~partners are women, or-, ma Onrpora'tion,
if 50 percent-~opmore of the stock is~o~ined by women.-5 Meanwhile,
the Interns,]. 1~e'v'enue Service estimates th~ number -of "female ~operated
firms for sole proprietorships~-by using the first names from the Form
1040, Schedule C that must be filed by business owners. The IRS does
not collect or analyze data by sex on partnerships or corporations.6
The Bureau ofLabor Statistics (BLS) figures count only the number of
people reporti~'ig to be self employed, not the number of businesses they
own nor their share of ownership. The BLSrfi-gures also do not capture
all U.S. business owners. Corporate owners~-atid partners are excluded
prom the count, since BI,.S counts these individuals separately as wage
2
-; A ~ ~ ~- ` -
PAGENO="0178"
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and salary workers. In addition, individuals who are self-employed in
a second job, but work for someone else in their primary job are not
included in the count.7
StatisticS based on these definitions represent only the smaller scale
businesses owned by women, since they are based on the U.S. Census
survey of sole proprietorships, partnerships and S Corporations. They
do not include those women who have moved up the entrepreneurial
learning curve in the last decade to larger scale enterpris~a, nor do
they capture those women who initiated their enterprises as regular (c)
corporations in the first place.
A glimpse of the possible magnitude of this hidden corporate sector of
women business owners can be seen by looking at select groups of more
sophisticated women business owners, such as those who were delegates
to the 1986 White House Conference on Small Business or who are members
of either the National Association of Women Business Owners (NAWBO) or
the Committee of 200.
Sixty-four percent of the womenwho were White House delegates owned
corporations (C or S)8 and 55% of the members of NAWBO are
incorporated (C or 5), with 42% owning C corporations.9 Consequently
many of these women's businesses were not captured by the U.S. Census
survey.
The Committee of 200 estimates that 80% of its members are
entrepreneurs, and 13% own or manage firms with revenues in excess of
$100 million. This orgamization was started with seed capital from the
National Association of Women Business Owners in order to dispel the
myth that all women own micro-enterprises and to point to the fact that
women are entering the business inainstreani as the owners of large scale
enterprises 10
The criteria for membership in the Committee is ownership of a business
whose revenues exceed $5 million dollars or control of a corporatS
division of a business with revenues in excess of $20 million dollars.
Mo~t important, when the search was made in 1981 for the top 200 women
entrepreneurs and corporate leaders, over 1,500 potential members
surfaced.
PAGENO="0179"
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To improve the national da~te on woman bi,tstne5s owi~ei~s, c1~e ~lovernment;
must estiablish initiatives to ens~ire the regular ct~to~ ~f r~lLab1e
national data on women business owner~ and further reflse~ and upd~ta
the Standard Industrial Classification Codes (SIC) to reflect the
dynamic changes in the service sector, including the profess~iqna~. and
technical services, where the preponderance of women busir~essosners is
concentrated.
Although the Standard Industrial Codes were updated in 1987, the
present SIC Codes still seriously under-represent the services sector.
The SIC Codes, which are used to measure output by industry group, were
developed in the l930s when America was primarily a manufacturing and
agriculture economy.
Not surprisingly, in 1988, the goods producing sector is represented by
607 different categories although it represents only one-third of our
gz~oss national product and 30 percent of employment, The services
sector is represented by 442 industry categories even though it
contributes two-thirds of out gross national product and 70 percent of
employment. This outdated statistical framework is grossly inadequate
*to support the development of sound economic, tax, trade, and
regulatory policies. Lack of sound data is a practical barrier to
understanding the true nature, dimensions and character of the dynamic
entrepreneurial business community~ This understanding is essential to
articulating the proper role for the federal government in promoting
growth, entrepreneurship and innovation.
As renowned management consultant Peter Drucker noted, "The aggregates
on which all statistics are built are now 50 years old. And so the
great national economic aggregates have been reliable plus or ninus 40
percent. . . If you get that much slippage and still base policy on it,
your chances of doing the wrong thing are simply too great.
The United States must accelerate efforts to modernize its national
data collecting capabilities. Much of this can be done within present
systems and without an unwarrabted increase in paperwork for the
nation's businesses.
Therefore, it is essential to develop a methodology for revising and
displaying a new classification system which will be both responsive to
and reflective of the rapidly changing entrepreneurial eccoomy and
economic structure of the United States. The goalis a flexible
classification system which, through periodic `updates, will accommodate
changes in economic structure and activities while maintaining a basis
for historical comparability.
It is also necesSary to revise the SIC codes for management and
procurement information and control purposes. Development Of a system
to provide comprehensive information on c~mmercia1 transactions between
LS. companies and foreign entities would assist in the formulation of
international trade policies and'assist US. business in identifying
and evaluating market opportunities.
PAGENO="0180"
174
Nine out of every 10 j~1~s ereated in the next decade will be in the
services indu~try. With woman business owners spreading into the
service area at a r~apid rate, clearly women-owned businesses will
be an important contributor to the national economy. Improved data
accumulation and st~atistical evaluation will assist policymakers to
determine the needs of women-owned businesses and their impacts on the
economy.
5
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175
1 National Association of Women Business Owners, "NAWBO Membership
Profile," (Chicago, National Association of Women Business Owners,
1984,
2 U.S. Department of Commerce Bureau of the Census, Women-Owned
Businesses.. 1971, (Washington, D.C.: U.S. Government Printing
Office, 1976).
3 Ibid.
4 President's Interagency Task Force on Women Business Owners, Th~
Bottosi Line: Unequal Enterprise in America, (U.S. Government
Printing Office, 1978).
5 Bureau of the Census, Wom~n-Owned Businesses., 1977.
6 U.S. Department of Treasury, Internal Revenue Service, ~
ProDrietorabip Retu~ns. .1979-1980. (Washington, D.C.: U.S.
Government Printing office, 1982).
7 Recent information on self-employed workers is analyzed in T.
Scott Fain, "Self-Employed Americans; Their. Nua~ber Has Increased,"
M~opth1y Labor Review (Nov. 1980): and Eugene ii. Becker, "Self-
Employed Workers: An Update to 1983" Monthly Labor Re$ew., 107, 9.
(July, 1984).
8 Source: white House Conference on Small Business, 1986.
9 National Association of Women Business Owners, "NAWBO Membership
Profile," (Ohica~o, National Association of Women Business
Owners, 1987).
10 Committee of 200, Chicago, Illinois.
6
PAGENO="0182"
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THE CHANGING WORK FORCE
and
THE IMPACT of WORKING WOMEN
According to Rosabeth Ranter, professor at Harvard University's School
of Management and a leading advisor to many Fortune 500 companies, there
are few periods in history that deserve the label of "transforming
eras," when circumstances change sufficiently to warrant a major shift
of assumptions. Thomas Kuhn, the historian of science, has pointed out
that major change takes place only occasionally, in what he called
paradigm shifts, when the working assumptions on which people have
depended become so inappropriate that they break down, to be replaced by
a more appropriate set. Thus, social or economic history is
intrinsically characterized by long .periods of stability in paradigm,
punctuated by relatively short periods of high instability: history as
staircase, rather than ramp. Ranter believes this model fits the
changing world of business organizations avery well.
Business organizations are facing a series of changes more extansive,
more far-reaching in implications, and more fundamental in transforming
quality than anything since the "modern" industrial system took shape in
the years between roughly 1890 and 1920. These changes in the American
business environment come from several sources: continued integration of
the world economy; further shifts of production from goods to services;
the application of advanced technologies to most industries; faster
gains in productivity, particularly in services; disinflation or
deflation in world prices; and increased competition in product,
service, and labor markets. Each of these by itself has changed
significantly. The present situation is unusual not only in that each
is undergoing transforming change, but that the changes are profound.
Furthermore, radical transformations of the US work force, have required
companies to address a series of managerial and human resource issues.
These transformations include:
o The U.S. has moved toward a society where men and women have
equal opportunities to pursue whatever career and family goals
they choose.
o White males, thought of only a generation ago as the mainstays
of the economy, will comprise only 15 percent of the net
additions to the labor force between 1985 and 2000. For
companies that have previously hired mostly young white men, the
years ahead will force them to look beyond their traditional
sources of personnel.
o Over the next 12 years, blacks, Hispanics, and other minorities
will make up a large share of the expansion of the labor force.
Non-whites, for example, will comprise 29 perceBt of the net
additions to the work force between 1985 an4 2000 and will be
more than 15 percent of the work force in the year 2000. Black
women will comprise the largest share of the increase in the
non-white labor force. In fact, by the year 2000, black women
PAGENO="0183"
177
will outnumber black men in'the work force, a striking c~ntrast
to the pattern among' whites, where men outnumber women by almost
three to two.
o Approximately 600,000 legal and illegal immigrants ~re projected
to enter the T3nited States annually throughout the halance of
the century. Two-thirds or more of the immigrants of working'
age are likely to join the'labor force;
o Seventy percent of all collegeeducated women work; virtually
all women in their twenties and thirties `work' u~1ess they have
small children, and even then half the women ~with chilctren under
six years work.
o As the baby boom ages; atd the baby bust enters the work force,
the average age~,of the work force will climb from 36 in 1988 to
39 by~ the year WOO. The number of young worke~s age l6-Z4~will
drop by almost million, or 8 percent.
o Part-time, flexibje~, sri4 stay-at home jobs will i,ncrease, an4
total work hours per employee are likely to drop in response
to the needs of women to integrate work and child-rearing, and
the modem equipped computer, *~hLch will eliminate the need for
the office as a centralized communication and production area
o Love ~f woth Ls~ on the upswing Seventy-f tv~ pet~enr~of
- American' a no' longer ftn4 `acceptable the ~prospect~ of Worlcihg at,
a~bori$g job ts~-iong at the pay is good. ,`$el'L~deni4j~n a~job
setting is an aging ~dea. ~alues are changin~
o Relocation is an issue that has brought the two-career family
into corporate focus. changes in values, especially among
younger employees, have made career advancement and financial
gain alone less persuasive inducements to relocate.
In particular, the mass movement of women into the'work force has been
hailed by social scientists and historians as a social change of
mOmentous proportions, comparable to the industrial te~ol~tion or the
wavis of immigration in the lass een1~ury. " It' s the ~is~g~l~,most
outstanding phenome~nn of~thl~s o,entury~" s9ys ~lL~i~zberg, ~Q~essor at
Columbia Uniwersiry. ~ attributes Ametica's rapid
economic growth in recent years to one factor Mouten entry in~o' the job
market as part-time, full-time, lifetime workers in virtualt~ alt
occupations and at all leve).s of responsibility,
This transfusion of feminine energy and skill from the pri~iace to the
public world, is, the'article qontinues, "boosting ecpnomic growth', arid
helping to reshape the economy dramatica1]~y. Women have seized
two - thirds of the jobs created in the last decade. .An4 th~y have been
the linchpip in the shift toward services and away from manufacturing
Because a rapidly expanding labor force is a principal element' in
propelling an eoonomy onto ,a'famn~growah traok~- t~e inf1~x of womer~ itto
the job market m~y be - the major reason that ,the U~S `ba* emerged so
2
PAGENO="0184"
178
much healthier than other countries from the aconomic shocks of the
l970s." Nobel laureate Paul A. Samuelson, professor of economics at
M.I.T adds, "To the degree that women are getting an opportunity that
they didn' t have in the past, the economy is tapping an important and
previously wasted resource."
In the 1980s women hmve become major players in the economic fabric of
the United States. Furthermore, as the country becomes more fully
entrenched in the information economy, it is becoming clearer that, if
industrial America wac a. man's world, the new information economy is an
era when women's economic achievements can be showcased. Thus, as we
approach the 21st Century women have a unique and very important stake
in business,, both as owners and as employees.
Between 1970 and 1985, the female labor farce participation rate
increased almost 85 percent, so that women now compromise 55 percent of
the work force - - compared with 38 percent in 1960 and only 27 percent
in 1940. The Bureau of Labor Statistics estimates that in 1995, 60
percent of women will wprk Slowly but surely, women's labor force
participation will move toward matching that o~fmen,~ approximately 75
percent.
Moreover, in~the space of a gei~c~tion, women's work patterns have
undergone a complete metamorphosis: At the end of the .Second World War
only 10 percent of married women with children under the age of six held
jobs or were seeking them Since then mothers of preschool children
have thronged to the job market~ 8~ 1985 the census bad classIfied more
than half of these young mothers not: only. as participants in the work
force, but also the fastest growing segment of the labor force.
Women are crowding into sectors of the work force traditionallyoccupied
by men. From 1972 to 1985 women's share of professional jobs increased
from 44 to 49 percent and their share of "management jobs" nearly
doubled - - growing from 20 to 36 percent.. From 1960 to 1983 the
percentage of lawyers who are women had risen from 2 to 15 and the
percentage of jobs in banking and financial management held by women had
risen from 9 to ~
A similar shift has occurred in blue-collar work. 1~rom 1970 to 1984 the
number of fema1~ `butchers'in~packiflghOuseS had risen by more than a
third and by 1984 nearly 80 percent of new bartender jobs were going to
women.
The future promises yet more blurring of traditional sex roles in the
work force. In the United States currently, more women than men are
enrolled in college and universities, and women are earning a steadily
rising share of all advanced degrees. For example, in 1983, 45 percent
of those receiving accounting degrees, 36 percent of new lawers, 36
percent of computer science majors, and 42 percent of business majors
were women.
As women have been moving in ever-increasing numbers into jobs and
professions traditionally occupied by men, the work environment has
begun to respond to women's needs and values. Working women, for
PAGENO="0185"
179
instapce, are raising ~he issue of omparable~,s~orth,. WOmen's pay,
thot~gh still a long way~'from parity, has risen from 57 percent of men's
wages in 1973 to 64 percent in 1987. Despite this~disheartening figure
there is cause for opti~ism
As women prepare themsel~s for business, enter traditionally male
fields, and move from staff to ~nageria1. posi~o~is the gap in pay will
continue to narrow. For example, according,to a ~tudy.in Working Woilien
magazine professional women have made steady gains, earning seventy-
five cents for each dollar a man earns, compared with only seventy-one
cents in 1983. Furthermore, women's wages, especially in secretarial
and clerical fields, will grow to reflect decliziipg nusib~rs of entry-
level workers -- and the increased options for ~qmen in Other areas.
Working women have also made mat~rnity l~ave, ~ne Of the maj or personnel
issues of the l980s. The Pregnancy, Discrimination Act of 1978. requires
employers to treat pregnancy like any other.disabi~.ity or illness. In
practice this means that cOmpany insurance must coMier. the same~share of
costs that would normally be paid for any, illness, .an4 tha; th~' employer
must give the mothers short disability leave.. The law does nOt require
the employer to extend the leave,beyond the ~immediape .reqovery..p~riod.or
to guarantee the j9b security of the mother if she opt for a lo*lger
absence. S
Many of the.pation's largest corporations, however, extend a twelvs.-to-
sixteen-week leave to new mothe~s, most guaranteeing job protection.
Some of these:corporations also allow paternity leaves, although most
companies actually frown ot~ `men who take this pption. Many smaller
companies extend leaves, but. guarantee the mother .h~r ~ a
comparable job only if favorable business coudition~ prevail/ ~iost
American companies that eytend leave do not give the mother any cash
benefits afte~r the immediate racovery.
Congress has introduced legislation that wil~. close the gap, between the
new diverse work force' and outdated maternity leave personnel policies
that govern, the workplace. The HOuse Education and Labor Committee
November ]~7, 1987 approted the Family and Medical Leave Act r~quiring
many public and private employers to offer their workers job-pr~~tected
family and medical leaves. The bill reqi4res businesses wLtK.50 or mbre,
workers to grant unpaid, leaves~ The threshold woi4d~ drop to 35 worbers
after 3 years unless Congress acts afEirm~tively to ~hange. it~,
The bill, which permi~s.'~an employee to. care .for~a' ne~horn or nemly
adopted child or a Ceriously ill child. or parent,. woi4d'ISe limited, to 10
weeks over 2 years, Medical leaves for workers who are themselves ill
or disabled would be limited to 15 weeks per year, In addition,
employees would not be entitled to.,~he .leave until' they had worked at .a
business at. least; 20 hours per.weelç for at l~ast ~.year~ and, ~in~loyers
would be permitted to deny reinstatement .to the .higbestpaid 10 percent.
of their employees,
Working women are also forcing corporations to become (tivolved with
child day care. Although 8 million children t~eed day care, there is
space for only. 2 million children in day-care centers. ~, it is predicted
4 5 , S
PAGENO="0186"
180
that the number of children needing day care will increase to 10.5
million by 1990.
A positive trend in child care is the involvement of corporations.
Recent figures indicate that approximately 3,000 corporations are
providing child-care assistance to their employees. The assistance
takes a number of forms, including information and referral services,
cash grants, vouchers, and onsite child-care centers finattced by the
corporation.
Corporate involvement in child care cart be expected to continue.
Corporations are finding that more and more of their employees have
dependent children in need of day care, and that workers are more
productive when they are not distracted by child-care concerns. A stu4y
by Texas Women' s IJniversity, for instance, revealed that a $50000
investment in a day-care program can save $3 million in employee
turnover, trainitig, and lost work time.
The city of San Francisco has passed a tiovel ordinance designed to deal
with the child care needs of workers. The ordnance requires the
builders of downtowns skyscrapers either to provide space for child care
or to pay a tax of $1 for each sciuare foot of space in the building.
The city will use the revenues generated to construct day-care centers.
Paralleling the tremendous increase of women in the work force has been
their influx into the entrepreneurial arena. Woman-owned businesses are
spreading into all areas of the economy at a rapid rate, although the
heaviest concentrations are in the service areas. The procurement
awards that have been made to woman-owned businesses attest to the
diversity of these businesses and the relevance of these businesses to
Government needs- -operation of Government facilities, management and
professional services, training, construction, and provision of such
goods as ammunition and explosives, vehicular equipment components,
furniture, and communications equipment.
In 1981, to delineate more accurately the characteristics of women-owned
businesses, the National Association of Women Business Owners funded an
original research project aimed at identifying the nation's leading
women entrepreneurs. The research, conducted over a 9-month period,
pinpointed more than 1,700 women in the United States who are running
companies that gross more than $1 milliór~ annually. These women not
only own major businesses but are also actively controlling them. These
women are engaged in a variety of traditional and nontraditional
businesses, including venture capital, construction, manufacturing, oil
and gas, and finance.
A more recent study, conducted by NAWBO in l~84, reveals that among the
766 women business owners surveyed in this study 25 percent had gross
annual sales of over $800~000, and 75 percenthad gross annual sales of
over $80,000.
5
PAGENO="0187"
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The study also sho~ied that those women business owners:
o Have combined total revenues of more than half of~ billion
dollars a' year.
o Have average annual revenues of. $425 , 000 per company.
o Awerage 11 full - time employees, with an additional 14 parts timS
or contract employees.
o Are concentrated in professiânsl services- -~ ~ection of the
economy where most o~ the nation's jobs arC now being created,
e.g., as consultants, actOutttants, and làyers'-and in
communications, distribution, and financial services.
o Include manufacturers, cOntractors, truckers, airport and train
operators, robotic experts, and other nontraditional womCn's
occupations.
The Committee of 200, a n~tiona1 group of top woman-owned businesCes,
created as an outgrowth of a NAWBO project to identify sutcessful women
business owners, provides another Sample of such businesses: Membership
in the Committee of 200 requires a woman to own and hav~ active control
oVer a business withannual salesin excCss'Of $5 iSilliomi dollars.
These businesses include general contracting, heavy construction,
electronics distrihutio~'~industrial tonI distribution, industtial
chemical distribution) . sirCel tontracting, mapping and hatutal resOurce `
information, analytical chemical laboratoties, petroleum refining, `oil
drilling supplies, metal fabrication, marniZacture ofprOducts-etdh aS
chemicals, instit~utiona1 health care products, laboret~ory siS~plies, `and
plumbing and lighting fixtures, `and such high-tech busihesses as
telecommunications and computers,
In the 10 year period between 1972 and l982~ the number of businesses
owned by women jumped from Less than~ 5 portent to over 25 percent..
Today, there arean estimated ~.7 million businesses ownedhy women in
the country compared~ to l~9 millioniri 1977, Currently, `women. are going
into business at a rate tw~ times faster then men and are thus the~
fastest growing segment of the entrepreneurial community. In addition,
since the vast majority of these mew female entrep~epeu~s e~tCr service
businesses, their role will grow. in importance as the country tontinnes
to shift away from a manufacturing-oriented economic base to OtiS where
service industries play an increasingly important `role.
Already, the indicators of this change are significant'. It was a women
business owners' trade association (the National Association'bft~omen~
Business Owners) which spearheaded the U. S. Department o~ Commerce' 5
fitst service-oriented tradS mission to Buz'ope,' and wonton played a major
role in the deliberations of the :1986 white House Conference~on `Small
Business wbCre they made up 36 percent of the dCle~~tCs, `compared to
only 12 percent'in 1980. . - `
6
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Of equal importance, is the economic impact of women-owned businesses.
Gross receipts from women-owned businesses approximated $100 billion a
year according to the 1982 U.S. Census study of women business owners.
However, the total economic impact of these businesses far exceeds this
level if one takes into account the multiplier effect of these dollars
as they turn over in the economy.
Using a conservative estimate that eactli dollar will be multiplied 2.5
times in the local economy, women-owned businesses contribute $250
billion to the national economy. Of this $250 billion, approximately
$37 billion is paid to the U.s. Treasury in federal taxes, and another
$13 billion is paid in local and state taxes. Consequently, women
business owners represent a vital new resource for the economic future
of the country.
Women, as busines~ owners and as employees, are having 5~ore than just an
economic impact on society. Women are "neurologically more flexible
than men," says Eli Ginzberg, "and they have had cultural permission to
be more intuitive, sensitive, feeling. Their natural milieu has been
complexity, change nuturance, affiliation, .a more fluid sense of time."
As women's attributes of feminine cultural are brought into the
workplace, they are providing a much-needed balance to what has been a
predominantly male environment, and slowly but steadily they are eroding
some of the obsolete practices and prejudices that have dehumanized
work and the work environment.
Business and industry are, in fact, beginning to give serious attention
to the development of a more humanistic working environment. As the
U.S. economy shifts away from smokestack production towards a greater
emphasis on services and high technology, business analysts are calling
for a more participative, people-orientated approach to managing. Many
companies are adopting radically new management philosophies, style, and
structures. The predominantly hierarchical authoritarian management
style is sifting to a more consultutive one in which the actors within
the enterprise have real opportunities to have input on decisions. As
John Naisbitt has noted, "mammoth centralized institutions whose very
existence have relied upon hierarchies are being replaced by smaller,
decentralized units, linked informally with each other instead of being
clumped together."
Alvin Toffler in The Third Wave, speaks of maj or changes to come in
corporate structure. Future management must be able to "operate as
capably as open-door, free-flow style as in a hierarchical mode.. .work
in organizations structured like an Egyptian pyramid as well as those
that look like a Calder mobile, with a few thin managerial strands
holding a complex set of nearly autonomous modules that move in response
to the gentlest breeze."
Moreover, Michael Piore in The Second Industrial Divide projects an
economic system in which, "an imposing but ultimately dangerously
unstable structure of vast rigid beams and girders has been replaced by
a honeycomb of flexible production cells, not only giving resilience to
the domestic economy but facilitating its adjustment to a stronger, more
stable international order. . . In the more communal arrangements of work
7
PAGENO="0189"
18$
that become possible `under flexible specialization, new social
relationships will arise, reducing the gulf between boss and worker,
encouraging the introduction of machinery that magnifies rather than
dwarfs the creativity of its user.'
In the services and information era, the challenge is to build an
operating environment which encourages freedom, ferment, aggressiveness,
and innovation. One that offers opportunity for great personal
satisfaction and that pro:vides ~tespect for all regardless of job level.
There are several ways to do this. One is to push. `responsibility `down
through the organization. Th give ~eople closest to the market or the
product more say in what goes on. Another way to create this innovative
environment is to break dowr~ some of the rigid organizational lines that
have been established,
Subsequently today's managers are being trained to Cncourage, common
goals, employee participation and cooperation. Furthermore, these new
managers are expeGted to exhibit qualities of sensitivity and
compassion, and treat employees as valuable organizational resources,
rathet than replaceable coflunodities.
Women are exceptionally wall qualified to manage in the .informition and
service economy. Women favor co~perattQn over competie~on. They prefer
to work in team structures where power and influence are shared more
across the group, as opposed to a hierarchy wher~ power is concentrated
at the top. ~Women managers also tend to pla~e strong entph'asis on
developing positive relationships with `co-workers. Furthermore, they
try to relate to employees in a more personal way than `often is the case
in the `traditional male style.
Naturally., these quAlities aren't ones' the,t are observed equally in all
women - - nor are they abse~it in all menE The key distinction is that,
as a group, women tend to exhibit these,- particular leadership qualities
to a far greater degree thati men, The reason for this is rooted'in~the
basic facts of socialization,
The post-World War II era- has seen eweeping demqgraphic changes- `in the
work force. Women, as business owners and employeirs, have ,beo~otek new
players in the nation's thdus~r~ial fabric~ Furthermore, since the vast
maj ority of these new .fem~le entrmpren~eurs enter ~erytee bus4~nesse's,
their role will continue to' g~rww in importance as- the ~otrnnry ~dontinueg"
to shift away from a man*uftcturing~oriented ecottOmi'c base t~ one ~he-~e
service industries play an ~~rtdreasingly important ro'ln. `~
If the United States is, to meet' the ch~lienge of the changing work force
and survive, a~d succeed in today' s fiercely competitive economio
climate, policymakers and corporaee~ America must shed outworn management
structures and~practices-and make fresh use -of both people and
technology.. As Richard C. Gersteuberg, former- G.M. Chairman stated,
"The business,, that fails in- the years ahead will be the -one- that fails
- tO understand how it is related-to the society around -it." One might - -`
also add that the business will-else, faiL U it `toes not organize itseth
internally to make best use of its-human resources. -
8 -
PAGENO="0190"
184
WOMEN-OWNED BUSINESSES IN FEDERAL PROCUREMENTS
The Federal Government is the largest purchaser of gonds and services in
the United states, representing over $200 billion in purchases annually.
Even though women are playing an increasingly important role in the economy
of the United States through the ownership of businesses, they receive only
six-tenths of 1 percent of all government purchases ovet $10,000.
The procurement awards that have been made to women-owned businesses attest
to the diversity of these businesses and the relevance of these businesses
to Government needs--operation o~ Government facilities, management and
professional services, training,' construction, and provision of such
goods as anmunition and explosives,' vehicular equipment components,
furniture, and conmunications equipment. Women own 25 percent of all small
businesses in the United States, and with women going into business at a
faster rate than men, this disproportionate share of procurement dollars is
especially distressing.
The limited access of woman-owned.businesses to Federal procurement~
represents a loss of excellent resources to the Government and a severe
impediment to the viability' of the female entrepreneur and business owner.
It is in the best interest of the nation's economy to support women
business owners as an evolving entrepreneurial sector. Federal policy must
create a climate that supports women-owned businesses.
An analysis of this situation, however, reveals that diCcrimination and the
absence of strong federal initiates to establish a greater conmitment to
women-owned businesses are at the heart of the problem. Consider the
following example: A Washingfo~n ~ article (September 1980) reported that
Karen Haste Williams, then administrator of the Office of Federal
Procurement Policy, was told-by the head of procurement at the Department
of Defense that doing business with a women-owned business was,
essentially, a threat to the nation's security. Robert Trimble, then
acting deputy undersecretary for acquisition polity and author of the -
-letter, wrote, "providing for the country's defense is our primary
mission.. .As indicated above, I have reached the conclusion that the
continued imposition of social programs on the procurement process is
adversely affectIng our ability to fulfill this objective." "Never mind,
the ~ reported, "that a good 30 percent of Defense's multi~billion
dollar procurement budget goes for such things as uniforms, food, laundry
and dry-cleaning equipment, liquor, draperies, mucical instruments,
textiles, sIgns and advertising>displays, toiletry articles, catering
services and the like." -- -
For over 10 years, the Federal Governient has verbally encouraged full.
participation of woman-owned businesse~ in the procurement process. For
the most part, however, this encouragemeht has remainea~ at the' level of lip
service, because the spirit and mechanisms to implement this policy have
been lacking. No preferential contracting programs have been established
for woman- owned- businesses', and' all initiatives to date have been largel~r
ineffective, with the result- that the Federal Government has been
essentially a closed market to woman-owned businesses.
PAGENO="0191"
185
Newly established woman~owned firms encounter many~barriers when competing
for Federal procurements. As with any new business, these firms are
unfamiliar with the procurement process and how to work within it, lack
effective contacts in agencies, and do not have a track tacord to
facilitate favorable contract awa~d decisions. Moreover, woman- owned
businesses often do not possess the Einancial stability to withstand the
extended procurement award cycle (often 12 to 18 months), and, once a
contract is awarded, must cope w&th the cash flow implications of doing
business within a system whete payment often lag~ significantly behind
irtcurring costs to provide goo~ds and services. Further, financing costs
are not recoverable undet Government procurement regulations.
No special set-aside programs e*ist specifioally for Woman.owbed businesses
that would enable thesa businesses, to get their "foOt in the door." One.
study, teported in the Small Business Ad *istr~tioS'~ SeLecx~d A~s~rac~g
ol Compi~eted Re~~grgh Sti.t~ii~e~ teported that ~rocttrement personnel resist
set-asides to small businesSes because of a general belief that "social
obj ectives should not be achiewed through the procurement process.0 ret,
experts say that women who aperate businesses which are;e~igible for
govetnment contracts are prevented from obaaining the contracts by the
general attitude - of agency peveonnel , and that "arbitrariness" is often
involved in the granting of government contracts. -Several small businesses
who were interviewed revea~e4 th~t "the most imporaartt fdctht~tiniit-ing
bidding on contracts was that seine organizations- have -Sn -inside track, ` a
trach ~somen obviously do not have. , . ,
Available inEorni~tion on how to sell to the government is oFten
overwhelming to the uninitiated. Further, the informa,aion,a~jable. gives
little insight into the rea~tties to the- l'ederal procutemeWt~ ~rouess,
namely ~iow to develop technical and oost~ -strategies, whárS -tb~ ~irt~i
backgtound necessaty to prepare a bid or~proposal, dud how to negotiate'
contract terms.
In addition to these problems faced by businesses entering the Federal
procurement matket, Woman-owned businesses face sociolo~gical batriers in'
the form of persistent misconceptions and biases. The~e barriers have been
verifi-4 time and time again by studies examining the role of woman-owned
businesses in Govetnment proauremeut. For e*ample, the 19~ teport of the
U.S. Civil Rights Commission on "htinoriti,es and-Women as Govetnment-
Contractors" states: "Woman-owned businesses are hampered Lti~the-
procurement ptocess by the unavailability of intorniat-iott and biases built
into the -procurement- system.~. i4earingà -before the Senate. Se1~ct' ~omnictee
on Small Business in `February 1976 created an official `tco5rd of ~he
discrimination encountered by women business owners tthder the prevailing
credit and procurement systems. Tn 1978, the President's Interagency Task
Force on Women Puniness Owners reported "women-owned businesses receive a
very sma~l~s~ia-re t~f th~ ~fe4ova~l'procurement dollar aSd ma~ be ex~dtienc-1ng
discrimination i~ their efforts to de business with'the' ,?overnsent," In a -
~iational Association of Women -Business Owners (NAWBO) survey, - members
repotted numerous a~amples .q~ -bias .dnd sex-based discrimination that they-
have experienced as women business owners from Coveenment ps~ogram and
contract~,ng~off5~cjalg, - Examples reperted by ~A-WuO members iñclude.~
2
PAGENO="0192"
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o Contracting officials have labeled women as emotional during contract
negotiation when the women have been tough negotiators and have
dismissed their contracting concerns as "just another complaint,
not to be taken seriously." Some NAWBO members have found the
problem sufficiently serious to hire men to handle their
company's contract negotiations.
o Technical review committees questionitig the ability of a woman to do
the job.
o Program and contracting staff questioning the- ability of a voman to
manage money and handle numbers.
o Women in nontraditional occupations being questioned-as to the
appropriateness of their position~atid their ability to do amen's
job."
Despite these subtle biases and open forms of discrimination that
woman-owned businesses face, there are-successful woman busitiess owners in
America. For instance, in 1979 a Maryland NAWBO member started a
biomedical research planning company. Desj~ite a lagging economy, in its
first 10 months of operations, the-company racked up $1.25 million in
revenues from federal contractS and increased its numbers of employees from
15 to 45. This- was. accomplished by submitting 13 proposals for government
consideration and winning every contract. Today, the company is one of the
fastest growing health communications and biomedical research firms in the
United States, offering integrated multidisciplinary health sciences
support in biochemistry, behavioral psychology, chemistry, and biology, - to
name a few areas, with on--staff Ph.Ds, scientists, nurses, and experts in
health education and public health. The company employs over 150 staff and
has projected sales of $7 million for 1988.
One way a small, woman-owned business could gain experience in Federal
contracting would be to subcontract with a large business. Subcontracting
with larger, more experienced firms could facilitate efforts by these
entry-level woman-owned businesses in overcoming some of -the barriers and
in developing the track record and contracts necessary for success in the
procurement process. However, procurement plans required -by Public Law
95-507 for utilizing small and minority-owned businesses as subcontractors
are not legally required to utilize woman-owned businesses. The only
procurement requirement for prime contractors to develop plans utilizing
woman-owned businesses is contained in the Federal Acquisition Regulations,
which requires prime contractors to develop plans for subcontracting with
woman- owned firms.
Even when agency-set goals for awards to woman-owned businesses are -
established, ~i- oifict*1*taekthe too1s~~SIW!,~tct
the policies! VLt~ th~- xcpttOfl of - the 8(e* program through which some
"socially and economically disadvantaged" woman-owned businesses may
participate, ~- ~ to directty
increaae~ the- nuthet *t -awards wade to wowan-'owned businesses. ~` Further,
th~1~ ~Lncenti'v** àr aecountmbi1it~ for contracting officers to - tMcs
actions to west agene~r goats for contracting with woman-owned businassesa
- 3
PAGENO="0193"
187
NAW8O is committed to facilitate the moVement of women business owners into
the mainstream of the Federal procurement market. NAWBO, in conjunction
with the U.S. Department of Commerce, sponsored MECAMARKET~1ACE I and II.
MECAMARKETELACE gave women business owners an opportunity to meet with
p~ocurement officials from iederal, state, and local governments, as well
as with prime contractors. This opportunity increased the visability of
women-owned companies among federal, state, local, and private contractors
NAWBO also used the 1986 White House Conference on Small Business as a
vehicle to get the issue of procurement in the forefropt of. public policy
debate. As a follow-up to the conference, NAWBO is workit~g with numerous
trade associations, including the Professional Services Council, National
Small Business United, the U. S. Chamber of Commerce, the Small Business
Legislative Council, and the National Federatiod of Independent Business to
implement the procurement recommendations that emerged from the
Conference. S
The barriers that now e~tist for women business owners and potential.
entrepreneurs will not be eliminated overnight. Probably the most
important statement that could be articulated is one that Margaret Heckler,
former Secretary of Health and Human Services, made when she testified at
hearings on the status of women' s business enterprises in 1980: "The
burden falls equally on both the public and private sector, but. . nothing
will happen in the private sector unless the government takes the lead.
As the Washington Star articles mentioned above stated, "The bright glow
which surrounded the Carter administration's much-heralded
women-in-business program has long since faded." It is telling that most
of the problems outlined in that administration's report, ~he Bottom Line:
Unequal Enterprise in Amarica, released in June 1977 remain.
However, the recent federal, congressional and politital party interest in
women entrepreneurs is encouraging. This activity by the parties indicates
that Washington policymakers are finally becoming aware of the epormous
contribution of women-owned businesses to long-term economic growth~
particularly to job creation.
4
88-199 0 - 88 - 7
PAGENO="0194"
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ACCESS TO COMMERCIAL CREDIT
Access to credit as a means of obtaining necessary financing for
start-up costs and business growth has been reported as a major problem
faced by small businesses throughout the United States. The inability
to obtain commercial credit is especially problematic for young
businesses which have not established a financial track record and have
not accumulated sufficient assets to qualify for the business financing
they need under traditional bank evaluation procedures. Businesses in
the service sector, no matter how promising, often face particular
difficulty in obtaining commercial credIt because usually they possess
few tangible assets to which a bank could look for collateral.
Women are starting their own businesses at a rate two times' greater
than men, and are therefore the fastest growing segment wi.thin the
small business community.1 Women-owned businesses are overwhelmingly
in the service sector of the economy. Accordingly, the difficulty of
obtaining credit for a small, service-oriented business has a
disproportionate impact upon women.
In addition, systemic discrimination places the average American woman
at a disadvantage in competing for capital for her enterprise. A
woman's traditional position in the work force has limited not only her
management experience, but also her income and the amount of collateral
she has been able to amass. The problem is even more serious for
minority and divorced women.
Moreover, co-mingled family funds, weak credit histories and limited
experience in the male business community all impact on a woman' s
ability to compete equally in raising éapital. It is these five "C's
of credit" (collateral, capacity to pay back, character, credit, credit
experience, and communications of capital needs) which are used to
judge loan applicants.
Even if de facto sex discrimination did not exist (and most women
business owners maintain that it does), the average American woman
comes to the financial negotiating table with a weaker hand than her
male counterpart. Not only have her earnings been substantially less
than men, but she has less experience in the financial system.
The severity of this problem and its impact on business growth has been
illustrated by two recent studies: one of Michigan business women, and
the other of women business owners in Philadelphia.
The Michigan study surveyed 3,500 women and received responses from 17%
(621). This survey showed that while 69% of these women business
owners had approached banks and lending institutions, only 14% of the
capital used to start their enterprises had come from lenders, with
over 70% coming from savings and earnings, and another 15% from
friends, relatives and private investors.
PAGENO="0195"
189
This self-reliance on their own earning and savings, despite the
traditionally low earning power of women in the work fQrce, resulted in
80% of the businesses being capitalized at under $20,000. Only 5% of
the women in the survey started their businessss with more than
$75,000.
Most important, over half (52%) of these Michigan business owners were
operating without a bank loan of any kind. Yet, these were not new
businesses. Only 8% of the survey respondents had been in business for
less than two years. Sixty four percent had been in existence for at
least five years, with 32% of these being over ten years old. In terms
of size, 41% of the respondents indicated that their businesses grossed
over $100,000 a year, and 54% employed over four full-time and
part-time employees, in addition to themselves. Almost one fourth
(23%) employed over ten such employees.
These Michigan businesses were not part-time ventures or home-based
enterprises with no plans for expansion. The survey showed that 86% of
the respondents operated full-time ventures and that 80% leased or
owned space. Most important, from an economic development
perspective~ was the fact that almost half (47%) were considering
expanding in 1987.
The information learned from questions regard~ng collateral in the
Michigan study highlight the problems women have in accessing
traditional sources of capital particularly in states where the
banking institutions are heavily oriented to asset-based lending. Of
the 48% who had bank loans, the business owner' s plant and equipment
was the frequently mentioned (47%) source of collataral, followed by
there house or car (31%), and business-owned receivables (30%). In
terms of the level of collateral required, the majority (75%) indicated
that the collateral required was equal to or greater than the amount of
the loan, with thirty-six percent indicating collateral requirements
greater than the loan amount.
Of those, 42% indicated that the collateral was higher than 200% of the
loan amount. Fifteen percent indicated having to collateralize their
loans at a level that was greater than 500% of the amount of the
loan2
A recent Philadelphia survey of 650 women business owners, to which 150
responded, sheds additi~na1 light on the degree to which women are
bootstrapping themselves into the market place. The t~omen in this
survey represented more recent business owners with 50% in operation
for less than four years. It illustrates, however, the level at which
women are outside of the traditional capital markets.
The initial start-up costs for 57% of the respondents were less than
$5,000. While this low level of capital may be due to the many
2
PAGENO="0196"
190
professional services and home-based businesses in the sample, other
studies confirm the phenomenon that women tend to start businesses with
smaller amounts of capital than men, regardless of professional and/or
home-based status. This initial use of small amounts of start-up
capital may inhibit the ability of these women to take advantage of
expansion opportunities as they become available.
Most of the Philadelphia women, regardless of business type, received a
significant amount oE their start-up support from personal sources.
Very few women received start-up money from secondary sources (business
colleagues, inheritadce, stock/bond sales, or a second mortgage) or
institutional sources (banks, goverdment agencies or personal finance
companies). Those percentages were 11% and 14%, respectively.
Most importantly, a significant percentage (64%) of women did not seek
information about securing a bank start-up loan. In other words, they
opted out of the process without exploring the possibility of securing
outside financing. Their teasons included thinking that they could not
get a loan, not knowing the procedure to follow, and having enough
money from other sources.
In addition, those Philadelphia women who were married had a better
incidence of getting expansion loans (since their husbands could
co-sign), then those who were unmarried.3
These current studies echo earlier findings. In June, 1983, President
Reagan established an Advisory Committee on Women's Bttsiness Ownership.
The Advisory Committee conduced a written survey of women business
owners and convened five public hearings in various areas of the
country. One of the Committee's key findings was that "there are,
unequivocally, barriers unique to women business owners today which
place them at a serious disadvantage." The Committee contributed women
business owners' problems with access to commercial credit to:
o A "hobby mindset" of some lenders which leads them to believe a
woman' s business is truly an avocation, and not a serious
business enterprise.
o Women are not always aware of their rights under the equal
access to credit laws. There are inconsistent enforcement of
lending laws.
o Women may not be aware of the likeliest source of capital
or of how to make the most effective loan presentation
and finat~cial projections.
o Often service industries find it hard to obtain financing
because it is difficult to collateralize staff and services.
PAGENO="0197"
191
o Women are not always as aggressive as men in seeking
alternative financing when denied credit by a bank, Men demand
explanations and keep searching for a source that will fund
them,
o The "e*perience factor may be missing" Women may know
their area of expertise but may lack business/management
skills.
Unfortunately, the public sector has done very little to overcome these
barriers.
In Th~ Annua)19~eport to the Pre~ident (June 1980), the Interagency
Committee on Women's Business Enterprise stated, `The most formidable
barrier to women's efforts to establish bu~inesses of their own,
continues to be latic of access to traditional source of credit and
capital. Banks have been slow to perceive women as a profitable target
market. Because of their low income status relative to men, -credit
worthiness is often difficult for women to establish when standard
measures such as collateral and income form the basis for judging. The
very small size of many women's enterprises both in receipts as well as
number of employees hinders their ability to focus on expansion."
Realizing these problems, the Small -Business Administration initiated a
mini-loan program exclusively for women entrepreneurs in late 1979.
The SBA program, designed to assist women whose capital needs for
starting or expanding a business were $20,000 or less, received 150,000
requests for mini-loan information almost immediately, 1~uring the
first six months of fl 1980, the SBA approved almost 900 loans for 13.9
million- -with roughly half granted to existing women-owned businesses
and half to new businesses,
Unfortunately, this successful program was discontinued in the early
years of the Reagan Administration. Women-owned businesses and women
entrepreneurs must once again compete with larger, well-established and
usually male-owned business for credit from conservative lending
institutions.
The 1978 Presidential Interagency Task Force on Women Business Owners
found that women seeking capital from financial institutions have Laced
problems "over and above those normally faced by any,. new or ~small
business person" and have encountered "subt~Le discri~uina~ipn," It
based these findings in part on an American Management As~oc~ation -
survey in which a majority of women believed that inability to obtain
adequate financing is a significant anci special problem ~or women
business owners. Many women, according to the study, found obstacles
disappearing and borrowing becoming sudc~en1y possible when they
approached the banking environment with support or assistance -from
their spouse, family members, or male friends.
The Equal Credit Opportunity Act of 1974 (ECOA) should have eradicated
barriers that have adversely affected the ability of women-owned
businesses to secure business credit, but unfortunately it did not.
Although the Act requires Linantial credit institutions to make credit
4
PAGENO="0198"
192
available equally to all credit-worthy customers without regard to sex
or martial status, many of its provisions have been interpreted not to
apply to business transactions.
The Equal Credit Opportunity Act prohibits discrimination in lending on
the basis of race, color, national origin, sex, martial status, age,
the receipt of public assistance or the exercise of rights under the
Consumer Credit Protection Act. It applies to both consumer and
commercial credit.
In implementing the ECOA, the Federal Reserve Board adopted Regulation
B, specifying various anti-discrimination safeguards applicable to all
types of credit transactions. Ordinarily, creditors must (1) furnish
credit applicants with written notice where credit is denied or other
adverse action is taken, and provide either a statement of specific
reasons for the action taken or inform applicants of their right to
request such a statement; and (2) automatically retain records of the
credit application and evaluation for 25 months. Regulation B also
prohibits a creditor frc~m requesting information on the marital status
of the applicant~
However, the Federal Reserve Board also included in Regulation B a
so-called "business credit exemption" which removes the safeguards
described above in the context of commercial credit transactions,
despite the apparent intention of the ECOA that its safeguards apply to
all credit transactions. Thus~ the so-called "bitsiness credit
exemption" in Regulation B t~$* the effect of shifting the burden of
ensuring non-discrimination from banks to some of the people the ECOA
was enacted to protect -- women and minority business owners.
Consequently, with respect to commercial credit applicants, creditors
may inquire into the borrower's martail status, need not supply arty
notification of reasons for adverse actions unless requested by the
borrower within 30 days of notice of denial, and need not retain credit
files for 25 months unless specifically requested to do so in writing
by the applicant within 90 days of the adverse action. Most
importantly, creditors are not required to notify commercial credit
applicants that they have the right to request both a written statemertt
of reasons for action taken and the retention of their credit files.
These exemptions from the otherwise applicable provisions of Regulation
B permit sex-based discrimination against women business owners and
appear contrary to congressional intent. Commenting on the Board's
power to grant exemptions from the Act, the Senate Committee on
Banking, Housing, and Urban Affairs wrote:
The Board would have to make an express finding that
there was no evidence or likelihood of discrimination
in that class of transactions, nor would the potential
for discrimination be greater if the Board were to exempt that
class of transactions from compliance withone or
more provisions of the Act. . The committee intends to indicate to
the Board that it should not grant broad exemptions.
PAGENO="0199"
193
Similar language appears in the Conference Report on the 1976
Amendments to the Act (Conference Report S.685, 94th Cong. 2nd Sess.9
(1976)).
As reasons for adopting the business credit exemption, the Federal
Reserve Board stated that the buainess loan application process was
more extensive than that of consumer loans, and that borrowers would
learn the reasons for denial of their application during negotiations
and exchanges in the application process. Moreover, the Board stated
that commercial borrowers are more sophisticated and don't need
extensive explanations, The Board also stated that creditors would
learti of the marital status of borrowors anyway when negotiating the
loan application, thereby alleviating the need for a prohibition of
marital status inquiries. Finally, the Board said that the cost of
retaining voluminous business records was significant and the Board
was unwilling to impose this cost on banks.
As the courts have recognized in the employment context, discrimination
is often subtle and hard to detect and prove. Exempting business
credit transactions from the requirements of the Act hampers the
ability of enforcement agencies and women entrepreneurs to detect
illegal discrimination eliminates incentives for financial
institutions to monitor their own practices, and makes it impossible
for public policymakers to know whether they need to address
discriminatory practices or other types of barriers to full access to
credit. The rapid growth of women-owned businesses, and the evidence
that their problems with financing continue, make action on this issue
vitally important.
To ensure that applicants for business credit receive the protections
intended by the Equal Credit Opportunity Act, Representatives
John LaFalce and Lindy Boggs in April 1987 introduced HR. 1987. This
bill permits the exemption of business loans from the broad scope of
the ECOA and Regulation B only if the Board holds a formal hearing and
finds that the application of the ECOA or particular provisions
thereunder to particular classes of business transactions is not
necessary to promote equal credit opportunities,
6
PAGENO="0200"
194
1 Report of the President's Advisory Committee on Women's Business
Ownership.
2 Source: Michigan Women-Owned Business Survey by Michigan Woman
Magazine and Touche Ross, April, 1987.
3 The. Hub Program For Women's Enterprise. A survey of Philadelphia
Women's Business Owners, by Dr. Amy Lyman, Warton Center for
Applied Research, University of Pennsylvania, April, 28, 1987.
7
PAGENO="0201"
195
PRE?ARE~ STATEMENT
TO THE 100TH CONGRESS
COMMITTEE ON SMALL BUSINESS
APRIL 26, 1988
by MARY H FARRAR
PRESIDENT
SYSTEMS ERECTORS, INC.
651 NORTH SOMERSET TERRACE
OLATHE, KANSAS 66062
(913) 782-7144
PAGENO="0202"
196
STI~EMENT OF M1~RY F2'tRRW~
April 26, 1988
Good morning Mr. Chairman and seaters of the cctrinittee. It is both an hcncc
and a pleasure to be here today.
My naite is Mary Farrar. I am the owner of Systems Erectors, Inc., in Kansas
City. I just finished my second term as national chairman of my trade association,
the Independent Erector Division of the Systems Builders Association and also
as an excutive cczmtittee neater of the Systems Builders. (I ant the only ~ien to
have ever held office In the associaticn.) I am a fainding nember of the Carmittee
of 200. I'm married, have five adult children and wa are expecting grandchild
nine and ten this year. I am the oldest of six children, I grew up in Kansas city,
the product of a very middle working class family. My father was a conductor for
the Santa Fe rai]road~and my mother was a school teacher who didn't earn her degree
until middle age (all my children attended her college graduation). I married six
naiths after high school and except for a clerical job before wa had children and
sate part tine (evenings when my husband was hate with the chi]4ren) work for a
neighborhood tax acconntant, I was a hateneker until 1972.
In September of 1972, with visions of college expenses for five children loatr~
ing before my eyes, I want to work fcc a ccnstruction cat~any that was in its infancy.
I was there in tine to prepare the second waekly payroll. The ccinpany did both
general construction and steel erection. The cai~any grew and I gained knowledge
in all ~ttases of the cçeration.. I learned to estimate and bid ~k. I learned
field mañagenent and scheduling. But my main job description was still office nen-~
ager and In that position I hal full responsibility for the financial rnanagenent of
the canpany. One of the most important lessons I learned during my six year~* with
the canpany was that my boss wo.i]d teach ma anything I was willing to take tine and
effort to learn and then he coi]d spend more and n~e tine away fran the besiness.
Because of my total involvenent, I hc~ed to eventually beccaxe a part owner of the
PAGENO="0203"
197
ccmpany. After being refused the right to boy into the canpany, I left in 1978
to launch my own canpany.
I had no formal training in either b.isiness or canstructice. But I did have
six years of ai-the~-job training, the magnificent sum of $500.00, lots of energy
and deterxninaticn, the support of my husband, Jim and xuDst importantly a cantract
to biild three warehcnise lxiilding fran a local general ccritractOr.
Systems Erectors, Inc. provides labor and equiptent to erect structural steel,
precast ccncrete and pre~engineered b.iilding systems for the low~rise ccn*tercial,
Industrial and warehcxise markets. Besides my office manager, Eerry Cac (who is
also my yaangest daughter) and myself, ve have no other employees except unicri
ircn~rkers and hoisting engineers.
Because I had no ira~ey to finance my operaticu and I knew I didn't have a bank-
able deal (a ~znan trying to start a uniui steel erecticn ccspariy with $500.00 to
her nams), that first cqntract becane all important. `The gerIeral cantractor agreed
to all~ ith to draw against that ccntract weekly, whatever ancunt my payroll and pay-
roll taxes cane to. A typical canstxucti~i ccntract calls for ncnthly draws, billed
at the end of the ncnth, bit usually nOt ~id until fifteen to thirty days later.
Thus, yce are making payrolls forty five to sixty days before yc*a collect any xttney.
A labOr intense cctupany such as maine ~ald need substantial capital just to exist.
So I bad a real sweetheart of a deal. I ms~e a small profit cist,
they are often liauited in scope and buried in efforts targeted to
other groups, particularly those for minorities. Few are
specifically designed to help women overcome the marketplace
barriers they face. These barriers are substantial and stem
4rpm a society that has, in large part, excluded the majority of
women from the mainstream of the U.s. business economy, and
provided them with few of the skills and resources needed to
compete equally in the American free enterprise system.
The impact of these barriers on business success, and the
reed for supplemental programs speci4~ally targeted to women to
overcome them, is evidenced by the lower than average level
receipts of women-owned businesses, While it is true that women
are streaming into entrepreneurship, chosing ownership at a rate
that is twice that of men, the majority of these wom~i1-owned
businesses are new and operating on the margin, without the
benefit of the capital and technical assistance which could help
them survive and promper. Although women own one-fourth of the
small businesses in the country, they earn only one-tenth of all
business receipts, and receive less than 1 percent of all Federal
procurement dollars.
PAGENO="0253"
247
Yet ~litt1e is b~EUr~ ~or~e by the blic sector et tii~
cedaral, State, or City level to correct these inequities.
Indeed, ~e found that the more innovative ~rogr,rns came from
private sector, nonpr~f*t organi~atIons fun~led by foundations
However, the m&~ority ~f these pro~rams 3'~eritrated øn lower-
in~ne and ur~derernpl~red womer~, seEk4n* e~onomic~ self-
suf4icien~y throu~h sElf~'employmeM~, Rel~ti~*ly itttle atter,tioi,
~s t~ing given. tc ~he qM~?$tion ~f how to Eti5u~lete the fastest
~rowin~ er~trepreneur~~I sect~ of the ~Qny--a~omen~oWmed
t~fla~s--irto 2ar9er $~~e and ~frC surre~Stu~ VCt~tur~s, thereby
increasinç~ the impact ~ich. women-owned ente~prises tiavC on our
N~tic~ns ecunomy.
~ the cot~rse of th~ researc~, we found that lCSs thar~ half
pf th~ +~fty st~t~s and fpmer than o*-~co~irth (21) of the
100 cities conte~ed have pro~raps for siomen business
owners. i~urther, fe~ of tt~ese prggrem~ ~~uZd be viewed as
substar~ti~U efforts. Only five states (Louls~ieria, lllinbis,
Michigan, $ew ~ersey ~nd Ohio) and one tity (C~evelal~d, Ohio)
have specifie pogr~anis targeted e~clusiv~4~ t~ women business
~ secor~ finding ~4 our stu~y was tt* rpw scope of t~e
proqi~am~ that ~id e>~ist. host of the, ~P~rams 4our~d merety
paralleled e>~isting *4forts for minorities an~ small busi.lesses,
targeting women but giving little thought or attention to the
deveiopeent of specific. programs which ~am 9~e~p them overcome
the barrier~ tmpedim~ their `business ~rosth. This was
particularly so in the two areas in which W~rner~ say they need
PAGENO="0254"
248
assistance most: capital and technical assistance.
Only f~ve of the states (Maryland, Nebraska, New York,
Oregan, and WiscOnsin) and One city (Phoenix, Arizona) were found
to have special capital~ programs that. include a women owned
business targetS Yet, in mahy cases, theme programs were not
relevant to the majority of womer,-owned businesses because of
either loan amount, collateral and equity requirements, or
specifications concerning types of business and job treation
potential.
The lack of specific sustained technical assistance programs
for women business owners was even more apparent. While a great
deal of activity is occuring in terms of one-day workshops or
business conferences, relatively little effort has been placed on
providing the kind of sustained technical assistance women say
they need. Only a few states (notablely Michigan, Illinoisand
New York) have developed such programs or funded private sector
organizations to provide ~uch assistance.
Another major finding of the study, and one that is
particularly relevant to todays hearings on procurement, was the
eurprising degree to which both the State and City programs were
skewed in the direction of providing government contract
opportunities to women, and the degree to which these local
programs were impacted by Federal procurement policies.
PAGENO="0255"
249~
As you are aware, the Federal government ~pend% mass~es of
money at the $tate and City leveLand the procurement policies of
these agencies impact on the policies of the local efltity~ This
is. part~ular1y true in urban transportation, highway
construction, environmental protection, and urban re-development.
Procurement programs were by f~r the most preval~nt programs
found, particlarly at the city level. All twenty-one (21) of the
city prç~grams were procurement programs, yet few were found to
offer services beyond that of monitoring purchasing goals and
cert~Fying women-owne busine~me~ *or participation. This
emphasis o.r~ procurement the rna~pr ~ømer1 business owner program
in the United ~tat~s also holds true at the ~t5te ~level. Over
half of the 22 state programs have a ~rocuremC~~t coffl~onent.
However, there was ~little 5~*dence tP~t these programs are
working well, Indeed, ~n many cases, ~*fle~ cistar~e of a
pro~urement pro~ram ~ppeared to ~e almost a **d ~irr&~~ari~ ttsed~
as an indication that a Etate or ~tty was "doing something" f~r
women bus4ness owners, when, in fact, 4~e3~tlvely few women
either knew abOL~t the program or wire able to take advantage of
it due to the size qr typs of ~buaines~s tI~5y performed. Thi~
situati in not. dis~4~l1jar to ~hat. we ~ ~t the Federal
level.
PAGENO="0256"
250
One of the major problems we found with these State and City
procurement programs was that they were often added to existing
minority business programs where the efforts for minorities
overshadowed those for women. Indeed, if anything surfaced in our
interviews with State and City officials , it was not only a lack
of commitment to the intent of. such women owned business targets,
but the degree of skepticism and resistance which existed to
allowing women to have an equal opportunity to compete even under
existing targeted programs.
1 prevailing assumption appeared to be that the majority of
women-owned businEsses are'not legitimate, but are "fronts for a
father, husband, brother, son or lover; were not technically
qualified to perform the work; or did not exist in the industries
spught. In some cases, it was eveh stated that there was less
active outreach and assistance to women than minorities because
of the~ belief that minorities needed the programs more then
women
In ~erieral, it appeared that as much time' was spe~t trying
to certifying women OUT, than on finding qualified women to
include IN a program. Certainly little attention was being given
to finding solutions to problems involving bdhdin'g, cashflow', bid
process, or outreach and education.
PAGENO="0257"
251
In addition, Federal guideance is rieedecLin overgoming the
barriers created by community property laws or agency
interpretations concerning the impact of co-mingle4~I family ~assets
used to start an enterprise. In some places, married women who
own and operate 100 percent of a buCiness cannot be certified as
a W~O bmc~ause they, used co~mingled family funds tO start they
business. Vet the majority of American families co-mingle their
incbmes, assets, and certainly their checking Cc~ounts~ Suth
strict interpretation severely l:imits the ability of married
women to participate In the procurement s~tem.
Ve~ procurement programs~ can work, given proper commitment
and-programs. Clevelands Female Business Enterprise proclurement
program is an example of how assii~tance targeted specfically to
women can both produce results and dispel myths concerning the
lack of qualified women-owned contractors~ DCspite relatively
high Ooals f~r women business owners C ~% for conceSsions to 16V.
for~s~rvices), Cleveland placed -$5.5 million in contracts with
women in 1986, double its stated $3 inilliongoal. Su~h programs
are impbrta~t in breaking down the barriers that face women
business owtiEfrs. And this needC tb be done.
ThEre car bE little doubt that women buSinEssowne~s are a
vastely underutilil~ed economic resource in the United States, and
that the public sector is not addressing the i.mp~rtant issue of
how to integrate this vital new business s~ctbr into our economy.
88-199 0 88 - 9
PAGENO="0258"
252
While women have become important players in ~merica's~
entrepreneuria~l resurgence, they still operate outside of our
business and economic mainstream. Developing new policies in
this area could have major implications for our country's future
economic growth.
In 1982, despite the barriers facing them, women-owned
businesses generated $98.3 billion in revenues. Today, the level
is probably closer to $100 billion. Vet this figure vastely
understates the true economic impact of this new business sector.
It does not include the revenues from larger corporations, but
only 5~]tE proprietorships and $ corporations. In addition, it
does not consider the impact of the turnover of these revenues in
local economies. If every dollar generated by a woman-owned firm
turns over in the economy 2.5 times, this means that the economic
contribution of women-owned businesses equals $2~O billion a year
in national income. OF this $250 billion, $37 billion is paid to
the U.S. Treasury in federal taxes, and another estimated $13
billion is paid in local and~state taxes.
With these kinds of economic implications, at hand, what
better reason is there for dev~loping and imp~ementing a new plan
of action. dedi~ated to the growth of women business owners.
PAGENO="0259"
The President Should Instruct all departments
and agencies to institütè~ffirmative action
programs for women business ownerS,
recognizing the double discrimination faced
by minority women business owners. An
Individual on the White House staff should be
designated to be responsible for this action.
The President ShoqId Issue an Executive
order to create a Nat1onaf~omen's Business
Enterprise Policy to:*
* Implement federal policy in support of
women's business enterprise.
* Coordinate the pa~tkipátion of all
federal agencies and departments in a
women's business enterprise effort.
* Develop comprehensive plans and spe-
cific program goals for women's business
enterprise programs.-
* Establish regular performance monitor-
ing and reporting systems to assure that
goals are being achieved.
* Provide the necessary funding and re-
sources to implement this policy.
Pending the issuance of an Executive Order
establishing a Women's Business Enterprise
Policy.
The President Should Direct, under the
leadership of the Small Business
Administration (SBA), the following named
agencies and departments to participate in an
interagency agreement to promote, foster,
and monitor the commitment of ~resources,
information, training and technical assistance
to women business owners.
11The Federal Trade Commission suggested
that should the issuance of a new Executive
Order Order not be feasible, that American
women be added as a specific group to
section 6(a) of Executive Order 11625.
kECOMMENDATIONS
* Departments of Agriculture, Commerce,
Defense; Energy; Health, Education and
Welfare, Housing and Urban Develop-
ment, Interior, Labor, and Transportation.
* Federal Trade Commission, General
Services Administration, National
Science Foundation and Small Business
Administration.
Additional resources~ should be provided to
SBA for its increased responsibility for new
initiatives relating to women-owned
businesses.
DATA ASSESSMENT
The President Should Instruct all federal
d~partments and agencies to adopt the
following definition of a woman-owned
business for data collection and procurement
purposes:
A woman-ow~ed business is a bust-
ness that is at least 51 percent
owned~, controlled and operated by
a woman or gr'oup of women. Con-
trofled is defined as exercI~sMg the
power to make policy decisions.
Operated is defined as ~ctively
involved in the day-to-day manage-
ment.
For the purposes of this definition,
businesses that ore publicly owned,
Joint stock associations and busi-
ness trusts are exempted.
Exempted businesses may volun-
tarily represent that they are or
are not womert-owned if this ir~or-
mation Is dvailable~
The Bureau of the Census should be
instructed to undertake a special mail-out
survey of businesses that are between 20 and
2~3
--Un
The Bottom Line~Equal Erterprise in Arneric~
Report of the President's Interagency Task Force on
Women Business Owners
IIJu~1e 28, 1978 excerptJ -
1
PAGENO="0260"
254
100 percent owned by women according to
1977 business tax returns. This survey should
contain data elements (such as age, race,
Industry, employment history, etc.) which will
provide information about business and the
woman business owner.
All agencies with business loan programs,
particularly the SBA and the Farmer's Home
Administration, should be instructed to
develop better procedures and systems for
loan programs, inclUding,-but not limited to:
* The development and implementation of
a system for tratking the. growth and
business health of minority and non-
minority women-owned businesses.
* The collection and analysis of statistics,
on a quarterly basis, for all loan
programs on the number, type and dollar
value . of business loan requests and
approvals for women business owners,
the loss rate on loans and the reasons
tor default; the level of equity in the
business on approved, loans; and the
participation rate in all categories by
minority women business owners.
* A determination of the demand for loans
by women business owners and: use of
such information in the development of
loan program procedures.
The presentation of a status report on all
of the above should be made to the White
House Conference on* Small Business in
3anuary of 1980.
The President Should. Instruct the
Administrator of the Office oUi~ederal
Procurement Policy to compile accurate
statistics oh ` the participation of women-
owned businesses in government procurement
taking into consideration existing data bases
`to insure maximum utilization and compa-
tibility among agencies, by:
* Systematically collecting government-
wide data and monitoring the
participation of minority- and
nonminority women-owned firms in the
contracting and subcontracting
procurement process, by using the
procurement definition of a women-
owned business developed by the Task
Force.
2
* Revising all applicable forms used in the
federal procurement process, includinp
Standard Form 129, "Bidder's Mailing
List Application," to permit the identi-
tication, by sex, of business owners.
All government agencies with responsibilities
for education and training for private-sector
business management should be instructed to
collect data that will identify female/male
participation ratios' in all government-
sponsored and cosponsored education and
training programs and to monitor ane
evaluate such programs to determine their
impact on women.
The SBA should be instructed to accelerate
its current efforts to compile a computerized
directory of women-owned businesses,
indicating the goods/services provided, size,
technical capacity and experience of such
firms in order to match their capabilities
with the government procurement market and
to make its directory~ available to other
procurement agencies.
The Whlte House Conference on Small
Business, scheduled for 3anuary 1980, shoul
oificially recognize the role in the. nation's
economy played by, women-owned businesses
by:
. Appointing both minority and non-
minority women committed to the
advancement of women business owners
to the Conference Planning Council.
* Assuring Conference participation by
minority and nonminority women busi-
ness owners and organizations represent-
ing their interests.
* Including the issue of the status of
minority and nonminority women as
business owners as a subject covered by
the Conference and by any state or
* regional conferences leading up to it.
* Directing federal agencies to prepare
repOrts for the Conference on the' vo
ume of assistance to woman-owned firms
through contracting, grants, loans and
specialized assistance; the steps taken to
monitor *this volume; and actions taken
PAGENO="0261"
255
to provide equal opportunity for women- management and entrepreneurship and to
owned firms under federal programs. perform research in these areas.
* Encouraging state governors, as part of * The Department should continue and
state conferences leading up to the expand special research and
White House Conference, to direct state demonstration projects to identify the
agencies to provide similar data for unique needs of minority and nonminority
consideration by their respective state women in attaining educational equality,
conferences on small business, particularly In business related fields.
* Forming a Council composed of small * In partitular, research efforts of the
business owners, women business owners quality, focus and direction that have
and government policy-level officials to been undertaken by the Education and
review the data-syste~ns reports Work Group and the Women's Research
following their submission to the White Staff in the National Institute of Educa-
House Conference and to propose tion should be continued and research
changes in individual programs to concerning vicarious achievement, worn-
redesign them according to the needs of en's motivation and the problems of sex
women business owners, bias should be expanded in order to
implement educational change with
j~e President Should Direct the Women's particular emphasis on identifying the
Bureau within the Department of Labor to unique characteristics of women from
act as a clearinghouse for the collection and racial and ethnic minorities.
dissemination of information on the available
resources in management training, credit and * Research results should be widely
capital formatior~, marketing and disseminated for the purpose of program
procurement, and federal programs, and to development.
focus on business ownership as a viable career
option. Increased resources should be
provided to initiate and implement this new The President Should R,ecomm~nd full funding
focus. of the Women s Education Equity Act.
P flI it' A TI ~ K! The President Should Encourage state
agencies in cooperatiOn with schools of
The President Should Instruct the secretary management and business administration and
of Health, Education and Welfare (HEW) and private business and foundations to increase
other responsible agency heads to make fellowships, scholarships and loans to support
vigorous enforcement of Title ix a priority, formal business training for full- and part-
In addition, advisory committees at the time female students.
federal, state and local levels should be N
balanced with respect to sex and
race/national origin and should include people TECHNICAL ASSISTANCE
problems of sex bias and The President Should Direct the SBA to
yp g. establish management assistance to women
The President Should Instruct the Secretary business owners as a priority and to accom-
~1 Health, Education and Welfare to push this by:
encourage grant and contract applications
from both minority and non-minority women. * Increasing both the number `of, and
quality of, training of SBA personnel
providing management training to women
In addition: business owners.
* All HEW vocational education, career * Focusing on the special needs and con-
development, employment development cerns of minority women.
and service provider programs should
include the authority to prepare minority * Increasing substantially the manage-
and nonminority women for business ment-assistance program of the SBA.
3
PAGENO="0262"
256
* Improving the SBA's management-infor-
mation system to service its clients.
The President Should Direct the SM and the
Dëpartments of Agriculture, Commerce,
Labor and Health, Education and Weif are to
develop ~ coordinated and~cohesive effort to
deilver increased resources for basic skills
and management training for women
entrepreneurs and to, mobilize existing public-.
and private-sector resources toward that end.
The Pre~ldent Shoujd1'Urge the National
SciencCFoUndation tO begin research efforts
on the participatiàn of businesses owned by
minority and non~minOrft~' women in' high-
technology growth industries and on ways to
develop their greater participation `In such
IndUstries through.~ ~tralning, through the
transfer of federally~developed technology tO
~businesses owned :by `minorIty and non-
minority women,~' ~ any other
means.
CR EDIT AND CAPITAL
FORMATION
The President Should Instruct the SBA to
iMprove it~slQan pçograms. to;'women business
owners by:
* Training, recruiting and appointing SBA
bank relations officers, particularly
nànminority women and min~rity. women
to interact with participating banks and
recruit greater bank parti~ipat:on in loan
* guarantee programs.
* Providing incentives tO participating
banks t~ expand their small loans in
order tO reach v.~omen business owners
* Develç~ping ~he means to signal the need
for management assistance earlier in the
life of a `loán before default ocç~irs.
* Requesting legislative authority to
implement a bank discretionary program,
within the ioal~ guatantee program, to
authorize selected banks to make
guaranteed loCris within certain guide-
lines without prior SBA approval for each
individual lan. Banks should be given
greater authOrity to administer the loans
and the size standard~ particulariy with
respect to the waiver of loan covenants.
* Targeting a portion of Economic Oppor-
tunity Loans to women business owners
with a specific Percentage set aside for
minority women business owners:
* Providing more program emphasis and
training to SBA. personnel In the areas of
financial management, counseling and
cash flow projections so, they can provide
greater and better service to women
business owners.
* Working closely with the banking asso-
ciation to, encourage their members'
active participation and educating them
* on the financial needs of `women business
owners.
* Improyingthe'turnarpund time onloans.
The President Should Direct the ,Of lice of
Management `and Budget ~o support SBA's
reques~ for incieased funding for direct loan
programs, with s~cific targeting for women
business owners who maybe unable to meet
criteria for credl$worthiness because of
"social or economic ~isa4va~tag&'
The President Should Ur~ tle'Chairman c~
the ~cUrities and Exchange Commission t~
program its Management lnformat~on system
to include information on the gender of the
owners of companies seeking to make initial
public offerings of securities.
The president. Should Direct the Secretary of
AgricUl~ure to target a portion of the
Department of Agric~lture's business ,Cnd
industrial loan programs to women business
owners, providing alOng with that all
necessary management and technical
assistance.
The `President Should Direc~ the Secretary of
Agriculture to delete the provision from
regul~tion section 1 8QQ.42 of the Farmers
Home Administration which makes a wile
,ind,ivi~ua1ly ~n~~*personally liable on a note
signed by both, spouses, regardlefs of whçther
the loan is for her benefit.
The Presjdent Should Support legislation to
restructure S~A's small business investment
companies so they can provide more high-risk
venture capital to small businesses.
Owners of Small Business Investment
Companies. (SBICs) should be urged to in
woman-owned businesses.
4
PAGENO="0263"
257
The President Should Instruct the SM to
clarify its prö~edures s.O that It is clearly
understood that businesses owned by socially
or economically disadvantaged women are
among those eligible for Investment by 301(d)
lincensees (MESBICS).
Owners of 301(d) licensees should be utged to
Invest In women-owhed businesses.
MARKETiNG AND
PROCUREM ENT
The President Should Direct that the
government procurement pOlicies that
support small and emerging businesses must
be revised to Incorporate equal Opportunity
for women business owners. Such revision
should include:
* Recognition that no recommendation `for
a special 8(a)-typo program or special
subcontracting programs for women
business owners or a set-aside program
for women should be made without a
condition that the small business set-
aside program be increased substantially
and more effectively administered.
* Doubling the number of SBA~ Procure-
ment Center RepresChtatives (PCR) and
providing for adequa'te' funding for SBA
to hire and train this additional staff.
* Briefing of PCR's and government pro-
curement officers on the President's
desire to increase procurement from
women-owned firms and the establish-
ment of performance goals for prime
Contract awards to women-owned
businesses.
* Amending section 8(a) of the Small
Business Act, if H.R. 11318 Is enacted,
* to require that program eligIbility be
determined on a case-by-casC basis for
both minorities and women, rather than
by a "rebuttable presumption" for
minority groups as currently proposed In
the bill. Programs under Section 8(a)
should be directed `toward toward
socially. or economically disadvantaged
Individuals and not toward classes of
people. However, if the presumption of
group inclusion is adopted for the Section
8(a) program, Ametlcan~women should be
designated as one of these groups The
participation of women in the program
should be monitored to assure their
equitable treatment, until such time as
legislation is passed to create a separate
program to addr~ss. similar neeck of
women butiness owners.
* The development, under the leadership of
the SBA In coordination with other
agencies, of objective criteria setting
forth the conditions under which
individuals may demonstrate social or
economic disadvantage.
* A direction to all procurement agencies
working through SM to increase the
proportion of contracts to minority
women business owners under the 8(a)
program.
The ~revision of government. prQcurement
policies should include
* Development of program emphases and
targets for women hiisiness owners in the
federal procurement system.
* Development of programs to ensure that
women-owned businesses appear on
government bidders lists for contracting
opportunities.
* Development O~ ~evlsions to the bending
provisions In construction, alteration and
repair contracts to amend the Miller Act
provision for bonding by increasing the
* threshhold from $2,000 to $25s000.
a Development of a policy to strengthen
subcontracting opportunities for women-
owned businesses by requiring, as part of
the preaward process., that subcontract-
ing abcve $ioo,000 but below $500,000
include positive plans to utilize women-
owned firms.
* Requesting the' Federal Acquisition
Institute of the Office of Federal Pro-
curement' Policy to address Itself in' 1ts
training responsibilities to foster an
~ffirmative' recognition `by the federal
procurement workiorce of th* needs of
women business owners as contractors
and subcontractors.
* Amending' "directives concerning the
Federal grant-making process to state
and local governments tO `re~ognlze the
potentials that exist fo~ encouraging set-
5
PAGENO="0264"
258
asIde or local pteference procedures for
small, minority and woman-owned
businesses and that jurisdictions which
currently have special programs for
small and minority businesses extend
their coverage to include women-owned
businesses without diminishing resources
to either of the aforementioned groups.
LEGISLATION AND
REGULATiONS
The President Should ige the Federal
R~érVé BOard tO lnitiàte rulemaking to
extend the current record-keeping
requirements of section 202.13 ahd 202.3(e)
of Regulation B for business credit t'ecords
from 90 days to a period that will enable
ptivate parties and enforcement agencies ~to
Implement the protections provided by the
Equal Credit Opportunity Act (ECOA). In
conducting this rulemaking, the Board should
consider whether recordkeeplng requirements
should vary for different loan amounts
different kinds of assistance or for larger or
smaller businesses, in order to ensure that no
requIrement will decrease the availability of
credit to small businesses.
The President Should Ur.g~ the Federal
R~serve Board to iñitlâte rulemaking to
extend the cu~rèflt record-keeping
requirements of section 102.13 of Regulation
B fot business credit records from 90 days to
a period that will enable private parties and
enforcement agencies to implement the
protections provided* by the Equal Credit
Opportunity Act (ECOA). In conducting this
rulemaking, the Board should consider
whether recordkeeping requirements should
vary for different loan amounts or for larger
or smaller businesses, in order to ensure that
no requirement will decrease the. availability
*of capital to small businesses.
The President Should Ucg~ the Federal
R~serve Board to amend Regulation B to
require that all business credit applicants be
notified, in writing, at the time of application
that
* The provisions of the Equal Credit
Opportunity Act ECOA apply.
* Discrimination based on the race, color,
sex, marital status, national origin,
religion or age is Illegal.
The President Should Urge the Federal
Reserve Board to ärñend Regulation B to
prohibit requests for marital status in cases
where property owned solely by the business
is being used to secure a business loan.
The President Should Urge the Federal
Reserve Board, Federal Deposit Insurance
Corporation, The. Federal Trade Commission
and the Comptroller of the currency to
expand their educational effOrts directed at
creditors b.y explaining the requirements of
ECOA and Regulation B As well as the
special problems encountered by women
business owners in obtaining credit. In
addition, they should encourage creditors to
make a special effort in considering credit
br women business owners.
The President. Should Ask Congress to take
the fOllowing actions.
* Review veterans' preference programs
within agencies with a view toward
limiting their use, in order to achieve a
more equitable system fair not only to
veterans but also women.
* Adopt the amendments to the U.S. Code
suggested by the U.S. Commission on
Civil Rights in the report, Sex Bias iiithe
U.S. Code. The Commiáiion proposed
that a new section be added to Title 1 of
the Code as I U.S.C Section 106(c) "Sex-
neutral (or nondiscriminatory) termi-
nology to be used in all legislative texts."
The section requires that all federal
laws, regulatior~s and rules be written in
sex-neutral terms, unless no neutral sub-
stitute exists. or unless the provision
refers to a physical characteristic unique
to a member of one sex.
* Amend. Internal Revenue Code 26 U.S.C
Section 1402(a) (5Xa) ... in community-
property states all for purposes of
Federal taxes. The statutory presump-
tion in favor of the husband be deleted
(26 U.S.C. l402(aXiXa)) the gross income
and deductions of the owner of a business
or trade "shall be treated as the gross
income and deductions . of the husband
* The applicant has the right to request
the reasons for denial of credit.
PAGENO="0265"
25~
unless the wife exercises'substantially all
of the management and control of suøh
trade or business in which ~äse all such
gross income and deductions shall be
treated as (that) of the wife. . ."
* Amend 26 U.S.C Section 1402(a) (5) (a) to
state that gross business income and
deductions are to be attributed to the
spouse who actually ex~rcises dominant
management and control of the business,
arid, if amended.
* Amend Internal Revenue Code 26 U.S.C
Section 2040(a)-.the estate tax code,
particularly the provision known. as the
"widow's tax'L.whlch `States that for ~the
purposes of estate tax, the full value of
all property held by a husband and wife
as joint tenants will be'considered to be
part of the estate of the' spouse who dies
first, unless the surviving spouse can
prove that she ol he inherited the pro-
perty or contributed to its purchase "in
money or money's worth." The Code
should be amended `to stata "For the
`purposes of this~ section, Sirvices per-
fOr med by a spou~ shall be `ti~eated as
consideration `in money `or in money's
worth,"
The, President Should Direct the Internal
Revenue Service to adopt Section i.1402(a)-8
of the federal tax regulations to reflect
proposed statutory changes `in 26 U.S.C.
section 1402 (aX5Xa).
* Amend Social Security laws to reflect
the contributions actually made by both
spouses to ensure a fair return of bane-
fits for both spouses rather than having
one be a contributor and the other' a'
dependent.
* Amend Title VI of the Civil Rights A~t
to' include the word "sex," after race,
color or national origin,
* Amend ECOA to (a) permlt the ~ustlce
Department to have access to complaints
received by the enforcing agencies so,
that it may file suit in appropriate cases
if an agency fails to do so, and (b) perinft
all enforcement agencies to bring court
actions against violators if they so
choose, without having to refer~ca~es to
the, 3ustice Department.
* Amend ECOA to provide for voluntary,
bindifl~ arbitration of complaints by
credit `applicants against lenders as an
alternative to the administrative process
and litigation,'al'temnatively, the agencies
shoul4 encourage lenders and applicants
to submit disputes to arbitration on a
voluntary basis,
* Amend the statute `to provide for
minimum damages in cases where credit
applicants prevail In court.
FEDERAL BUSINESS
PROGRAM ASSESSMENT
The President Should Instruct the Secretary
~ ~--`-~
* Direct ihe Office of MinorityE Business
Enterprise (OMBE) ~to undertake an
outreach effort for minority women busi-
ness owners.
* `Recommend reconsideration of the
minority women entrepreneUrs program
proposed by OMBE, and allocate
additional resources necessary for
implementation.
* Recommend a new focus on women
business owners through the Economic
Development Administration's (EDA)
University Centers program and to coor-
dinate such a program with other
agencies, particularly the SBA.
* Recommend to Congress the `allocation
of funds `to EDA's ~technical assistance
program to develop additional technical
assistance and business management skill
programs' for women business owners in
cooperation wIth other agencies.
The ,Presiderit Should Designate the SM as
~he lead agency in ~Cveioping womCn's
business enterprise ih coordination with
Other agencies and departments. In
conjunction with that SBA should
* Continue its current National Women's
Business `Ownership campaign.
PAGENO="0266"
260
* Establish within SEA an Advocate for
Women's Business Enterprise, who will be
responsible for a major and continuing
effort across all government programs
for women business owners, with
provision for an appropriate, budget
allocation for such effort.
* Encourage the Small Business Institutes
to recruit more female students as SBI
counselors and strive to serve a larger
percentage of women business owners
and to eliminate the requirement that
SBI clients be SBAloan recipients~
* Mobilize private sector support on behalf
of the advancement o~ wo'men.owned
businesses in securing a fair share of the
nation's business.
* Recruit more women, inèluding minority
women, as SCORE/ACE volunteers, and
to develop a focus on women entrepre-
neurs as contractors under its "Call
Conti~actor" program.
The President Should Instruct these other
government agenciCs to take~the following
actions,
`* The Secretary of the Department of
I-lousing and Urban Development should
issue directives to all community deve-
lopment block grant entitlement reci-
pients providing information on the new
eligible activities authorized under their
1977 legislation, including the range of
project activities that can be undertaken
to assist small businesses, eligible local
recipients for these project funds and
special informatioit on the needs and
problems of women business owners and
increased business opportunities for
minorities and women business owners.
* The Office of Management and Budget
to: (1) work towards expanding and
modifying the Federal Assistance
Program Retrieval Service (FAPRS)
system so that it provides widely avail-
able, up dated and complete information
about Federal assistance programs and is
able to produce lists of programs avail-
able to specific groups such as women;
and (2) develop a mechanism for
technical assistance, to women business
owners In areas such as contract
interpretation, negotiation, compiiance
criteria.
PAGENO="0267"
261
MA~ 10,. 1988
CONGRESSM&N BILBEAY'S
OPENING REMARKS FOR THE SMALL BUSINESS COMMITTEE HEARINGS ON
WOMEN'S BUSINESS ISSUES
ONCE AGAIN MR. CHAIRMAN I CONGRATULATE YOU ON YOUR LEADERSHIP TO
HOLD HEARINGS ON WOMEN'S ISSUES. REALIZING THE DIFFICULTY MANY
WOMEN HAVE JUST BEING IN THE WORK FORCE, I CAN ONLY BEGIN TO
IMAGINE THE COMPLEXITIES WOMEN OWNED BUSINESSES MUST DEAL WITH ON
A CONSTANT BASIS.
I ANXIOUSLY A~1AIT TODAY'S TESTIMONY IN ORDER TO BETTER UNDERSTAND
THE WORLD OF WOMEN OWNED BUSINESSES WITH THE HOPE THAT WE
INCONGRESS HAVE BEEN OF ASSISTANCE; AND IF NOT, THEN WHAT WE CAN
DO TO BE OF GREATER HELP.
PAGENO="0268"
262
Statement of Senator Carl Levin
on
Equal Credit Opportunity and Women Busines~ Owners
May 10, 1988
I would like to thank the Committee for the opportunity
to express my support of efforts to facilitate and promote
the interests of women business owners. I commend the
Committee and the participants in these hearings for their
work in this area.
My own State of Michigan is well represented today by
Barbara Gentry, Director of the Women Business Owner
Services Office within the Michigan Department of Commerce.
This office has made impressive strides in calling attention
to the importance of women owned businesses to the strength
of our economy. Moreover, it has been invaluable in
pinpointing the obstacles facing such businesses and in
assisting women business owners to breakdown and overcome
these obstacles.
As a result of work done by this commendable
organization, I presented testimony during the 99th Congress
PAGENO="0269"
263
-2~
to the House Small Business Committee on the Equal Credit
Opportunity Act, H.R. 1575. At that time, I was a cosponsor
of the Senate legislation, 8. 1846. Barbara Gentry and the
office under her direction had conducted a series of
hearings held across Michigan. The hearings were part of a
comprehensive study to determine the problems women face
when establishing and/or operating their own business. The
study and the hearings brought to the forefront the
underlying forces which cause women business owners to
compete on a less than level playing field. The vital
information from this study was presented to the Committee
with recommendations fer necessary changes.
The State of Michigan has continued in its praiseworthy
efforts on behalf of women business owners. The appearance
of Ms. Gentry today to take part in these important bearings
is another example of their commitment to this cause.
As a member of the Senate Small Business Committee, I
am very pleased with the work being done to strengthen this
vital economic base. Women owned businesses are a dynamic
force available to diversify and enhance the economy. It
makes good economic sense and is Sound pnbi.ic policy to make
sure these businesses are not undermined by unfair
practices.
PAGENO="0270"
264
Prepared Testimony
House Small Business Committee
Reference:
Oversight Hearings
The State of Small Business
~
Testimony Presented on May 10, 1988
9:00 a.m.
2361 Rayburn Building
Washington, D.C. 20515
Testimony Presented by:
Barbara Gentry, Director
Women Business Owners Services
Michigan Department of Commerce
P.O. Box 3022.5
Lansing, Michigan 18909
(517) 335-2166
PAGENO="0271"
265
Mr. Chairman and estenieed members of the House Small Bus~inegp
Committee, as the Director of Women Business Owners Services, in
Michigan's Department of Commerce and as a business owner for the
past 13 years, I want to thank you for this opportunity.
Women Business Owners Services has recently been recognized by
the U.S. Department of Commerce as the moSt outstanding program
in the U.S. providing the most comprehensive eoonomicdevelopment
inititetives to! women entrepreneurs. It. is from this experience
that the following testimony is presented.
Our free enterprise system is based on the premise of equal
opportunity for all. But for small businesses in start up or
business growth steges, access to capital is not a level playing
field. Traditional bank lending policies have a discriminatory
impact on young oompanie~ which have not accumulated suff~g~ient
assets or resources to meet the lender's loan criteria. This is
especially true f'or service sector bUs~~eS~ses becauae they
PAGENO="0272"
266
possess few tangible asSets which banks require as collateral for
most loans.
This banking standard has a disproportionate impact upon women-
owned businesses. Eighty-four percent of the businesses owned by
women are in the category of service, wholesale or retail. They
are the businesses which, In banking terms, have soft assets -
companies with little or no tangible assets, such as machinery or
equipment. Because~women are starting businesses at a rate four
times greater than men and continue to be the fastest growing
segment of small business, the narrow focus of lending policies
artificially harnesses the growth and increased potential for job
creation.
These policies have a profound impact in the early stages of
women-owned start up businesses. A woman's traditional position
in the work force has limited not only her management experience
but alsO her income and, therefore, the amount of collateral or
2
PAGENO="0273"
267
assets she has been able to amass. A well' known rule of tI~umb
is, "In order to get money, you must have money." Lenders
require borrowers to not only have collateral for loans, usually
1-5:1, but also to' invest theit own cash or risk into the
venture. Women traditiOnally do not have sufficient assets,
access to financial max~kets, or even access to famiI~ *assets~
Perceptual discrimination further limits access to capital. In
July 1986, Michigan held four public hearings concerning access
to capit'al for women business ~`wners. ~estiaon~ given by the ~I~5
women business owners identified one overri~ing èonó~rn. In
their bpinion, women do not have equal access to cre'dit and are
disorimi'nated' against in't't~e `6usifless a'n~ loa'n' pt~ooes8~ Lenders
perceive women-owned b~isinesses as' high-risk investments due'1td
es~pe;eeption~ about wornefl'sabllity, experience' and commitment
to operate suoeessfully. Women are therefore charged' excesáf'J~'
amount's of interest and collateral - up to five times the amount
of the loan - and co-signatures are required trom husbands,
3
PAGENO="0274"
268
fathers, or sons when women have attained pers~na1 credit in
comparable amounts.
Supporting ~this testimony, the American Management Association
found obstacles disappearing and borrowing suddenly became
possible when women approached the banking environmen.t with
support or assistance from their spouse, family members or male
friends.
A Touche Boss Michigan study surveyed 3,500 women business owners
and received responses from 18% (621). This survey showed that
while 69% of these women business owners approached banks and
lending institutions, only 1~% of the capital used to start their
enterprises came from lenders, with more than 70% coming from
savings and earnings, and another 15% from friends, relatives and
private investors.
PAGENO="0275"
269
This reliance ~ofl their own earnings and savings, deàpite t~e
traditionally low earning power of women i~ the work toroe,
resulted in 8~% of the businesses berng capitalized at under
$20,000. Only 5% of the women ~n the survey started their
businesses with more than $75,000.
These Michigan businesses were not part.-time ventures or home.-
based enterprises with no planafor eXpan81~on The survey showed
fhat 66.% of the respondents are oorporatjo~na, 86%~ operated full-.
time ventures~ and that 80% leased or owned space. Most
important, ~roa an economic devèlo~mezit perspective, was the fact
th~t~ almost h~if (1$7%) were'considering expanding in 1987.
It is àritlotl to point out that the data ~oollected troth IRS
a6~ut the reven~ue of biomeC business owners ii incomplete. The
$1O0~20ó~~iljion annual re~enues~e~resent sale proirietozsbipe,
partnerships and~ sUb obapt~r ~càrporationa only. The data does
not reflect the U.S. corporations owned by women. In MichIgan in
5
PAGENO="0276"
270
1983, IRS reported that 111,620 woxnen...owned non farm businesses
created *1,087,1481,000 in sales. The recent Touche Ross survey,
polling the top 50 women business owners, indicated that their
corporate revenues for 1986 exceeded 867 million. Therefore, the
actual economic impact of just these 50 additional corporations
would almost double the gross revenues reported by IRS in 1983.
The information learned from the Touche Ross survey regarding
collateral in the Michigan study highlights the problems women
have, accessing traditional sources of capital. This is
particularly true in states where the banking institutions are
heavily orIented toasset-based lending. Of the 148% who bad bank
loans, the business owner's plant and equipment were the
frequently mentioned (147%) sources of collateral, followed by
their house or car (31%) and business~owned receivables (30%).
In terms of the level of collateral, required, the majority (75%)
indicated that the amount was equal to or greater than the sum of
the loan, with 36% indicating collateral requirements greater
6
PAGENO="0277"
271
than the loan total. or those, 112% indicated that the collateral
was higher than 200% of the loan amount. Fifteen percent
indicated having to offer collateral that exceeded 500% of the
loan amount.
As a result of these barriers, the area of greatest risk for
women business owners continues to be the necessity to start
under capitalized businesses which significantly reduces their
ability to be competitive.
GROWTH CAPITAL
The impact of under-capitalization `and lack of capital from
traditional sources limits the potential of gPowth for women-
owned businesses. As businesses expand, growth capital, the
permanent working capital needed to sustain growth, is not
available either internally or externally. Data gathered in the
Touche Ross survey (see graph below) indicates that 31% of the
7
PAGENO="0278"
272
companies that started with less than $»=0,000 in capital were
grossing over $100,000 in 1986. While 65% of the companies that
started with $20,000 or more in 1983 were grossing over $100,000.
UNDER CAPITALIZATION
Percent of Fires
* With
1983 Capital Resources
8
PAGENO="0279"
273
During, the past year, the Natjonal Devsteprnent Council conducted
tour intensive financial management classes entitled "Taking Care
of Business" for women entrepreneurs in Michigan. Attending were
seasoned business owners with a ~inirnum of three years~ ownership,
more than $100,000 in a~sets an4.. ,g~ro.wtb ~oriented.
Overwhelmingly,: the partic~p.ants, were experiencing the ettecta of
under capi~ta3%izatiofl and the need for growth capital~
In the Michigan Touche Ro8s survey, over halt (52%).. of these
Michigan b~~ine~~ owner~ were opevattng without a bank &oan Qt
any kind. Yet, these were not new buainesse~~. .0n1y~8%~.~f the
survey respondents had been in business tor less than two years.
$ixty..four percent had been in existence for at ~l~ast five years,
with .32% of these iore than ten years old. In terms ot a~ze,~4i%,
of the ~,espondents indicated that their businesses grossed more
than $100,000 a sear, and 51% employed ~morethaa~tour full~ti~e
and part-time employees, in addition to themselves. Almost.one.
fourth (23%) employed more than tin workers..Tbe major barrier in
9
PAGENO="0280"
274
obtaining capita]. is again ~an issue of tangible assetà and tbb
perception of risk on the part of the lender.
The SBA (Ta) guaranteed loan progPam was originally designed to
assist young businesses in growth stages and encourage ~iendera~ to
expand their~ loan portfolio to include riskier Companies in early
growth stages. However, the guaranteed loan program is designed
for fixed asset companies. In recent years it has become even
more conservative. Lenders in certain regions now~say that the
guaranteed loan program's criterIa are now so conservative 1~hat
they are comparable to the bank's existing loan critera.
Nationally, women..owned business start ups are experiencing a
growth rate of 9.i$% annually. This impact on public policy is
profound in terms of growth creation. Yet this extráordi.~ary
growth is being artificially restrained by the unavailability of
capital.
10
PAGENO="0281"
275
CAPITA$~ BEYOND C0NVENT~ONAL BANK LOANS
Many states are moving to meet increasing mai~ket d~aand for start
up or growth capital 1oan~ for businesses with few tangible or
soft assetS. Some of the most creative programs are being
developed in Michigan. Througb~ .i~s innovative Michigan Strategic
Fund, the state is Using so~er'ce p~iblid resources not to build a
bigger bureaucracy, but to unleash private Capital ror sm~alI~
business fleeds and fill existing financing~ gape.
The State of Michigan has implemented two major~initiatives
the Capital Access Program and the BIDCO Program to increase
access to capital for small and medium-sized Mibbigan businesses.
While these programs will have a broader impact, we believe ~
have special potent~ial for aesistiiig ~
obtaining needed capital. Both programs fo~US'On the approach of
using limited public resources to leverage large Imounts ot
private capital, and rely on attracting and~ Ueing private-sector
expertise.
11
PAGENO="0282"
276
The Capital Access Program is a flexible and extremely
nonbureaucratic program which gives banks a tool to make business
loans that are somewhat riskier than a conventional bank loan, in
a manner consistent with safety and soundness. While the program
Is based on an insuring concept, it is fundamentally different
from the traditional, type of insurance, or guarantee program, such
as the $BA 7(a) loan guarantee program. While the SBA'Program is
based on a loan by loan guarantee, the Capital Access Program is
based on a unique portfolio insurance concept. Banks have used
the program in many cases to make loans that met their
conventional criteria, except for collateral.
To date, 100 companies have been financed under the program nines
t~be program's launch in August 1986. This barely scratches the
surface of the program's potential. Indeed, the volume of
lending has been expanding dramatically in recent months, and is
expected to continue to expand. Thus far, some 20% of the loans
have been made to voaen~.owned businesses, and new efforts are
12
PAGENO="0283"
27?
underway to increase th*e Use~ er the program for wornenowned
businesses.
BIDCOs are a new ty~eof licensed and regul~ted private financial
institution which can p3~ay a lajor role in prb~vid~flg t~nsioured Or
subordingted debt fOr growirng businesses. RXDCOS are designed ~o
till `busitieSs fir~anoing ~~eeds t~i~t are too ri~y for bank
financing but which cannot provide ti~e. super high rates of return
ebught by tenture oapttalist8. While the State of Michigan has
taken the lead in oat~lyzing the formation ~of this new Industry
of finanCial' institutions, BIDCOs are based on privati ~arke~
principies, and are depending t'oz~ their success on private sector
talent, decision making and captial. Many other states are
looking to copy' M1à~higan's bIDCO Program. I
it is anticipated that within five years, adiver'se industry of
20..2 BIDCOs will be ~operating th~oughOut Michigan. One of the
BIDCOs in advanced formation stage iS a~wo'men.~owned BIDCO which
13
PAGENO="0284"
278
is identifying its primary market focus as service businesses
with soft assets and women.owned businesses.
I would like~ to submit for the record detailed papers on the
Capital Access Program and the BIDCO Program. Thes,e papers were
prepared by the Michigan StrategioFund, a state agency which has
taken the lead In developing and implementing these programs.
What I want to stress here is the value and market potential of
women business owners. Savvy prof~ted~oriented companies in
Michigan like Touche fio~s Accounting Agency have recognized it.
Their commitment is not the least bit altruistic. It is about
growth potential theirs as well as their clients. It is
imperative that public national policy makers - such as
yourselves - think strategically in our changing economy to
maximize this resource - the fastest growing segment of small
business. Women sole proprietors contribute between 100 and 250
billion dollars to the national economy in spite of all the
14
PAGENO="0285"
279
restri~tiona mentioned earlier itt this testimony. What kind of~
growth and impact could be created without the hindrances? The
sty,~ong pat~tioipation of this vigorous Segment not only
contributes more diversity and resilience in our economy it
vests even more actors with a vital stake in staying àompetitive
and an interest in making oUr national economy strong.
To conclude, I have, eight specific recommendations. Their
enactment by Federal Regulatory Agencies would do much to open
doors now closed to women business owners, and unlock their
potential for ~ob~ creation and economic growth:
1. Adopt a specific affirmative action program to help
women business owners overcome traditional lending
practices that limit their access to financing.
15~
PAGENO="0286"
280
2. Support the present legislation introduced by
Representative John J. LaFalce and Representative Lindy
Boggs regarding the Equal Opportunity CredIt Act of
19711.
For women-owned businesses, the Equal Credit
Opportunity Act of 19711 (ECOA) is a missed opportunity.
It had the potential to eradicate barriers that have
limited the ability of women..owned businesses to
acquire business credit. Although the act requires
financial credit institutions to make credit available
equally without regard to sex or marital status, many
of its provisions have been interpx~eted not to apply to
business transactions.
3. Expand the bank examination process to examine for
compliance with the ECOA's prohibition against sex
discrimination in business lending and to include data
16
PAGENO="0287"
:~281
colle~tion on oommé~ial loins granted or denied to
women business ownez~s.
ii. Develop a rating system to be incorporated into the
examinat~ion and implementation of the Community
Reinvestment Act to measure the impact of the lenders'
loan practices toward satisfying the credit needs of
women bUs~ne~s owners.
5. Spons~r educat~ional ~programs ihatructing lending
institutions how ~ review loan ~pad1eages for soft asset
companies based on cash flow analysis, rather than
asset~based financing.
6. ~Reve1.sO~ the conservaU~Sm of t1~e SBA 7(a) guaranteed
loan program and develop new policy that ~efl~eots~tbe
borrowiflg, ~needs of today's e~onoey $o~ include soft
asset bane partioularly tor w~omenbusiness owners~ ~
17
PAGENO="0288"
282
7. Improve the quality and information about small
business growth in the United States by expanding the
County Business Pattern data to include women..owned
status and business type, sole proprietorship,
partnership or corporation. (Published by the U.S.
Department of Commerce, Bureau of Census.)
8. Enact Legislation authorizing the implementation of a
National Capital Access Program, and a National BIDCO
Program for women business owners, based on the models
being developed so suoqeasfully in Michigan.
I look forward to the day when women entrepreneurs are free to
focus their energies and talents on growing their businesses and
creating jobs, instead of pushing the rock of mystematio and
perceptual prejudice up the bill again and again. With your
help, we can giwe womenbusiness owners the tools they need,
Thank you.
18
PAGENO="0289"
288
MICEIGAN STRATEGIC FUND CAPITAL AccEss PROGRAM ANI~ I3IDCO PROGRAI~f
(Business and Industrial Development Corporations)
EXECUTIVE SUMMARY
Women Business Owners in Michigan own 36%of the businesses ahd ar~ the
fastest growing segment of the small business Community. Women are starting
businesses five times faster then men. It h~s been projected that women will
own 45% of the businesses by 1990.
In spite of this phenomenal growth rat~ewOmefl entrepreneurs' major obstacle
in the development an.d expansion of thelr~ businesses is equal access to
Capital.
In March and May of 1985, Doug Ross, Director øf the Michigan Department of
Commerce, met w ith 35 lop women bus I ness owners from a'round the state, to
discuss issues and strategies. The number one concern of this group was
their difficulties in obtaining financing.
The testimony given by the women at the four public hearings Identified One
overriding concern. in their opinion, women do not ~av~ equal access to
credit and are discriminated against in the business ~and ~ommerc1al loan
process. Lenders perceive women owned ~uslnesses a~ high risk investmentS
due to misperception about women~s ability, experience and commitment to
operate successful businesses. Women are ~charged excessive amounts of
interest and collateral (up to 5 times the loan amount) and çQ-si9natures are
required even from women who have attained persOnal credit in comparable
amounts, Furthermore, 84% of the businesses owned by women are In the
category of Service, retail or wholesale, and ifl banking terms, have "soft
assets" which lenders perceive as poor collateral for loans. Therefore, due
to the type of buisness owned by women, additional discrimination due to
perception is experienced.
Existing laws such as the Equal Credit Opportunity ~Act prohibit
discrimination based upon age, sex, race or religion and have significantly
Improved womens ability to obtain personal loans. Unfortunately,
legislation did not go far enOugh and due to certain exemptions granted
lenders from the requirements of Regulation B of the Federal Reserve Board,
have made It easier to deny commer~iaI and business predit to women pr of fer
loans with discriminatory terms.
88-199. 0 - 88 - 10
PAGENO="0290"
284
Women Business Owners Services
In 1983, Women Business Owners Services (formerly called `the Office
of Women Business Owners) was created within the Michigan
Department of Commerce to provide advocacy, exposure, and assiatance
exclusively to women entrepreneurs. Women Business Owners Services
provides:
- A central point of contact for business guidance and problem solving
through a toll-free number (1-800-831-9090);
A full range of technical assistance and financial counseling to
emerging and existing businesses;
Individual assistance in developing a business plan;
Access to special entrepreneurial and management education programs;
Procurement services including certification assistance, notification of
potential contracts, and help in preparing bids or proposals;
Access to atate and local programs and services devoted tp Michigan
businesses; and,
- Heightened awareness in the media and the general public of the
increasingly significant role of women in Michigan's economy.
Additioual Services And Programs -
Offered By Women Business Owners Services;.
A Women Business Owners Directory which includes a comprehensive
list of women-owned businesses made available to state, federal, and local
procurement offices, as well as other public/private organizations seeking
to do, business with women entrepreneurs.
A Business Advocacy Program, in support of issues relevant to women
busin~ss owners;
Programs linking banks and financial institutions with. private enterprise;
Expertise and Assistance in Establishing a BIDC9 (Business and
Industrial Development Corporation);
Leadership Opportunities, education, and information about appointments
on state boards and commissions;
A Women Business Owners Network to bring about an alliance of
women entrepreneurs providing information to foster the use of resources
and business expertise in helping their businesses develop and grow;
A Newsletter to publicize business topics and events of special interest
to women in business. The newsletter features business tips, trends and
articles to heighten public awareness of the economic contributions and
importance of women business owners; `and,
Conferences and Seminars to provide ,present and potential women
business owners a wide range of ttchnical, managerial, and financial
information from private and public sources;
~`M!CH!GAN
`con ll,:-,:o-- On,,,',' ~:"si~'c'
I), `::`t:n::: ,`t L'
10. Ii's 1,,~.
\ll 4M~lc'°)
u ii,, \1i ,~`,* ;t, \\`,`,,,~,
lii,;,,':
i i I
PAGENO="0291"
285
MICHIGAN'S TOP
WOM'ENmOWNED BUSINESSES
Total RevenuAt
(millions)
0wne~'s Name Title Type of Business 1986 1985
Gertrude Cram chmn publislring 120.0 too
Ruth Rich pres & mdrrutactuterslot doors and 77.0 650
chmh aluminum windows
Ilene Moses pres & designer manullacterer anus distributor 71.0 450
ceo or womens apparel
Janet C Muhieman pres lull Service adverliyrtgdgenCy ~66.1 `45
Carol A 80/10 ores real estate 55.0 330
Narene Slavrn pres harneso racing 52.0 St 0
yet) Lnwenstetn chmn. OEM upholstery manutactuter 500 u/A
Kathleen Gunk/n pres real estate 40.0 330
Dorothy Knllppenbutg chmti. . manutacturero of fas)yoers and done. 36~8 400
ponents lot the calindustry
Marilyn BarreD pres advertising 34.3+ 3)4+
Irma Elder pres. auto dealership . 32.4 259
Ruth Wheaton & owners electric wholesalers 30.0 300
Jospehine Aracker
Alice Shotwell Oustatson pres. wholesale beet. wine and 26.6 246
nor*aicoholrc beveragedislributor
Marion W Ryan pros wholesale beer distributor 25.0 21
Beatree J Berk C e.o auto dealer 22.6 2t 7
Lucille Wertz pros wholesale beerdislrlbutor 20.0 198
Mary Falvey Fuller pres . auto dealer and servIce 20.0 b/A
Flnrine Mark pres 6 personal seruices ` 18.6 6
Palocia Andrew owner plumbIng and heating wholesaler (8.8 157
Barbara Wilson pIes auto dHaler 17.0 130
Beverly Purnari pres. general contractor 15.0 tOO
ArrteoeLangwald pres trace) 14.5 020
Helen Dennis chmn. elechlcalconstructiun 13.8 13.0
Lea) Dun Horn dir. retailer . 12.8 120
H. Keene MciOenna chmn. wood models, panemo, mockups. 11.0 0.0
CRC machining
JoanA. Binkow , c.e.o. teleproduction 10,9 97
AliceC. Jencks pres. coil manufacturer , 10.6 85
MangaretCampbell preo. manutactunnts of 8elf~pretclng tastenets 9.7 95
and handling Oyutems
Beulah I. Kendall ç(rmn lndatthal supply 9.0 90
Carol Ouigley pres metal stampings ardwelded assemblies 8.5 60
gauge manufacluner
Joyce Lockhart Chmn. induorrial and clerical . 7.5 6.0
temporary help
~Gr0os Bil6ngs
continued...
Rank Company
1 Cram Coirimunications Inc
1400 Wuodbridge Ave Delroit 48207
2 Acnrii Building Compormts Inc
12620 Wesnwood Ave Oetroii 48233
3 SMS Inc
16035 Harper Detroit 40224
Group 243. Inc
1410 Woodridge Ave .Ann Arbor 48105
5 Catol 801106 Associates
2937 Biddle Aue.. Wyardone 48192
B Jackson TInning Association
00 Boa 881. Jackson 49204
7 ACme Mills Company Inc
~15t Loraine Ave . Detroit 48208
8 Century St Realty Ltd.
1601 0 Grand River. Lansing 48906
9 Michigan Rivet Corporation
13201 Stephens Rnad Warren 40089
10 Mars Advertising Compory
242o9ddorthwestern Hwy.. Soutntield 48075
11 TOny Ford
777 John 9. Troy 48083
12 FiOpatrick Eiectric Supply
444 irwin Ave Muskegon 49443
13 Hubert Distributors Inc
1200 Auburn Ave.. Pontiac 48057
14 Tom Ryan Distributing Company
3302 Kent St. Flint 48503
15 Richard Chevrolet Inc
7640 Lewis Ave ,Temperance 48123
tO 010 WerO Dislnibuling Company
44900 Vic Wertz Drive. Mt. Clemens 40943
17 Falvee Autos Ins.
1815 Maplelawn. Troy48084
18 The WW Group Inc
25555 Orchard Lake Road. Parmington 1)11548333
19 W. T. Andww Company
15015 Hamillon Ave.. Dettoit 40203
20 Ferndaie Motors Inc.
21350 Woodward. Ferndale 48220
21 Fairview Construction
1100 Opdyke. Auburn Hills 48057
22 61km Travel Inc & Cruises Only!
25950 Greerfield Road. Oak Park4BB37
23 Ordiversal Systems
r4rO E. blewart Ave., Flint 49500
24' Oar Horn Inc.
0630 Th080crott. Troy 48084
26 McKenna Industries Inc.
2222 Stephenson Hwy.Trny 48083
26 General Television Network
13225 Capital Ace.. Oak Park48237
27 Detroit Coil Company
2435 Hilton Road. Ferndale 48220
28 ((ear Manutacruning Corporation
2500S. Gulley Road. DBanbsrn 48125
29 ` Kendall Industrial Supplies
7026. 20th SIred, BarOeCreek 48015
30 OAiQ/eylndustnies Inc.
2r547'Teiegraph Road. Soulhtield 49034
3t Employers Temporary Service Inc.
01220 Whinier, Detroit 48224
PAGENO="0292"
286
MICHIGAN'S TOP
WOMEN-OWNED BUSINESSES
32 A.V.S. Construction Specialties Inc.
3345 Auburn Road. Suite 205. Auburn Hills48057
33 SchitlenMasonContractors
2l900elhi N.E.. Holt48842
34 Fnames0nhirnitedlZirndat Enterprises
3343Lousma DAve. Grand lIapids49508
35 FireGuard Inc.
319 Executive Drive. Troy 48083
38 Woluenne Flexugnaphic Mtging Co.
20774 ChesleyDr.. Farrnington48024
37 AA Electric Supply & Service Co.
5101 E Davison. Detroit4O2l2
38 Knagitvs Medical& SungicalSupply Inc
1825 Bailey St.. Dnanburn48t24
39 LuoAssucrateslnc.
3l000Notthwestetx Hwy.. FanrninglonHills48333
40 Llnitonce Temporary Servicestnc.
10005. Woodwatd. Blrmingham48024
S200Nortlrwind Drive. East Lansing 48823
41 R. 1. Adams Plastics Inc.
2dS0Buchanan St S.W.. Grand Rapids 49508
42 Swanson's Cookie Company
330 Upton Ave. Battle Creek49OtS
43 WellsFneight& Cargo
126 E. Hudson. RuyalOak48067
44 Western Walenproosng Company
O96OFneeland. Delnoit4B227
45 Diamond Die& Mold Company
35401 Gwesbeck Hwy.. ML Clemens4eQ43
46 E. L. NickellCompasy Inc.
635 FrankboSt.. Constantine 49042
47 Rnmanow Building Services
3093 EnsenpnseDnve. Sageeaw4O6O3
48 R&S Truck Leasing Inc.
1651 Walker Road. Muskegos49442
49 Bell BrnadcastingCompany
2994 C. Grand Blvd.. DeIroit4B2O2
50 1 Martin TemporaniesPlus
793AirpontBlvd.. Ann Anbon48tOlt
St DetroitAinCompressor & Pam
3205 Bermuda. Ferndale 4822
52 Detroit First Aid Co. Inc.
19275 Nonthline Ruad. Southgalr 48195
53 Edward'sOil Service
530S. Rouge. Detroit 49217
54 Delnnit Bardag Inc.
7500S. Die. Detroit 48217
55 Interior System ContnaclGnoup
BuhlBuilding. Detroit4O226
56 Greaten FlintTemporary Ltd.
P0. Box 4198. Flint48504
57 Immediate Temporary, Hea0h Cane
4l5Jersme. Midland4864O
58 PR. Associates
1600Penobscot Building. BetroiI4B226
59 BerlrieyMactilne Produclo Inc.
3l52OPamco. Linorria 48150
Wruttle Elevatorlec.
224 WaterSt.. Harbor Beactt4O44l
PC. Ceenachne Inc.
4965 Band. 1noy48084
Welbunn Buick
600South Main. RoyaIOak4806l
Kristin Peterson pies. underground sanitary. slorm walrr
main installation
Margaret A. Schifler pies, contractor
7.0
6.8+
5.0
43+
Donotlty Zimdan pros. an
6.5
60
Tern Melnick mao. tire protection
6.0
60
Kathleen Hager chmo. manulactuning
5.9
N/A
AgnesScott pros. wholesale electric supplier
5.5
2.2
Ninailnasity pies, distributor 01 medical and surgical
supplies
DianeChambers Lutz chmn. mulliIaceted communications services
5,5
.
5.5
50
46
Fatncia Gray & owners temporary services agency
Alyson Steele
5.0
50
Lilo E Adams pies loam extrusion
5.0+
50+
Ruth Venn pins, cookie marulacturnr
5.0+
50+
Gerry Goodman pies , melailer
5.0
50
Evelyn Mazvr pres. construction
4.5
35
Josimn Hinds pres tool and din
4.0+
25
Lyda L. Nickell pies. nelnigeration unit manolacturer
4.0
3.5
Manna Romanow pies custodial services
3.7+
29
MatgaretJ Smith pies common carrier
3.7
40
Mary Bell pies radio slatinn
3.5
22
Jean Martin pnes employment services
3.2
tO
Gretchen Bornor Cole pros. sales/parts/seince
3.0
30
Jacqueline Fox pros medicalsupplies
3.0
30
Elizabelh Ooieck pies Oil changing
3.0
30
Sun Funk pies Ituck tire service
3.0
30
Billie Wanink prncpl interiors
2.8
16
ChanloOe Bnavrslnom pies. tempotary employmenlsenvices
2.6
10+
Sharon Long pies health services
2.7
23
Bovetly Beltaine pies. public relations
2.5
22
Louise Con v. pros. automolive manulacluner
2.5
25
OthenSignihicanl WomanOwned Businesses
Marlonie Wruble pies, elevator company
PatnicaShea pies. general contraclor
Rhonda We/buns pies auto dealer
Grsss Billings
PAGENO="0293"
287
STATE OF MICHIGAN
JAMES J. BLANCHARD, Governor
MICHIGAN STRATEGIC FUND
P.O~ BOX 30234, LAW BUILDING, LANSING; MICHIGAN 48909
(511) 373'1550
PETER PLA$TRIK, President
October 1987
~
~
~~Qce~±iQn
LaI~Q4U~±1Qa
A new industry of private finançlai'institutlons is being built in Michigan.
designed to help meet the financing needs of small and medium sized MichIgan
businesses. Many sound businesses are unable~to obtain growth capital because
their financings are viewed as too risky for conventional bank lending, yet'
cannot provide the super high rates of retiirn sought by venture capital ists.
BIDCOs (business and industrial development corporations) are anew type of
licensed and regulated private financial institution well suited to f II I this
financing gap. High caliber people from the private sector are seizing the
entrepreneurial opportunity to form BIDCOs, and subStantial private equity
investment in BIDCOs has already been raised.
In May 1986, the Michigan BIOCO Act became law. `This `Act. provides for the
licensing and regulation of BIDCOs by the Michigan Financial Institutions
Bureau In June 1986, the Michigan Strategic Fund adopted Its program to
catalyze the formatiofl, of Bi000s by investing up to $2 million per BIDCO,
contingent on the ~1DCO `then raising private equity in at least a 2 to 1
match. S `
While the State of Michigan has taken the lead In catalyzing the process, the
BIDOO Program Is based on private market principles, and depends for its
success on private sector talent, decision making and capital. And Indeed,
the private sector is responding to the chaiien~e. Already the Strategic Fund
has made commitments to invest In three specific BIDCOs in formation.
Numerous other prospective BIDCOs are in the pipel me, and interest by new
potential BIOCO organizers continues to Increase all'the time. S
It takes a lot of time and effort to put together a BIDCO. But if the
momentum continues to develop, the prospect of having a diverse indust~y In
Michigan of at least 20-25 B1DCOs within 5 `years can~ become `a real lty.
PAGENO="0294"
288
Tb~_Q~p~ ~e±~een n~~fl~yQpj~rQ Capjj~J~
Banks play an important role in the financing of businesses. However, given
the nature of their capital structure and their regulation, they face
significant constraints in the types of financings that they can provide.
Banks get most of their capital from deposits. By taking deposits, in effect
banks borrow money from their depositors, and they do this against a
relatively small equity base. Thus the debt to equity ratio for a bank may be
roughly 15 to 1. In addition to banks being heavily leveraged financial
institutions, they are also heavily regulated institutions, by both state and
federal agencies.
As a result of these factors, bank lending to businesses has focused on what
can be called the low risk/low return end of the business financing spectrum.
Annual ized loss rates may. run at 1/2 of 1% or less, and normal ly the interest
rate on bank loans will not exceed a feW percentage points above prime.
Venture capitalists, on the other hand, focus on what can be called the high
risk/high return end of the business financing spectrum. Venture capital
partnerships are well suited to take high risk because typical ly they don't
borrow money and thus have a zero debt to equity ratio. Venture capital funds
typical ly invest their capital in an equity form, and may expect to sustain
losses on a third of their investments. In judging whether a particular
company will qualify for an investment, venture capital funds typically will
not even consider making the investment unless there is a prospect of the
investment providing a 35%, 40% or 50% compounded annual return.
Because of losses end shortfalls, most investments by a venture capital fund
will not actually achieve such rates of return. However, the key point is
that venture capital funds will normally not even consider an investment
unless they believe there i~ a prospect for such a return. By targeting a
35%, 40% or 50% compounded annual return on investments, venture capital
partnerships seek to actuallyprovide a 20%25% return to their investors (the
limited partners), once tosses, shortfalls, overhead, and dilution (from the
general partners taking a share of the profits) are taken Into account.
Given the dramatic effect of compounding, if a venture capital fund is to
obtain a 40% compounded annual return on an equity investment which cashes out
after 7 years, the fund must get back more than 10 times its original
investment. (If it takes 10 years to cash out, a multiple of 29 to 1 would
have to be achieved.) Thus venture capital funds focus their investments on
companies with super rapid growth potential that have a prospect of going
public or being acquired within a 5 to 7 year period. To a large extent,
venture capital partnerships have emphasized high technology companies. Given
the criteria used by venture capital funds, the overwhelming majority of
companies have no real prospect of attracting venture capital financing.
PAGENO="0295"
289
...3.~
There is a large gap between the low risk/low return debt financings that
banks arepositionéd to provide, and the high risk/high return equity type
financings that venture capitalists provide. Thus manysmall and medium sized
businesses have financing needs that are too risky for conventional bank
lending, yet cannot provide the super high rates of return sought by venture
capital ists. The financings of many such busine~ses indeed could meet a
private market test on the risk/return spectrum, yet such companies often
cannot obtain the financing because there is no existing type of private
financial institution well suited to serve this moderate risk/moderate return
niche. This is the gap that the emergingBIDCO industry is designed to fill.
From the perspective of economic development and Job creation, the moderate
risk gap is important to address, because frequently the growth capital needs
of small and medium sized businesses fall within this gap. Capital for
expanding businesses often faila within this gap because a growing company
frequently wil I not have the collateral to ful ly back up the financing of its
growth. Whereas banks tend to focus on well secured financing, BIDCOs will
often take unsecured or subordinated positions. BIDCOs will rely more on cash
flow, management competence and performance of its portfolio companies. In
addition, compared to banks, BIDCOs will tend to be structured to provide a
much greater degree of hands on support and management assistance, in order to
reduce risk and facilitate the growth of its portfolio companies.
~
BIDCOs have tremendous flexibility in how they structure financings of
businesses. Businesses can receive financing from aBIDCO in the form of
straight debt, straight equity, royalties, debt with equity features, or
virtually any type or combination of financing that makes sense for both the
business and the BIDCO. $iven the fact that BIDCOs will be filling the gap
between banks, which focus on providing debt financing, and venture
capital ists, which emphasize equity financing, in many cases a BIDCO's
financings may be in the form of a combination of debt with equity kickers.
Equity kickers can take any number of forms, including, for example, warrants
to acquire stock, a percentage of net income, a perdentage of cash flow, a
percentage Of sales, or convertible debentures. Whatever the structure, the
key concept is that inaddition to gettin~ speciflc interest income from a
financing, a BIDCO, through equity kickers, can also share to some extent in
thesuccess of the company, $n order to appropriately compensate ~the BIDCO for
its risk,
For example, aBIDCO might make a loan of, say, 11% to a company, but with
equity kickers targeted so that if the company is Successful, the BIDCO may
receive an overall 2O%'.2~% compounded annual return on the investment, (It is
important to emphasize that this example is ii lustrative only, and that in
addressing the broad gap between banks and venture capitai, many other
combrnations of assumptions are possible.) A 2O%-~25% return on an individual
financing is obviously a lot more than a bank seeks, but much less than a
venture capital fund's target rate. And the BIDCG's return can be achieved
while still being very affordable to the~~ompar~y, and~sensitive to the
company's cash flow needs.
PAGENO="0296"
290
-4'-
Because the type of financing that BIDCOs will provide is different from, and
complementary to, that provided by other financing sources, there are many
possibilities for complementary relationships, including the potential of
doing deals together. As an example, assume that a company needs to borrow
$900,000 to accomplish its growth needs. Assume also that $600,000 of this
can be supported by strong collateral and could be provided by a bank, if only
the additional $300,000 can be raised. * In such a situation a BIDCO might put
together a package, with the BIDCO providing $300,000 in unsecured
subordinated debt and with a bank providing. $600,000 in well secured senior
debt. The BIDCO's participation makes the whole deal possible. Clearly in
this situation the BIDCO is taking more risk than the bank, because of the
BIDCO's subordinate position. To compensate for this added risk, the BIDCO
takes an equity kicker.
We have identif led several good examples of existing financial institutions
which are already successfully making numerous investments In this moderate
risk/moderate return niche by use of subordinate debt with equity kickers.
These examples include: 1) Massachusetts Capital Resource Company, located in
Boston; 2) Al I led Investment Corporation, located in Washington, D.C., an
SBIC subsidiary of Allied Capital Corporation (which is a holding company with
a number of financing vehicles); and 3) Capital South Corporation, located in
Charleston, South Carolina. While these financing entities provide strong
confirming evidence of the market opportunity represented by the moderate risk
niche, what is so unique about the BIDCO concept is that instead of being
Isolated investment companies which happen to make loans in this niche, the
BIDCO concept provides a capital structure, regulatory mechanism and focus
upon which an entire new industry of financial institutions can be built.
~ Leygr~gQ
A key to the ability of BIDCOs to address the moderate risk/moderate return
niche, while at the same time achieving a good return to investors in the
B1DCO, will be their ability to moderately leverage themselves by borrowing
money. Whereas a bank might leverage itself 1~ to 1 through diposits, and a
venture capital partnership will typically not borrow at all, B1DCOs may seek
to achieve debt to equity ratios up to, say, 3 to 1. It is anticipated that
this leverage would be achieved gradually over a period of years. The concept
is that a BIDCO would start out with capital provided by its equity investors,
* and develop a portfolio of investments to diversify its risk. At that point
the BIDCO would begin to borrow money in stages from major institutional debt
sources, achieving increasing leverage as the ~ operating experIence and
track record justify.
PAGENO="0297"
29~
`-5-
The actual degree of leverage that a BIDCO would achieve over time would
depend on many factors~ inclu~iing, for example, the quality of the B1DCO's
management team, the BIDCO's mark~t niche, the risk of individual financings,
the relationship between average size of loans and total equity, the BIDCO's
balance of current income vérsu~future income, and ultimately the ~
actual track record as indicated by loss rates as well as earnings on
successful deals. The business plans of some BIDCOs may appropriately
~ontempiate achieving a debt to equity ratio of substantially less than
3 to 1.
Leverage is a crucial factor in a B1DCO's business plan. If a BIDCO borrows
money at, say, 11~, and invests those funds with a 20%..25% return, such a
margin can dramatically increase the BIDCO's rate of return on its equity
capi-tal~ By taking advar~fage of leverage, a well managed BIDCQ should
typically be able to provide a return to equity investors which is as good as
or better than a venture capt~lal partnership would retut~n to Its equity
investors (Its limited partners) * Leverage enables the BIDCO to accbmpi ish
this without' having to target the super high rates ~t return sought by venture
capital funds on indivi~dudl inv~stments. At the same time, because BIOCOs
will be much less leveraged than banks, BIDCOs wil I be able to take
substantial ly more risk on individual financings than a bank can take.
IbLi,as1_aaL.RegLt1~n.Qi_aiQQQ~
The licensing and regulation of BIDCOs will be the responsibility of *he
Michigan Financial Institutions Bureau, the same agency that charters and
regUlates state ~harterod banks, s~vings and loan associations, credit Unions
and other entities. Unlike bank regulation, the regulatory system created by
the Michigan BIDCO Act is~ nOt designed to prevent BIDCOs from taking risk On
individual fiflancings. The regulatory system, however, does focus on
preventing fraud,confiict of interest, mismanagement, and on promoting
accurate recordkeeping and appropriate communication with shareholders. The
regulatory system is also designed to prevent a BIDCO from investing too much
of its capital in any one co~npany. The I icensing and regulation system
includes annual examinations, and provides real enforcement powers such as
cease and desist orders and other tools.
The I roenming and regulation ot BIDCOs is designed to assist a BIDCO In
raising capital by providing comfort to prospective equity investors and debt
sources for the BIDCOs. For example, major institutional debt sources such as
pension funds, rnmurahce companies and banks~who are all licensed and
regulated themselves and have tiduciary responsibilities, will take a measure
of comfort in kn~.ving that they are lending to an entity that is also Iióensed
and regulated ih a manner to protect their interests. In addition, from a
longer term.perspective, it is an explicit purpose of the regulatory system to
safeguard the reputation of BIDCOs as a class of private financial
institutions as an industry. This will continue to have benefits in
attracting additional capital sources. The concept of development ot a strong
"industry" Identification of Bl'DCOs is an important concept of the whole
program, and the licensing and regulation system supports this theme.
PAGENO="0298"
292
-6"
There is an additional explicit benefit that the licensind and regulation
provides. As licensed and regulated lending institutions, BIDCOs will be
eligible to apply to the United States Small Business Administration (SBA) to
become approved lenders under the SBA's 7(a) loan guarantee program. Under
this program SBA guarantees up to 90% of a loan, and the guaranteed portion of
these loans can be sold on a national secondary market. Using this process, a
BIDCO can obtain additional funds for lending, while retaining an interest
rate spread between the rate they must pass through to the secondary market
purchaser of the guaranteed paper and the interest rate received on the actual
loan to the business.
SBA 7(a) loans are pure debt vehicles, and SBA's criteria for guaranteeing
loans are generally conservative. For example, they place substantial
emphasis on collateral. Thus there Is a real limit on the degree to which a
BIDCO can use the SBA 7(a) program to address moderate rIsk growth capital
financing needs. However the SBA program can provide a useful means for a
lender to stretch out the term to maturity of a financing of a business. The
business plans being developed by some BIDCOs, in Michigan contemplate use of
the SBA program, while others do not plan to use it.
For tnose B1DCOs for which the SBA program fits in with their business plan,
the program has the potential of being a valuable additional tool. In
general, however, even for Michigan B1DCOs that plan to take advantage of the
SBA program, it is anticipated that a relatively small percentage of the
BIDCO's capital will be devoted to this window.
This contrasts sharply with the experience in Qal Ifornia, the one other state
that has had a BIDCO licensing and regulationstatute. The California
licensing statute was passed in.1977. To date, the California BIDCOs have.
exclusively devoted themselves to participating in the SBA 7(a) Program.
Prior to 1986, these B1DCOs demonstrated an ability to effectively and
profitably use the SBA program. In 1986, Congress enacted legislation to
reduce the guarantee percentage from 90% to 85% for loans above $155,000.
This substantial ly reduces the leverage and profitability, for a B1DCO making
and selling SBA loans. Given this change, and given continued uncertainty
regarding additional potential changes in that program, it has been difficult
for the Cal ifornia BIDCOs, which have a track record, business plan, and staff
geared solely to do SBA loans, to raise additional capital to sustain their
volume of lending.
These problems. encountered by the Cal I fornia BiDCOs will not be applicable to
Michigan BlD~0s, because Michigan BiDCOs will in no way be dependent on the
SBA program. While the SBA program has the potential of being a valuable tool
as one part of a diversified BIDCO, a business plan heavily dependent on the
SBA program would create substantiai obstacles.
PAGENO="0299"
293
-.7-
~
A basic premise of the BIDCO concept is that investing In a BIDCO can be an
excellent Investment for Institutional investors and wealthy indIvidual
investors. The $IDCO niche presents a substantial ~market opportunity, and the
capital structure and regulatory mechanism are well suited to take advantage
of this opportunity. If a BIDCO has a good management teath and a good
business plan, it should present a good long term Investment opportunity.
Such an Investment would have excellent prospects for a good return, and
relatively l~ risk. Potential Investors in BlDCO~ Include, among others,
banks, savings and loans, corporations, pension funds, insurance companies,
foundations, Investment hankers, commercial finance compat~ies, leasing
companies, utilities, and sophisticated individual investors. In addition to
In-state sources, the emerging BIDCO Industry should be able to attract
capital from around the country, and even some foreign Investment.
In addition to the potential of being a good investment, many of these types
of institutional investors may have good strategic reasons for investing in
B1DCOs. For example, because of the complementary relationships possible
between a bank and BIDCO, with the potential of referring customers to each
other and doing deals together, a bank may be Interested in investing in one
or more BIDCOs in order to help develop such complementary relationships.
~
The emerging BIDCO industry is based on strong market principles, and can
attract high quality management and substantial private capital to meet a
strong market opportunity. The major obstacle is the novelty of the concept.
While an excellent case can be made that investing in a BIDCO can be a good
long term Investment, it is always 41ff icult to raise equity capital for
something this new. For this reason, the Michigan Strategic Fund (MSF) is
helping to catalyze the formation of BIDCOs by taking a lead role in
communicating the vision, providing technical assistance to SIDCO organizers,
and being an equity investor in BIDCOs. Under- the MSF's B1DCO Investment.
Program, the MSF will make equity investments of up to $2 million per BI1DCO,
contingent on the BIDCO organizers then raising at least $2 in private equity
for every $1 of MSF Investment. In order to emphasize that BIDCOs are private
institutions, with private sector management and deci~lon making on
Investments, the MSF's stock will be nonvoting stock, convertible to voting
status if the MSF sells the stock. In addition, In order to express our
confidence in our investment decision, and to give a bOost to private
Investors, a portion of the MSF's stock wIll be subordinate in status to the
private equity, in the unlikely event of a failure and liquidation of the
BIDCO. The MSF will share fully in upside returns.
PAGENO="0300"
294
The MSF's investment decision is based on a thorough review of the management
team and the business plan, and a determination that the investment is a good
investment from a private market perspective. This thorough approach is
helping the MSF to gain credibility within the private sector, which enhances
the value of the MSF's commitment in giving a boost to the private fund
raising process. It is also heiping to ensure that the BIDCOs actually being
formed will be of the highest quality, thus maximizing the prospects for long
term growth and success for the Michigan BIDCO industry.
The MSF's long term objective is to catalyze the process of forming B1DCOs,
and ultimately to sell its stock in BIDCOs at a profit, leaving behind an
industry of permanent private institutions operating without any MSF
I nvestment.
Ec1±e~ctoLBesponae
The private sector response to Michigan~s BIDCO Program has been remarkable.
Tremendous interest has developed from numerous high caliber people seekIng to
form and manage BIDCOs. This interest is coming from people with a variety of
backgrounds, including, for example, bankers and former bankers, financial
consultants, management consultants, investment bankers, accountants, and
lawyers. A common link among these people is that their experiences have
given them a real appreciation of the financing needs of businesses and the
huge market opportunity that exists for a financial institution poised to
address the moderate risk niche. They are stimUlated by the excitement of
creating this new industry, and the entrepreneurial prospect of being well
compensated for their efforts, both from salary and a piece of the action.
While tremendous interest has already developed in the formation of BlD~Os, we
believe that this is only the beginning, and that interest will continue to
mushroom.
The MSF originally allocated $12 million of its resources to invest in BIDCOs.
Given the tremendous private sector response, the MSE Board, in September
1987, increased this allocation to $24 mil lion. If interest continues to
Increase, the Board may consider an additional allocation.
To date, the MSF Board has committed to invest a total of $6 million of the
$24 million allocation, by committing the maximum $2 million each to three
B1DCOs in formation. It is estimated that over the next 10 years, these three
BIDCOs will together provide $250 million in financings to Michigan
businesses. The three BJDCOs that the MSF has committed to thus far are as
follows:
PAGENO="0301"
295
Onset BIDCO, located in Farmington Hills; intends to focus on the financing
needs of Michigan businesses which provide innovative products, capital
equipment or services to major durable goods manufacturers. Onset is seeking
to raise $8 million in private equity capital, a majOrity of which has already
been raised Chrys I er Corporation has made a commi tment to i nvest $4 mi I ion
in Onset BIOCO. Onset's primary market area wilt be Southeastern Michigan.
Arcadia BIDCO located in Kalamazoo, intends to focus on the financing needs of
a broad base of businesses and industries, primarily serving companies with
annual s8les ranging from $300,000 to $3,000,000. The primary market area
will be the Kalamazoo. and Battle Creek metropolitan areas, but Arcadia BIDCO
will also serve the entire Southwest Michigan area. Arcadia BIDcO has
completed its private fund ralsIr~g, securing $4 mill Ion in private equity, and
expects to be operationai in the near future.
LGA Capital Resources BIDCO, located in Troy, intends to emphasize the
provision of financing for corporat~ turnarounds. LGA Capital Resources BIDCO
will serve primarily Southeastern Michigan, but also expects to finance a
substantial number of companies in other parts of the state. LGA Capital
Resources is seeking to raIse $6 million in private equity.
An important feature of the emerging BIOCO industry in Michigan is the
tremendous diversity that is developing among BIDCOs. While a central common
theme is addressing the moderate risk niche, within this niche there is
substantial diversity. This diversity extends to geography, market niche,
size of financings, size of companies being financed, structUre of financlngs,
amount of equity capital to. be raised, anticipated degree of leveraging,
management approach and ether items.
Alt ~bmen±s
Attached to this paper is a detai led paper specifying the MSF `s parameters for
Investing in BIDCOs. Also attached is a a copy of the I icéflsi.ng and
regulation statute, known as the Michigan BIDCO Act.
PAGENO="0302"
296
STATE OF MICHIGAN
JAMES J. BLANCHARD, Governor
MICHIGAN STRATEGIC FUND
P.O. BOX 30234, LAW BUILDING, LANSING, MICHIGAN 48909
(517~ 373-7550
PETER PLASTRIK President
JUNE 1986
DETAILED PROGRAM PARAMETERS
FOR THE
MICHIGAN STRATEGIC FUND'S
BIDCO INVESTMENT PROGRAM
PAGENO="0303"
297
BIO~O~ INVESTMENT PF~C~J~M
BAS~.C OBJECTIVES
The purpose of the NSF's BIDCO lnve~tment Program is to catalyze the formation
of a new industry of private financial institutions in Michigan, designed to
fill the middle risk financing gap between conventional bank financing and
venture capital financing.
The NSF believes that from a private market perspective, investment In B1DCOs
can be good Investments, with excellent returns and relatively low risk.
However, obtaining initial equity capital for anything novel, such as a BIDCO,
can prove difficult. Thus to catalyze the formation of BIDCOs, the NSF is
prepared to make equity investments in BIDCOs. If after a rigorous analysis
of the business plan and the experience and qualifications of the management
team of a prospective BIDCO, the NSF makes a commitment to make en equity
investment, the ability of the prospective BIOCO to then raise capital from
private equity sources will be enhanced. in addition, in order to express its
confidence in the investment, and provide a psychological boost to help the
BIOCO obtain private equity investment, the NSF is prepared to take an extra
portion of the downside risk in the event of the liquidation of the BIDCO.
A major objective of the MSF is to obtain substantial leverage from the funds
that it invests in BIDCOs, In addition to private equity requirements,
additional leveraging should be anticipated, such as by the BIDCO being able
to borrow money after it has had some operational experience, or possibly
through selling the guaranteed portions of SBA guaranteed loans. Ultimately
it is the objective of the NSF to sell its stock in a BIDCO at a profit,
leaving behind an ongoing, permanent institution operating without any NSF
Investment.
~AMETERS. OF THE ~O~I1T~4ENT PROCES.~
The NSF will open a window and accept applications from prospective BIDCOs for
the NSF to make en equity investment. (The entity applying shouldhave
already incorporated.) The NSF may be the first investor to make a
commitment, but any NSF investment shell be contingent on. the applicant
raising the minimum private equity capital specified in the application. Such
minimum private equity capital shall be at least $1 million and shall beat
least two times the amount requested from the MSF. (For the purposes of this
program, private equity capital shall be considered to be equity capital from
non-NSF sources.) The NSF's investment will also be contingent on the
applicant obtalfling.a BIDCO license from the Financial. institutions Bureau.
The MSF may also include other conditions on its commItment as may be
appropriate in a particular case. The NSF will invest up to $2 million per
SI OCO.
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Commitments made by the MSF under this program shall normal ly be for a period
of anywhere from 6 months to a year. If there is adequate progress towards
fulfilling the conditions of the commitment, it is the MSF `s intent that
extensions will be routine. All commitments and extensions must be approved
by the Board of DIrectors of the MSF.
In order to increase the prospects that limited MSF resources will be used to
invest in those BIDCOs where the MSF's investment is having a catalytic effect
on the ability to raise private equity, as a general guldei me the MSF will
limit its investments to BIDCOs in which no more than 50% of the initial
private equity capital comes from any one source. However, this guideline may
be waived on a case by case basis if there is a strong basis for believing -
that the M$F's investment Is an important element in catalyzing the formation
of the BIDCO.
The 1'ISF expects that most of the applications it receives from prospective
B1DCOs will be from applicants seeking to run the BIDCO on a fully profit
oriented basis. However, the MSF will also consider applications from
prospective BiDCOs which have a businesslike mission but with social
objectives as well, and ±hus will not be intended by its private investors to
achieve a profit commensurate with the risk. (Such a BIDCO will have to be
able to satisfy the statutory requirement, for licensing purposes, that it has
a reasonable promise of being a viable, ongoing BIDCO and of satisfying the
basic objectives of its business plan.) In such a situation, the MSF may
consider, on a case by case basis, a waiver of requirements such as the 2 to 1
minimum ratio of private equity to MSF equity, and the $1 million minimum
private equity. Moreover, if the MSF concludes that the stock in such a
sociai ly oriented BIDCO. is not likely to be marketable for many years into the
future, the MSF may consider structuring its investment in such a way so that
it eventuai iy has a reasonable prospect Qf recovering the amount of its
investment.
CHARACTERISTICS OF ThE MSF'~ EOUITY INVESTMENT
The NSF's equity investment in a BIDCO will generally be structured to have
the same legal status as the main round private investor equity, with two
exceptions:
1) The NSF's stock will be non-voting stock. Instead, the MSF will
have observation rights, the right to have a representative be present at all
meetings of the BIDCO's Board of Directors, to recmive all notices and
information sent to the Board, and to have the same rights that Board members
have to obtain information, if the MSF sells its stock in the BIDCO, the
stock shaii be convertible upon sale to voting stock, on a par with voting
stock held by the main round private investors.
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2) A percentage of the MSF's shares of stock shell be subordinate, upon
liquidation of the BIDCO, to the private stock. At the minimum 2 to 1 private
to 14SF leveraging ratio, 20% of the shares purchased by the 14SF shall be
subordinate. At a 4 to 1 or greater leveraging ratio, 80% of the shares
purchased by the 14SF shall be sUbordInate. For a leveraging ratio between 2
to 1 and 4 to 1, the percentage shall be appropriately scaled between 20% and
80%. For example, at 3 to 1, 50% shall be subordinate; at 2.5 to 1, 35% shall
be subordinate; and at 3.5 to 1, 65% shall be subordinate.
The applicable leveraging ratio shell be determined by therelative amount of
private equity and 14SF equity committed as of the time of closing. If an
applicant has satisfied the private equIty requirement contained in the MSF's
commitment, but wishes to reduce the amount to be invested by the-MSF in order
to increase the percentage of the 14SF's shares that will be subordinate, and
if such reduction is acceptable to the private, investors, the applicant may
request the 14SF to invest an amount less than the MSF's fully committed
amount.
In determining the amount of private investment for the purposes of the $1
million minimum, and to calculate the leveraging ratio, both for the purposes
of determining the minimum 2 to 1 ratio and for determining the percentage of
shares to be subordinate, only the main round private investor stock shall be
included. In other words, founders stock, favorably priced employee stock and
seed investor stock shall not be included. Founders stock and favorably
priced employee stock shall In fact be subordinate in status to the MSF's
stock. However, the MSF's subordinate stock shall also be subordinate to seed
investor stock if the 14SF determines that the pricing of the seed investor
shares is consistent with the risk taken, in comparison with the pricing of
main round investor shares.
Any share of the ~iSF's subordinate stock would be convertible to non-
subordinate status if the NSF sells the share for a price which exceeds the
original purchase price by a designated percentage. The designated percentage
varies In accordance with, the leveraging ratio. At a 2 to `1 leveraging ratio,
the designated percentage is 15%, whereas at a 4 to I or greater leveraging
ratio, it shall be %1% For any leveraging ratio between 2 to 1 and 4 ~o 1,
the designated percentage is computed by taking.the original amount of 14SF
subordinate stock, multiplying by 1.5, d~vlding by the original amount of main
round private investor stock, and expressing the resuiting proportion as a
percentage. The rationale behind this formula is that if the stock has
appreciated in value by the designated percentage, that is an indication that
the original cushion provided to the private investors by the MSF's
subordinate status is no longer needed.
While commitments for the NSF's equity investment end private equity matching
requirements shall be obtained prior to the BIDCO obtaining its
license, the actual timing of the purchase of equity securities may be phased
in, as specified in the BIOCO's fund raIsing plan.. if the main round private
equity capNal Is phased in over a period of time, the f4SF's equity investment
would, In general, be phased in on `a similar schedule.
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300
.4.
OPERAT ING REOIJ I REMENTS
During the period when the MSF owns stock in a BIOCO, the BIDCO shall operate
in accordance with the following parameters.
1) The BIDCO shall provide financing assistance only to business firms
located in Michigan. If the business firm has multi~'state operations, the
criterIon that shall be used by the BIDCO is whether or not Michigan is the
state where the largest economic benefit of the financing transaction is
likely to occur.
2) The BIDCO shall endeavor to maintain as its primary focus, in
providing financing assistance, the ability to address the gap between low
risk conventional bank financing and high risk venture capital financing.
3) WIthout the consent of the MSF, the BIDCO shall not apply to the
Commissioner of the Financial Institutions Bureau to surrender the ~
license pursuant to SectIon 317 of the Michigan BIDCO Act.
The MSF may negotiate additional operating requirements with BIDCOs on a case
by case basis, as needed to safeguard the quality of the NSF's investment or
to promote achievement of the objectives of the program or the Michigan
Strategic Fund Act.
APPL ICATION REOU IREMENTS
To apply to the MSF for a commitment to invest, a prospective.BIDCO shall
submit detailed information covering three main categories: 1) fund raising;
2) experience and qualifications of the proposed management team, and 3) the
business plan for the BIDCO. The following sections specify In more detail
the information that should be covered. While these sections provide a
possible format, the applicant should in no way feel bound by this format.
The applicant can use its own format, as long as the basic information is
provided. Moreover, the applicant should feel free to provide additional
information which is viewed as relevant. The MSF may request additional
information beyond what is specified below.
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301
Fund raising
1. Specify the amount of P4SF commitment sought.
2. Specify the minimum amount of private equity to be raised if the MSF
makes the commitment requested in #1 above. Specify the maximum
amount of private equity to be~ raised.
3. Describe the basic legal structure of the various proposed classes
of equity investment in the BIDCO, including positioning, pricing,
voting control, and any other major parameters. This should be in
enough detail to give the MSF a good overview of what is
contemplated. However, this ~does not require the presentation to be
in a formal private placement memorandum format. If a formal
offering document is not presented, the MSF's commitment to invest
shall be subject to approval of the formal offering document by the
staff of the MSF and by the Attorney General `s off Ice.
4. Describe and discuss the applicant's fund raising strategy for
raising the private equity.
5. Specify the principal investor sources that the applicant will be
targeting.
6. What is the applicant's basic pitch to prospective private
investors.. Whet expectations ~end objectives is the appl Icent
specifying. This includes, for example, representations regarding
reasonably expected returns on private equity investment, indirect
finenciOl benefits, if any, and social purposes, if applicable.
7. List any specific financing commitments already obtained, including
documentation for each.
8, Describe specific demonstrations of interest from private investor
sources, lnclud~ng documentation where poss~ible.
9. DeScribe fund raising experience of peopled involved or to be
invotved in fund raising. Describe keyfundraising~contacts.
10 Specify your projected timetable, with milestones for completion of
the fund raising and obtaining a license.
11. Specify whether you anticipate taking in all of the committed equity
investment at closing, or whether you plan a phase In. If a phase~
in is planned, specify the proposed schedule It is permissible to
have different scenarios based on the actual amount of equity
capital raised
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302
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12. Specify your start-up budget, including funds already expended and a
detai led projected budget for completion of the fund raising.
Specify the person or people who will be working on the startup
phase, including how much of their time they will spend; how, if at
all, *they will be compensated; and their resumes and references.
List your seed investors, if any, with amounts invested ~ind number
of shares of stock owned. Specify any additional amount of seed
capital you are seeking, inciuding a discussion of possible sources.
Exp~r1enca. and Ouplificatlons
1. Submit resumes, references, and personal financial statements for
all principal members of the management team that are identified.
2. Describe the proposed responsibilities of each of the principal
members of the management team that have been identified. If any of
these people will not be full time, describe their other activities.
3. Describe the responsibilities of any principal management position
for which a person has not been identified.
4. Specify any directors that have been identif led, and submit resumes.
5. identify any other key people that have been identified, including
any. advisors, consultants, attorneys and accountants, and submit
resumes and/or descriptions of firms.
Bn~inpss Pimp
I. Market
a. Describe and discuss the types of businesses that the BIDCO
wilt finance. Discuss the extent to which the BIDCO intends to
specialize in certain industries, or whether a more broad based
approach is planned.
b. Describe the size range of businesses that it is contemplated
the BIDCO will finance, with a general indication of where most
of the focus is expected.
c. Discuss the life cycle stage or stages of the companies which
the BIDCO will likely finance, with an Indication of where most
of the focus is contemplated.
d. Discuss the geographic area in which the BIOCO plans to focus.
Specify the city or county in which the BIDCO's principal
office is planned to be located, an~ discuss intentions, if
any, to establish any additional offices.
e. Provide any market analysis that you deem relevant.
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803
2. Financlngs Describe and discuss the financing Instruments that
are intended to be used by the BIDCO (e.g. debt with equity
features, royalty, equity, pure debt (with SBA ornot), etc.).
Discuss the anticipated mix of the various types of financing
instruments. Discuss the anticipated size range of
loans/investments to be made, and informatiQn regarding pricing,
term, and other conditions. Discuss risk/return expectptions on
deals. Discuss methods of exit from investments.
3. t4~rk~tJn.g St~atag~ Describe the BIDCO's plans and approach to
marketing its services, including the Identification of potential
applicants for financing assistance.
4. ~praaning Process & Evaluatign Crit~r1s Discuss the anticipated
number of bulsiness firms that will be reviewed for possible
financing assistance, in comparison with the number that will
actually be financed. Discuss the approach to screening business
firms, and the evaluation criteria for deciding whether and under
what terms and conditions to provide financing assistance.
~eJ.ncome - Discuss the potential for fee income, and any plans
that the BIDCO might have for generating f me income.
6. ~n~cn~ent~ssimtance Discuss the plans of the BIDCO to provide
management and/or technical assistance to companies for which the
BIDCO provides financing. Discuss the BIDCO's plans for monitoring
its financings, and enforcing provisions of loan or investment
agreements. Discuss how the BIDCO plans to handleprobiem loans and
investments. Discuss the BIDCO's plans to provide management
assistance to companies that the BIOCO is not financing.
7. Qgm~n~ntaryR~l~tIonsh)pS Discuss the nature of complementary
relationships that are anticipated with banks, commercial lenders,
investment bankers, venture capitalists and other institutions
This discussion can be based on general types of institutions and/or
can identify specific instItutions where complementary relationships
have already been discussed.
8. th~gemcnt Struct~ire - Descr ibe the proposed management structure
for the BIDCO, and anticipated compensation for principal members of
the management team.
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9. Cap1t~J Structur'e Leverage - Discuss the BIDCO's plans and
prospects for leveraging its equity capital, by borrowing money, use
of the SBA guarantee secondary market, or other approaches. With
respect to borrowing money, what degree of leverage would the BIDCO
seek and over what time period? What sources for debt financing do
you anticipate? How would you seek to structure the debt? if use
of the SBA program is contemplated, discuss `your approach to this
activity and analyze its potential profitability. If you are
relying heavily on the SBA guarantee program, what is your fallback
if the SBA guarantee program is eliminated or its effectiveness
significantly curtailed.
10. Idle Funds - Describe plans foa the management of the idle funds of
the BIDCO.
11. Re~l1zation of Returns By inve~tor~ Discuss iong term plans and
options for providing a tangible return to the investors in the
BIDCO (e.g. dividends? go public? be acquired?)
12. Tax and Accounting issue~ Discuss relevant tax and accounting
issues for the BIDCO.
13. Financial P~gjeetlon~
a) Provide a detailed operating budget for the first three years
of' the BIDCO's operation. The first year shall be month by
month. The second and third years may be presented on an
annual basis.
b) Provide performance projections, year by year, for a 10 year
period. These projections should show cash flow, income and
expense (including taxes), and balance sheet data. For these
performance projections, operating expenses can be consolidated
Into one line item.
c) Specify the assumptions used for the performance projections.
It is permissible to submit several sets of performance
projections based on dIffering assumptions. However, if you
submit several sets of projections based on differing
assumptions, specify which set of assumptions are your primary
assumpt ions.
d) Specify computer programs used for the projections, and specify
formulas used.
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305
`.9..
E~ALUAT ION STANQ~J~Q~
in order to obtain a commitment from the MSF, an applicant must satisfy a
number of standards, Which are spelled out below. The MSF is free to make
whatever investigations are needed in order to determlne' whether an applicant
satisfies these evaluation standards. The MSF may suggest or negotiate
changes in the proposal that may be needed in order to satisfy the standards.
The standards are as follows:
1. O~jm~tIy~ The M$F's prospective commitment to invest, and
subsequent investment, must promote the basic objectives of this
BiD~O Investment frogram and the Michigan Strategic Fund Act.
2. G, fnvAk~nt- An equity investment in the BIOCO needs to be
judged by the MSF as being a good investment from a private market
perspective, with expected returns being commensurate with the risk
taken. However, BlDCOs which have a sociai objective in addition to
a businesslike mission, and will thus flot'be intended by its private
investors to achiBve returns commensurate with the risk, will not be
disqualified on the basis of this criterion if Ihi sOcial
orientation of the BI000 sufficiently furthers the objectives of the
Michigan Strategic Fund Act, and if the applicant will be able to
satisfy the statutory Standard for obtaining a license which
provides that the applicant must have "reasonable promise of being a
vi~bie, ongoing B1DCO and of satisfying the basic objectives of its
business plan."
3.' Good~iijj~nee~flm~ The applicant must have a good business plan.
The buSiness plan must be thorough, clear, have reasonable
assumptions, identify realistic markets which indicate good market
opportunities, and demonstrate thoughtfulness and grasp of issues.
The various aspects of the business plan need to mesh well with each
other and be intornally consistent. Capitalization needs to be
appropriate to the tasks identified In the business plan The
financial projectionsneed to be accurate, be based on realistic
assumptions, and be consistent with the business, plan.
4. ~ The management team, and supporting people
Ce g consultants, advisors, legal and accounting) as may be
applicable, need to. demonstrate appropriate experience, education
and training, and standing and contacts within the business and
financial community', which indicate an ability to successfully
manage the BIDCO. `In oral discussions, there needs to be evidence
of thoughtfulness, insights and grasp of issues. At the time' of the,
NSF's investment, Sri necessary skills needed to run the BIDCO will
need to be availebto These skills include, for example, overall
leadership, financial analysis, ability to evaluate potential
financings, marketing, and management assistance The management
team should have appropriate balance, and contain skills that fit
well with the tesks called for in the business plan There must be
good evidence Of strong personal commitments `to the success of the
PAGENO="0312"
N 306
BIDCO. Salaries and deferred compensation through stock ownership,
profit sharing plans, stock option plans, etc. need to be reasonable
to provide fairness to investors, but should also indicate that
management's stake in the success of the BIDCO will be adequate to
provide reasonable incentives.
PrcthIl~tyoLRa1siflgRAguIred Private Equity - Satisfactory
evidence must be presented to Indicate that if the MSF makes a
commitment to invest, it is probable that the applicant will be able
to raise the minimum required private equity capital. Since
investors will be looking to the quality of the management team and
business plan, the better the performance on these measures, the
better will be the prospects for raising the capttal. However
evaluation of information specifically relating to fund raising is
also necessary to appropriately assess the prospects of raising
private capital. The evidence provided can take a variety of forms.
Documentation of commitments or demonstrations of interest can be
very useful and positive, but are not a necessity. A prior fund
raising track record by key people can eiso provide substaiitial
evidence. Examples of additional factors that can improve the
chances for fund raising success include the personal relationships
and contacts of the founders, the appropriateness of proposed
funding sources, the relationship between the market to be served by
the B1DCO and the funding sources, the potential for compiementary
activities with funding sources that provide investment value beyond
the profitability of the investment, and existence of supporters of
the BIDCO who may be able to influence investment. The~MSF must
also conclude that adequate resources are likely to be available to
the applicant to fund the process of raising capital and obtaining
the i icense.
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Act Ito. 89
PubUc Acts of 1986
Approved by the Governor
May 1. 1986
FUed with the Secretary of State
May 1, 1986
STATE OF MICHIGAN
83RD LEGISLATURE
REGULAR SESSION OF 1986
Introduced by Senators DeMaso, Kelly. Gast and Irwin
ENROLLED SENATE BILL No. 54
AN ACT to promote economic development by providing for the licensing and regulation of business and
industrial development corporations: to provide penalties; and to repeal certain acts and parts of acts.
The Peobte of the State of Michiqan enact:
ARTICLE 1
SHORT TITLE, PURPOSES, AND DEFINITIONS
Sec. 101. This act shall be known and may be cited as the "Michigan BIDCO act",
See, 102. The purposes of this act are to 4to all of the following:
(a) Promote economic development by encouraging The formation of bitsiness end industrial development
corporations, a new type of private institution, to help meet the financing assistance and management
assistance needs of business firms in this state,
(b) Provide for a system of licensing, regulation, and enforcement that will enableimsiness and industrial
development corporations to satisfy eligibility requirements to participate, if they so, thOose, in the program of
the small business administration pursuant to section 7(a) of the small business act~ Pubik Law 85-536, 15
U.S.C. 636(a), and other programs for which they may be eligible.
(c) Provide for a system of licensing, regulation, and enforcem~Ot `designed to prevent fraud, conflict of
interest, and mismanagement, and to promote competent management, accurate record keeping, and
appropriate communication with shareholders: in ordto' to provide the following:
(i) Comfort to prospective shareholders so as to facilitate equity investmentb in business and industrial
development corporations.
(ii) Comfort rospective'debt sources soal t~facilitate the.borrowing of money by business anti industi~ial
development corporationC. - .
(d) Safeguard the general reputation of business and industrial ievelopment corporations as a ty~c of
institution in order toinerease the confidenceof prospective equity investors in and prospective debt tources for
those institutionS:
(e) Eliminate unnecessary restrictions which have discouraged the formation of busine~f development
corporations wider Act No. 117. of the Public Acts of 1963. by rOpeaIin~ th~t act and substituting a more
flexible regulatoty ftamework,
(82)~
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Sec. 103. For the purposes of this act, unless the context clearly indicates otherwise, the words and phrases
defined in sections 104 to 106 have the meaning ascribed tothem in those sections.
Sec. 104. (1) "Affiliate" means, if used with respect to a specified person other than a natural person, a
person controlling or controlled by that specified person, or a person controlled by a person who also controls
the specified person.
(2) "BIl)CO" means a business and industrial development corporation licensed under this act.
(3) "Business firm" means a person that transacts business on a regular and continual basis, or a person that
proposes to transact business on a regular and continual basis.
(4) "Commissioner" means the commissioner of the financial institutions bureau of the department of
commerce.
(5) "Control" means, if used with respect to a specified person, the power to direct or cause the direction of,
directly or indirectly through 1 or more intermediaries, the management and policies of that specified person,
whether through the ownership of voting securities; by contract, other than a commercial contract for goods or
nonmanagement services; or otherwise. A natural person shall not be considered to control a person solely on
account of being a director, officer, or employee of that person. A person who, directly or indirectly, owns of
record or beneficially holds with power to vote, or holds proxies with discretionary authority to vote, 20% or
more of the then outstanding voting securities issued by a corporation shall be rebuttably presumed to control
that corporation.
(6) "Controlling person" means if used with respect to a specified person, a person who controls that
specified person. directly or indirectly through 1 or more intermediaries.
(7) "Corporate name" means the name of a corporation as set forth in the articles of incorporation of that
corporation.
Sec. 105. (1) "Incorporating statute" means the act under which a licensee is incorporated, either the
business corporation act, Act No. 284 of the Public Acts of 1972, being sections 450.1101 to 450.2099 of the
Michigan Compiled Laws, or the nonprofit corporation act, Act No. 162 of the Public Acts of 1982, being
sections 450.2101 to 450.3192 of the Michigan Compiled Laws.
(2) "Insolvent" means a licensee that ceases to pay its debts in the ordinary course of business, that cannot
pay its debts as they become due, or whose liabilities exceed its assets.
(3) "Interests of the licensee" includes the interests of shareholders of the licensee.
(4) "License" means a license issued under this act authorizing a Michigan corporation to transact business
so a BIDCO.
(5) "Licensee" means a Michigan corporation which is licensed under this act.
~6) "Michigan corporation" means a corporation incorporated under the business cto'poration act, Act No.
284 of the Public Acts of 1972, or the nonprofit corporation act, Act No. 162 of the Public Acts of 1982.
(7) "Michigan nonprofit corporation" means a corporation incorporated under the nonprofit corporation act,
Act No. 162 of the Public Acts of 1982.
Sec. 106. (1) "Officer" means:
(a) If used with respect to a corporation, a person appointed or designated as an officer of that corporation by
or pursuant to applicable law or the articles of incorporation, or bylaws of that corporation, or a person who
performs with respect to that corporation functions usually performed by an officer of a corporation.
(b) If used with respect to a specified person other than 8 natural person or a corporation, a person who
performs with respect to that specified person functions usually performed by an officer of a corporation with
respect to that corporation.
(2) "Order" means an approval, consent, authorization, exemption denial, prohib)1ion, or requirement
applicable to a specific case issued by the commissioner. Order includes a condition of a license and an
agreement made by a person with the commissioner under this act.
(3) "Person" means an individual, proprietorship, joint venture, partnership, trust, business trust, syndicate,
association, joint stock company, corporation, cooperative, government, agency of a government, or any other
organization. If used with respeCt to acquiring control of or controlling a specified person, person includes a
combination of 2 or more persons acting in concert.
(4) "Principal shareholder" means a person that owns, directly or indirectly, of record or beneficially,
securities representing 10% or more of the outstanding voting securities of a corporation.
(5) "Subject person" means a controlling person, subsidiary, or affiliate of a licensee; a director, officer, or
employee of a licensee or of a controlling person, subsidiary, or affiliate of a licensee; or any ether person who
participates in the conduct of the b~isincss of a licensee.
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309
(6)~,'~ubsiaiary" means, if used with respect to a licensee, a company or busiqess firm which the licensee
holds control of as permitted by section 507(l)(b), (c) or (d)
(7) "This act" includes an order issued or rule promulgated under this act.
ARTICLE 2
REGULATION, REPORTING, AND EXAMINATION
Sec. 201. (1) The commissioner shall administer this act. The commissioner may issue orders and promulgate
rule&-that, in the opinion of the commissioner, are necessary to execute, enforce, and effectuate the purpose~ of
this act. Any rules promulgated sha!I be promulgated in accordance teith the administrative procedures act of
1969, Act bte. 306 of the Public Acts of 1969, being sections 24.201 to 24.328 of the MichiganCompiled Laws.
(2) Whenever the commissioner issues an order or license under this act, the commissioner may imp~se
conditions that are necessary, in the opinion of the commissioner, to carry out this act and the purposes of this
act.
(3) The commissionermay honor applications from interetted persons for declaratoryrulings regarding ~ny
provision of this act.
(4) Every final order, decision, license, or other official act of the commissioner under this act is subjec~ to
judicial review in accordance with law, `
Sec. 203. An application filed with the commissioner under this act shall be in such a form and contain st~ch
information as the commissioner may require.
Sec. 205. (1) The commissioner may makepublic or private investigations within or outside this state that
the commissioner considtrs necessary to determine whether to apprç~v~ an application filed with ~he
commissioner under this act, to determine whether a person has violated or is about to violate this act, to ai4 in
the enforcement of this act, or to aid in issuing an order or promulgating a rule under this act.
(2) For purposes of an investigation, examination, or other proceeding under this act, the commissioner n~ay
administer oaths and affirmations subpoena witnesses, compel the attendance of witnesses, take evidence ~lnd
require the production of books, papers, correspondence, memoranda, agreements, or other documents or
records which the commissioner considers relevant or material to the proceeding.
(3) If a person fails to comply with a subpoena issued by the commissioner or to testify with respect t~ a
matter concerning which the person may be lawfully questioned, the circuit courc~forInghatn county, on'
application of the commissioner, may issue an order requirihg the attendance of theperson and the givin~ of
testimony orproduction of evidence. ~
Sec. 207. Service of process authorized to be made by the commissioner in connection with a noiicrimi~ial
proceeding under this act may be made by registered or certified mail.
Sec. 209. (1) A fee shall be paid to, and collected by, the commissioner, as follows:
(a) The fee for filing an application for a license is $2,500.00.
(b) The fee for filingan application for approval to acquire control of alicensee is $1,250.00.
(c) The fee for filing an application for approval for a lice~~ee to merge with anothpr corpopation, an
application for approval for a licensee to purchase all Or substahtlallyall `of the business of another person, Or an
applicationfor approval for a licensee to sellalior sub~tantia1ly all ofith business or oftlte~business of ap~ Ol~ its
offices toanother licensee is $1,250.00. If 2 or more applications relatingto thesaine merger, pureha~e,or ~ale
are filed the fee for filing each application shall ba the 4uotien~t~determinèd by dividing $1~25Q.0Q:by thO
number of the applications. , `
(d) `J~he annualfee for a licensee is $2,500.00, payable at a time prescribed by the commissioner.
(e) Whenever the commissioner examines a licensee ora subsidiary of a licensee within' 10 days a'ter
receiving a statement frofn the commi~siotier, th4liceOseeshall pay a fee established by the commissioner ba~od
on the number of examiner hnurs used for the e,cathinatioit, plus travel expenses. Examiner time'~hall lie bi~ied
at a rate not less than $25.00 per hour and not nvore than $40.00 pOr hour. `
(2) A fee for filing Sn application with the commiSsioner is nonrefundable and shall be paid at the time the
application is filed with the commissioner.
(3) A fee collected under this section shall be paid ibtO the state treasury to the credit of the finan4~ial
institutions bureau .of the department of commerce, and money in this account shall be t~sed only for the
operation of the financial institution~ bureau.
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Sec. 211. (1) A licensee shall make and keep books, accounts, and other records in such a form anti manner as
the commissioner may require. These records shall be kept at such a place and shall be preserved for such a
length of time as the commissioner may specify.
(2) The commissioner may require by order that a licensee write down any asset on its books and records to a
valuation which represents its then value.
(3) Not more than 90 days after the close of each calendar year or a longer period if specified by the
commissioner, a licensee shall file with the commissioner an audit report containing all of the following:
(a) Financial statements, including balance sheet, statement of income or loss, statement of changes in
capi(al accounts, and statement of changes in financial position or, (or a licensee that is a Michigan nonprofit
corporation, comparable financial statements for, or as of the end of, the calendar year, prepared with an audit
by an independent certified public accountant or an independent public accountant in accordance with
generally accepted accounting principles.
(b) A report. certificate, or opinion of the independent certified public atcountasit or independent public
accountant who, performs the audit, stating that the financial statements were prepared in accordance with
generally accepted accounting principles.
(c) Other information that the commissioner may require.
Sec. 213. (1) If a person other than a licensee makes or keeps the books, accounts, or other records of that
licensee, this act applies to that person with respect to the performance of those services and with respect to
those books, accounts, and other records to the same extent as if that person were the licensee.
(2) If a person other than an affiliate or subsidiary of a licensee makes or keeps any of the books, accounts, or
other records of that affiliate or subsidiary, this act applies to that person with respect to those books, accounts,
and other records to the same exteht as if that person were the affiliate or subsidiary.
(3) If the commissioner considers it expedient, the commissioner may require any particular licensee to
obtain the approval of the commissioner before permitting another Øerson to make or keep any of the books,
accounts, or other records of the licensee.
Sec. 215. Each licensee, each affiliate of a licensee, and each subsidiary of a 1i~ensee shall file with the
commissiontr such reports as and when the commissioner may tequire A report under this section shall be in
such a form and shall contain such information as the commissioner may require.
Sec. 216 (1) The commissioner shall publish annually and provide to the house cqmmittee on economic
development and energy and senate committee on ecor~omic development,trade and tourism information on the
impact of this act in promoting economic development in this state. At the minimum, the information shall
include aggregate statistics on each of the following:
(a) The number and dollar amount of provisions of financing assistance made by licensees to business firms.
(b) The number and dollar amount of provisions of financiog assistance made by licensees to business firms
classified in broad categories of industry such as divisions of the standard industrial classification manual.
(c) The number and dollar amount of provisions of financing assistance made by licensees to minority owned
business firms and to woman owned business firms.
(d) Estimates of the number of job~ created or retained.
Sec. 217. (1) The commissioner shall examine each liceqsee not less than once each calendar year.
(2) The commissioner may at any time examine a licenseror subsidiary of a licensee.
(3) A' director, officer, or employee of a licensee or of a subsidiary of a licensee being examined by the'
commissioner, or a person having eustodyof any of the books, accounts, or records of the licensee or of the
subsidiary. shall exhibit to the commissioner, on request, any of the books, accounts, and other records of the
licensee or of the subsidiary and shall otherwise facilitate the examination so far as it is in their power to do so.
(4) If in the commissioner's opinion it is necessary in the examination of a licensee or of a subsidiary of a
licensee, the comrnissioner ~ay retain a certified public accountant, attorney, appraiser, or other person to
assist the commissioner. Within 10 days after receipt of a statement from the commissioner, the licensee being
examined shall pay the fees of a person retained by the commissioner under this subsection.
ARTICLE 3
LICENSING
Sec. 301. A Michigan corporation may apply to the commissioner far bcensure as a BIDCO. A per500 other
than a Michigan corporation shall not apply for a license.
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Sec 303. (1) After a review of infprmation regarding the directors, officers, and controlling persons of the
applicant, a review of the applicant's business plan, including at least 3 years of detailed financial projections
and other relevant information, and a review of additional information cohsidered relevant by the
commissioner the comthissioner shall approve an application for a license if, and only if, the commissioner
determines all of the following:
(a) The applicant has a net worth, or firm financing commitments which demonstrate that the applicant will
have a net worth when the applicant begins transacting business as a BIDCO, in liquid form available to
provide financing assistance, that is adequate for the applicant to transact business as a BIDCO as determined
under subsection (2)
(b) Each director, officer, and controlling person of the applicant is of good character and sound financial
standing; each director and'officer of the applicant is competent to perform his or her functions with respect to
the applicant; and the directors and officers of the applicant are collectively adequate to manage the business of
the applicant as a BIDGO.
(e) It is reasonable to believe thatthe applicant, if licensed, will comply with this act~
(d)' The applicant has reasonable promise of being a viable, ongoing BIDCO and of satisfying the basic
objectives of its business plan.
(2) In determining if the applicant has a net worth or firm fipar~cing commitments adequate to transact
business an a I3IDCO, the commissioner shall consider the types and .yaeiety of ~inaneing assistance that the
applicant plans to provide; the experience that the directors, pfficers, and controlling persons of the applicant
have in providing financing and managerial assistance to business firms; the financial projections and other
relevant information from the applicant's business plan; and whether the applicant intends to operate as a
profit or nonprofit corporation. Except as otherwise provided in this act, the commissioner shall require a
minimum net worth of not less than $1,00Q,000.O0 and not more than $10,000,000.00. The commissioner may
require a minimuth net worth of less than $1,000,000.00, but not less than $500,000.00, if, in the context of the
applicant's business plan, the initial capitalization amount is adequate for the applicant to transact business as
a BIDCO because of special circumstaflce~ including, but not limited to, funded overhead, low overhead, or
specialized opportunities.
(3) For the purposes of tubsettion (I), the commissioner may find any of the following:
(a) That a directon officer, or controlling person of an applicant is not of good character if the director,
officer, or controlling person, or a director or officer of a' controlling pereon, has been convicted of or has
pleaded nob contdndere to a crime involving fraud drdishonbsty.
(b) That jt is not reasonable to believO that an applicant, if licensed, will comply with this act, if the applicant
has been convicted of or has pleaded nob contendere to a crime involving fraud or dishonesty.
(4) For purposes of subsection (13, subsection (B) shall not be considered to be the only grounds upon which
the commissioner may find that a director, officer, or controlling person of an applicant is not of good character
or that it is not reasonable to believe that an applicant, if licensed, will comply with this act.
Sec. 305. (1) A person may apply to the commissioner for preliminary approval of an application for a
license. Notwithstanding that commitments to invest in the equity of the applicant have not been obtained and
that all directors and officers of the applicant have not been identified, the commissioner may grant
preliminary approval. In issuing an order granting preliminary approval, the eommisa~oner shall indicate that,
f~r the commissioner to detezmine that the requirements of sect~ion 80$ are satisfied, final approval is
conditioned on review by the commissioner of the applicant's completion of fond-raising, including the
controlling persohs, and review by the commissioner of the completion of the roster of directors and officers. If
an application for preliminary approval has been granted, before granting final approval of the application for
a license, the commissioder may request an updated balance sheet and such other information considered
relevant by the commissioner.
(2) If a person files an application under this section, the fee required by section 209(1)(a) is payable at the
time the application is filed with the conunissioner.
Sec. 307. If the commissioner'denles an~appl1e~tfon under se~tions 801 to 805, the.eonwnissioner shall provide
the applicant with a written statement explaining' ~he basis for'the denial.
Sec. 309. If an' application for, a li'c~nse is approved and, all conditioCs precedent to the issuance of that
license are fulfilled, the Øomtoissioner shall issue a license to the applicant. A licensee shall post the license in a
conspicuous place in the licensee's principal office. A license is not transferable or assignable.
Sec. 311. (1) Except `as otherwise provided in s~bse~tion(2), a person transacting business in this state, other
than a licensee, shall not use a name or' title which indicates that the person is a business and industrial
development corpQration including, but not limited to, use of the term "BIDCO", and shall not otherwise
represent that the person is a business and industrial development corporation.or a licensee.
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(2) Before being issued a license under this act, a Michigan corporation that proposes to apply for a license or
that applies for a license may perform, under a name that indicates that the corØoration is a business and
industrial development corporation, the acts necessary to apply for and obtain a license and to otherwise
prepare to commence transacting business as a licensee. Such a corporation shall not represent that it is a
licensee until after the license has been obtained.
Sec 313. A licensee shall not misrepresent the meaning or effect of its license.
Sec. 315. (1) A Michigan corporation that is licensed under another law of this state or under any law of the
United States may apply for and be issued a license under this act unless the transaction of business by that
corporation as a licensee under another law of this state or a law of the United States violates this act or is
contrary to the purposes of this act.
(2) A Michigan corporation that is licensed under this act may apply for and be issued a license under
another law of this state or a law of the United States unless the transaction of business by that corporation as a
licensee under another law of this state or a law of the United States would violate this act or would be contrary
to the purposes of this act.
Sec. 317. (1) Upon approval of a 2/3 vote of its board of directors and after complying with subsection (2), a
licensee may apply to thd commissioner to have the commissioner accept the surrender of the )icensee's license.
If the commissioner determines that the rc~quirements of this section have been satisfied, the commissioOer shall
approve the application unless in the opinion of the commissioner the purpose of the application isto evade a
current or prospective action by the commissioner Onder article 7.
(2) Not less than 60 days before filing an application with the commissioner under subsection (1), a licensee
shall notify all of its shareholders and all of its creditors of its intention to file the application. Each creditor
shall be notified of the right to comment to the commissioner. Each shareholder shall be notified of the right to
file with the licensee an objection to the proposed surrender of the license within the 60-day period and shall be
advised that, if the shareholder files an objection, the shareholder should send a copy of the objection to the
commissioner. If shareholders representing 20% of the outstanding voting securities of the licensee file an
objection, the licensee shall not proceed with the application, under subsection (1) unless the application is
approved by a vote of shareholders representing 2/3 of the outstanding voting securities of the li~e~see.
ARTICLE 4
CORPORATE MATTERS
Sec. 401. The corporate name of each licensee shall include the wotd "BIDCO". A licensee shall not transact
business under a name other than its corporate name.
Sec. 403. (1) The board of directors of each licensee shall consist of not less than 7 directors.
(2) The board of directors of each licensee shall hold a meeting not less than once each calendar quarter.
Sec. 405. Within 30 days after the death, resignation, or removal of a director or officer: the election of a
director; or the appointment of an officer, the licensee shall notify the commissioner in writing of the event and
shall provide anyadditional information which the commissioner may require.
Sec. 407. (1) A licensee shall not pay, or obligate itself to pay, a cash dividend or dividend in kind to its
shareholders unless that payment is consistent with a dividend policy which has been adopted by the licensee
and approved by the commissioner. In reviewing dividend policies under this section, the commissioner shall be
flexible in recognizing the special characteristics of BIDCOs and the diverse range of potentially appropriate
dividend policies for BIDCOs, while at the same time protecting against unsafe or unsound acts which could
threaten the viability of the licensee as an ongoing BIDCO. The commissioner may at any time withdraw any
previous approval of a dividend policy if the commissioner determines that the withdrawal is necessary to
prevent unsafe or unsound acts.
(2) Without the prior approval of the commissioner, a licensee shall not buy back, or obligate itself to buy
back a share of stock from a shareholder.
ARTICLE 5
TRANSACTION OF BUSINESS
Sec. 501. (1) A licensee shall maintain not less than 1 office in this state.
(2) A licensee shall not maintain an office at any place otitside this state.
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(3) Each office of a licensee shall be located in a place which is reasonably accessible to the public.
(4) A licensee shall post in a conspicuous place at each of its offices a sign which bears the corporate name of
the licensee.
(5) A licensee shall maintain at each of its offices personnel who are competent to conduct the business of
such an office.
(6) Upon written notice to the commissioner, a licensee may establish, relocate, or close an office.
Sec. 503. (1) The business of a licensee shall be the business of providing financing assistance and
management assistance to business firms. A licensee shall not engage in a business other than the business of
providing financing assistance and management assistance to business firms.
(2) In addition to the powers and privileges provided to a licensee by this act, a licensee has all powers and
privileges conferred by its incorporating statute which are not inconsistent with or limited by this act. The
powers of a licensee include, but are not limited to, all of the following:
(a) To borrow money and otherwise incur indebtedness for its purposes, including issuance of corporate
bonds, debentures, notes, or other evidence of indebtedness, A licensee's indebtedness may be secured or
unsecured, and may involve equity features including, but not limited to, provisions for conversion to stock and
warrants to purchase stock.
(b) To make contracts.
(c) To incur and pay necessary and incidental operating expenses.
(d) To purchase, receive, hold, lease, or otherwise acquire, or to sell, convey, mortgage, lease, pledge, or
otherwise dispose of. real or personal property, together with rights and privileges that are incidental and
appurtenant to these transactions of real or personal property, if the real or personal property is for the
licensee's use in operating its business or if the real or personal property is acquired by the licensee from time to
time in satisfaction of debts or enforcement of obligations.
(e) To make donations for charitable, educational, research, or similar purposes,
(f) To implement a reasonable and prudent policy for conserving and investing its money before the money is
used to provide financing assistance to business firms or to pay the expenses of the licensee.
Sec. 505. (1) A licensee may determine the form and the terms and conditions for financing assistance
provided by that licensee to a business firm including, but not limited to, forms such as loans; purchase of debt
instruments; straight equity investments such as purchase of common stock or preferred stock; debt with equity
features such as warrants to purchase stock, convertible debentures, or receipt of a percent of net income or
sales; royalty based financing; guaranteeing of debt; or leasing of property. A licensee may purchase securities
of a business firm either directly or indirectly through an underwriter. A licensee may participate in the
program of the small business administration pursuant to section 7(a) of the small business act, Public Law 85-
536. 15 U.S.C. 636(a). or any other government program for which the licensee is eligible and which has as its
function the provision or facilitation of financing assistance or management assistance to business firms. If a
licensee participates in a program referred to in this subsection, the licensee shall comply with the
requirements of that program.
(2) Management assistance provided by a licensee to a business firm may encompass both management or
technical advice and management or technical services.
(3) Financing assistance or management assistance provided by a licensee to a business firm shall be for the
business purposes of that business firm.
(4) A licensee may exercise the incidental powers that are necessary or convenient to carry on the business
of, or are reasonably related to the business of, providing financing assistance and management assistance to
business firms.
(5) Except as provided in subsection (6), in connection with an extension of credit by a person to a licensee or
an extension of credit by a licensee to a business entity as defined in Act No. 52 of the Public Acts of 1970, being
section 438.61 of the Michigan compiled Laws, the parties may agree to any rate of interest, including a rate in
excess of the rate set forth in Act No. 259 of the Public Acts of 1968, being sections 438.41 to 488.42 of the
Michigan Compiled Laws.
(6) In connection with an extension of credit described in subsection (5), a person shall not knowingly charge,
take, or receive money or other property as interest on the loan at a rate exceeding 25% simple interest per
annum. A person who violates this subsection is guilty of a felony punishable by imprisonment for n~t more
than 5 years or a fine of not more than $10 000.00, or both. As used in this subsection, "interest" does nOt Include
anything of value that is contingent on the performance or value of the borrower including, but not limited to, a
percentage of net income of the borrower, royalties, stock in the borrower, warrants to purchase stock in the
borrower, and convertibility of debentures.
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Sec. 507. (1) Either by itself or in concert with a director, officer, principal shareholder, or affiliate; another
licensee; or a director, officer, principal shareholder, or affiliate of another licensee, a licensee shall not hold
control of a business firm, except as follows:
(a) If and to the extent necessary to protect the licensee's Interest as creditor of, or investor in, the business
firm, a licensee that had provided finahcing assistance to a business firm may acquire and hold control of that
business firm Unless the commissioner approves a longer period, a licensee holding control of a business firm
under this subdivision shall divest itself of the interest which constitutes holding control as soon is practicable
or within 3 years after acquiring that interest, whichever is sooner.
(b) With the approval of the commissioner, a licensee may acquire and hold control of a corporation which
has offices located only in this state and which is licensed as a small business investment comØany under the
small business investment act of 1958, Public Law 85-699, 72 Stat. 689.
(c) With the approval of the commissioner, a licensee may acquire and hold control of a company located in
this state which is a local development company in accordaftce with the small business investment act of 1958,
whether or not such a development company is or may become certified by the small business administration
under section 503 of the small business Investment sot of 1958, 15 U.S.C. 697.
(d) With the approval of the commissioner, a licensee may acquire and hold control of another business firm
with offices only in this state which is engaged iii no business other than the business of providing financing
assistance and management assistance to business firms.
(e) With the approval of the commissioner, a licensee may acquire and hold control of a business firm not
referred to in subdivisions (a) to (d). The commissioner shall not approve an application under this subdivision
unless the commissioner determines that such an approval will not cause the amount of the licensee's
investments in business firms covered by this subdivision to exceed 15% of the amount of the assets of the
licensee and that in the commissioner's judgment such an approval will promote thepurposes of this act. An
approval by the commissioner under this subdivision shall be for a period of not more than 3 years, except that
in a particular case the commissioner may subsequently extend the period beyond 3 years if the commissioner
determines that a longer period is needed and is consistent with the purposes of this act.
(2) If the commissioner fails to issue an order approving or denyiitg an application under subsection (lXb) or
(c). within 45 days from receipt by the commissioner of an ipplidation which complies with section 203, the
application shall be considered approved by the commissioner.
(3) For the purposes of subsection (1), "hold control" means ownership, directly or indirectly, of record or*
beneficially, of voting securities greater than:
(a) For a business firm with outstanding voting securities held by fewer than 50 shareholders, 40% of the
outstanding voting securities.
(b) For a business firm with outstanding voting securities held by 50 or more shareholders, 25% of the
outstanding voting securities.
(4) If a licensee anticipates acquiring and holding control of a business firm under subsection (iXa), the
licensee shall file with the commissioner a plan for acquiring and holding~control of the business firm that shall
include at least all of the following:
(a) The reasons it is necessary for the licensee to acquire and hold control of the business firm.
(b) The percentage of outstanding voting securities of the business firm the licensee p1a~s to own.
(c) The licensee's proposed course of action upon obtaining control of the business firm.
(d) The length of time the licensee anticipates it will be necessary to hold control of the business firm.
(5) The commissioner may require the licensee to demonstrate the necessity for the licensee to hold control of
a business firm under subsection (1)(a).
Sec. 509. (1) A licensee shall transact its business in a safe and sound manner and shall maintain itself in a
safeand sound condition.
(~) In determining whether a licensee is transacting business in a safe and sound manner or has committed
an unsafe or unsound act, the commissioner shall not consider the risk of a provision of financing assistance to a
business firm, unless the commissioner determines that the risk is so great compared with the realistically
expected return as to demonstrate gross mismanagement.
(3) Subsection (2) does not limitihe authority of the commissioner to do any of the following:
(a) Determine that a licensee's financing assjstance to a single business firm or a group of affiliated business
firms is in violation of subsection (1) or constitutes an unsafe or unsound act, if the amount of that financing
assistance is unduly large in relation to the total assets or the total shareholders equity of the licensee.
(b) Require that a licensee maintain a reserve in the amount of anticipated losses.
8
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(c) Require that a licensee have in effect a written finanéing assistance policy approved by its board of
directors including credit evaluation and other matters. The commiSsioner shall not require that a licensee
adopt a financing assistance policy that contains standards which prevent the licensee-from e~cercising needed
flexibility in evaluating and structuring financing assistance to business firms on a deal by deal basis.
Sec. 511. (1) For purposes of this section:
(a) "Associate" means that term as defined as in article 8.
(b) "Relative" means parent, child, sibling, spouse, father-in-law, mother-in-law, son'in-law, brother-in-law,
daughter-in-law, sister-in-law, grandparent, grandchild, nephew, niece, uncle, or aunt.
(2) If a licensee provides financing assistance to a-business firm or engages in anotherbusiness transaction,
and if that financing assistance or transaction involves a potential conflict of interest, the terms and conditions
under which the licensee provides the financing assistance or engages in the transaction shall not be less
favorable to the licensee than the terms and conditions that would be required by the licensee in the ordinary
course of business if the transaction did not involve a potential conflict of interest. Each person who participates
in thedecision of the licensee relating to a transaction described in this section and has knowledge of a potential
conflict of interest involving that transaction shall take care that the potential conflict of interest is disclosed in
the financing documents of the transaction or, for a business transaction not involving financing assistance, in
another appropriate document.
(3) For the purposes of subsection (2), transactions engaged in by a licensee which involve a potential conflict
of interest include, but are not limited to, the following:
(a) Providing financing assistance to a principal shareholder of the licensee, to a person cOntrolled by a
principal shareholder of the licensee, or to a director, officer, partner, relative, controlling person, or affiliate of
a principal shareholder of the licensee.
(b) Providing financing assistance to a business firm to which a principal shareholder of the licensee; a
director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of a licensee; or a
person controlled by a principal shareholder o~ the licensee provides or plans to provide contemporaneous
financing assistance.
(ci Providing financing assistance to a business firm which has or is expected to have a substantial business
relationship with another business firm which has a director, officer, or controlling person who is also a
director, officer, or controlling person of the licensee or who is the spouse of a director, officer, or controlling
person of the licensee.
(d) Providing financing assistance to a business firm if that business firm, or a director officer, or
controlling person of that business firm, contemporaneously has lent or will lend money to an associate of the
licensee.
(e) Providing financing assistance f~r the purchase of property of an associate or principal shareholder of the
licensee.
(f) Selling or otherwise transferring any of its assets to an aSSociate or principal shareholder of the licensee.
(4) Nothing in this section or in any other section of this act limits the authority of the commissioner to
determine that an act involves a conflict~f interest and therefore is an unsafe or unsound act.
Sec. 513. Except with the approval of the commissioner, a licensee shall not provide a lien on or security
interest in any of its property for the purpose of securing an obligation Of,-~r an obligation incurred for the
benefit of, another person. S
- ARTICLE 6
- MERGERS AND ACQ1JISITIONS
Sec. 601. (1) Without the prior approval of the commissioner, a person shall not acquire control of a licensee.
(2) With respect to an application for approval to acquire control of a licensee, if the commissioner
determines, that the applicant and the directors and officers of the applicant are of good ehiarapter and sound
financial standing; that itis reasonable to believe that if the applicant acquires control of the licensee, the
applicant will comply with this act; and that the applicant's plans, if any to make a major change in the
business, corporate structure, or management of the licensee are not detrimental to the safety and soundness of
the licensee, tbe commissioner shall approve the application. If, after notice and a hearing, the commissioner
determines otherwise, the commission~r shall deny the application.
(8) For purposes of subsectIon (2), the commissioner may determine any-of the following:
(a) That an applicant or a director or officer of an applicant isnotot good character if that person has been
convicted of, or has pleaded nob contendere to, a crime involving fraud or dishonesty
88-199 0 - 88 - 11
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(b) That an applicant's plan to make a major change in the management of a licensee is detrimental to the
safety and soundness of the licensee if the plan provides for a persOn to become a director or officer of the
licensee and that person has been convicted of, or has pleaded nob contendere to, a crime involving fraud or
dishonesty.
(4) The conditions described in subsection (8) are not the only conditions upon which the commissioner may
determine that an applicant or a director or an officer of an applicant is not of good character or that an
applicant's plan to make a major change in the management of a licensee is detrimental to the safety and
soundness of the licensee.
Sec. 603. (1) A licensee shall not merge with another corporation unless:
(a) If the licensee is the surviving corporation, the merger is approved by the commissioner.
(b) If the licensee is a disappearing corporation, the surviving corporation is a licensee and the merger is
approved by the commissioner.
(2) A licensee shall not purchase all or substantially all of the business of another person unless the purchase
is apprm~ed by the commissioner.
(3) A licensee shall not sell all or substantially all of its business or of the business of any of its offices to
another person unless that other person is a licensee and the sale is approved by the commissioner.
(4) The commissioner shall approve an application for approval of a merger, purchase, or sale, if, and only if,
the commissioner determines all of the following:
(a) That the merger, purchase, or sale will be safe and sound with respect to the acquiring licensee.
(b) That, upon consummation of the merger, purchase, or sale, it is reasonable to believe that the acquiring
licensee will comply with this act.
(c) That the merger, purchase, or sale will not have a major detrimental impact o~i competition in the
providing of financial assistance or management assistance to business firms, or if there will be such a
detrimental impact, the merger, purchase, or sale is necessary in the interests of the safety and soundness of
any of the parties to the merger, purchase, or sale, or is otherwise on balance, in the public interest.
ARTICLE 7
ENFORCEMENT
Sec. 701. If in the opinion of the commissiOner, a person violates, or there is reasonable cause to believe that a
person is about to violate this act the commissioner may bring an action in the name of the people of this state
in a circuit court to enjoin the violation or to enforce compliance with this act. Upon a proper showing, a
restraining order, preliminary or permanent injunction, or writ of mandamus shall be granted, and a receiver
or a conservator may be appointed for the defendant or the defendant's assets. The court shailnot require the
commissioner to post a bond in an action brought under this act.
See. 703. (1) If the commissioner finds that a person has violated ot~ that there is reasonable cause to believe
that a person is about to violate section 311, the commissioner may order the person to cease and desist from the
violation unless and until the person is issued a license.
(2) Within 30 days after an order is issued under subsection (1), the person to whom the order is directed may
file with the commissioner an application for a hearing on the order. If the commissioner fails to commence a
hearing within 15 business days after that application is filed or within a longer period to which the person
consents, the order shall be considered rescinded. Upon the hearing, the commissioner shall affirm, modify, or
rescind the order. The right of a person to whom an order is issued under subsection (1) to petition for judicial
review of the order is not affected by the failure of the person to apply to the commissioner for a hearing on the
order issued under this subsection.
Sec. 705. (1) If, after notice and a hearing, the commissioner determines that a licensee or a subject person of
a licensee has violated or is violating, or that there is reasonable cause to believe that a licensee or subject
person of a licensee is about to violate, this act or another applicable law, or that a licensee or subject person of a
licensee has engaged or participated or is engaging or participating, or that there is a reasonable cause to
believe that a licensee or subject person of a licensee is about to engage or participate, in an unsafe or unsound
act with respect to the business of that licensee, the commissioner may order that licensee or subject person to
cease and desist from the action or violation; The order may require the licensee or subject person to take
affirmative action to correct any condition resulting from the action or violation.
(2) If the commissioner determines that any of the factors set forth in subsection (1) are true with respect to a
licensee or subject person of a licensee and that the action or violation is likely to cause the insolvency of or
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substantial dissipation of the assets or earnings of the licensee; is likely to seriously weaken the condition of the
licensee; or is likely to otherwise seriously prejudice the interests of the licensee `before the completion of
proceediqgs conducted under subsection (1), the commissioner may order the licensee or subject person to cease
and desist from that action or violation. The order may require the licensee or subject person totake affirmative
action to correct any condition resulting from the action or violation.
(3) Within 30 days after an order is issued under subsection (2), the licensee or subject person of a licensee to
whom the order is directed may file with the commissioner an application for a hearing on the order. If the
commissioner fails to commence a hearing within 15 business days after the application is filed or within a
longer period to which the licensee or subject person consents, the order shall be considered rescinded. Upon the
hearing, the commissioner shall affirm, modify, or rescind the order. The right of a licensee or Subject person to
whom an order is issued under subsection (2) to petition for judicial review of the order is not affected by the
failure of the licensee or subject person to apply to the commissioner for a hearing on the order issued under
this subsection.
Sec. 707. (1) The commissioner may issue an order removing a subject pel'een of a licensee from his or her
office, if any, with the licensee and prohibiting the subject person from further participating in any' manner in
the conduct of the business of the licensee, if, after notice and a hearing, the commissioner determines all of the
following are true:
(a) The subject person has violated this act or another applicable law; the subject person has engaged or
participated in an unsafe or unsound act with respect to the business of the licensee; or thO subject person has
engaged or participated in an act which constitutes a breach of the subject person's fiduciary duty.
(b) The act, violation, or breach of fiduciary duty has caused or is likely to cause substantial financial loss or
other damage to the licensee or has seriously prejudiced or is likely to seriously prejudice the interests of the
licensee, or the subject person has received financial gain by reason of the act, violation, or breach of fiduciary
duty.
(c) The act, violation, or breach of fiduciary duty either involves dishonesty on the part of the subject person
or demonstrates the subject person's grosS negligence with respect to the business of the licensee or a willful
disregard for the safety and soundness of the licensee.
(2) The commissioner may issue an order removing the subject person from his or her office with the
licensee, if any, and prohibiting the subjeOt person from further participating in any manner in the conduct of
the business of the licensee, except with the prior consent of the commissioner, if, after notice and a hearing, the
commissioner determines that, by engaging or participating in an act with respect to a financial or other
business institution which resulted in substantial financial loss or other damage, the subject person of a licensee
has demonstrated both of the following;
(a) Dishonesty or willful or continuing disregard for the safety and soundness of the financial or other
business institution.
(b) Unfitness to continue as a subject person of the licensee or to participate in conducting the business of the
licensee.
(3) If the commissioner determiiies that the factors set forth in subsection (1) or (2) are true with respect to a
subject person of a licensee, and that it is necessary for the protection of the interests qf the li~ense~ or for the
protection of'the public interest that the commissioner immediately suspend the subject person from his or her
office, if any, with the licensee and prohibit the subject person from further participating in any manner in
conducting the business of the licensee, the commissioner may issue an order suspef4lng the subject person
from his or her office, if any, with the lieensee and prohibiting the subject person from further participating in
any manner in conducting the business of the licensee, except with the consent of the commissioner.
(4) Within 30 days after an order is issued under subsection (3), `the subject person of a licensee to whom the
order is directed may file with the commissioner an application for a hearing on the order, If the commissioner
fails to begin a hearing within 15 business days after the application is filed or within a longer period to which
the subject person consSuts, the order shall be considered C~scinded, Upon the hearing, the commissioner shall
affirm, modify, or rescind the order. The right of a subject person of a licensee to whom an order is issued under
stibsection (3) to petitibn for judicial review of the order shall not be affected by the failure of the subject person
to apply to the commissioner for a hearingon the order issued under this subsection.
(5) A person to whom an order is issued under this section may apply to the commissioner to modify or
rescind the order. The commissioner shall not modify or rescind the order unless the commissioner determines
that it is in the public interest to do so and that it is reasonable to believe that the person, if and when he or she
becomes a subject person of a licensee, will comply with this act.
(6) As used in this section, `office", if used with respect to a licensee, means the position of `director, officer,
or employee of the licensee or of a subsidiary of the licensee.
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Sec 709. (1) If the commissioner determines that a subject person of a licensee has been indicted by a grand
jUry or has been bound over for trial by a court for a crime involving dishonesty or breach of trust, and that the
fact that the person continues to be a subject person of the licensee may threaten the interests of the licensee or
may threaten to impair public confidence in the licensee, the commissioner may issue an order suspending the
subject person from his or her office, if any, with the licensee and prohibiting the stibject person from further
participating in any manner in the conduct of the business of the licensee, except with the consent of the
commissioner,
(2) If the commisskrier determines that a subject person or former subject person of a licensee to whom an
order was issued under subsection (1), or another subject person of a licensee, has been convicted of a crime
which is punishable by imprisonment for a term of not less than 1 year and which involves diahonesty or breach
of trust, and that the fact that the person continues to be or will resume to be a subject person of the licensee
may threaten the interests of the licensee or may threaten to impair public confidence in the licensee, the
commissioner may issue an order suspending or removing the subject person or former subject person from his
or her office. if any, with the licensee and prohibiting the subject person from further participating in any
manner in the conduct of the business of the licensee, except with the prior consent of the commissioner.
(3) Within 30 days after an order is issued under subsection (1) or (2), the subject person of a licensee to
whom the order is directed may file with the commissioner an application for a hearing on the order. If the
commissioner fails to commence a hearing within 15 business days after the application is filed or within a
longer period to which the subject person consents, the order shall be considered rescinded. Upon the hearing,
the commissioner shall affirm, modify, or rescind the order, The right of a subject person or former subject
person of a licensee to whom an order is issued under subsection (1) or (2) to petition for judicial review of the
order is not affected by the failure of the person to apply to the commissioner fpr a hearing on the order issued
under this subsection.
(4) The fact that a subject person of a licensee charged with a crime involving dishonesty or breach of trust is
not convicted of the crime shall not preclude the commissioner from issuing an order to the subject person
undei' any other provision of this act.
(5) A person to whom an order is issued under this section may apply to the commissioner to modify or
rescind the order. The commissioner shall not modify or rescind the order unless the commissioner determines
that it is in the public interest to do so and that it is reasonable to believe that the person, if and when he or she
becomes a subject person of a licensee, will comply with this act.
(6) As used in this section, "office", if used with respect to a licensee, means the position of director, officer,
or employee of the licensee or of a subsidiary of the licensee.
Sec. 711. If, in the opinion of the commissioner, disclosure to shareholders regarding a matter is warranted,
the commissioner may require a licensee, in such a form and manner as the commissioner may specify, to
disclose to the shareholders of a licensee the results of a communication or order from the commissioner
addressed to the licensee or to a subject person of the licensee.
Sec. 713. (1) If the commissioner considers it expedient, the commissioner may call a meeting of the board of
directors of a licensee by giving notice of the time, place, and purpose of the meeting not less than 5 days before
the m~eeting to each director either by personal service or by registered or certified mail sent to the director's
last known address as shown in the records of the commissioner.
(2) If the commissioner considers it expedient, the commissioner may call a meeting of the shareholders of a
licensee by giving notice of the time, place, and purpose of the meeting not less than 5 days before the meeting
to each shareholder either by personal service or by registered or certified mail sent to the shareholder's last
known address as shown by the books of the licensee. The licensee shall pay the expenses of the notice and of a
meeting called under this subsection.
Sec. 715. (1) The commissioner may issue an order directing a licensee to refrain from providing any
additional financing assistance to business firms if, in the opinion of the commissioner, the order is necessary to
protect the interests of the licensee or the public interest, and if, after notice and a hearing, the commissioner
determines that any of the following are true:
(a) The licensee or a controlling person, subsidiary, or affiliate of the licensee has violated this act or another
applicable law.
(b) The licensee is conducting its business in an unsafe and unsoundmanner.
(c) The licensee is in a condition that makes it unsafe or unsound for the licensee to transact business.
(d) The licensee has ceased to transact business as a business and industrial development corporation.
(e) The licensee is insolvent.
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(f). The licensee has suspended payment of its obligations, has made an assignment for the benefit of its
creditors, or has admitted in writing its inability to pay its debts as they become due.
(g) The. licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief
under a bankruptcy, reorganization, insolvency, or moratorium law, or that a person has applied for such relief
under such a law against a licensee and the licensee has by any affirmative act approved of or consented to the
action or such relief has been granted
(h) A fact or condition exists which would have been grounds for denying the application if the fact or
condition had egisted at the time the licensee applied for its license.
(2) If the commissioner determines that any of the factors Set forth in subsection (1) are true with respect to a
licensee and that it is necessary for the protection of the interests of the licensee or the public interest that the
commissioner immediately issue an order directing the licensee to refrain from providing any additional
financing assistance to business firms, the commissioner may issue such an order without a hearing. Within 30
days after an order is issued under this subsection, the licensee to whom the order is directed may file with the
commissioner a request for a hearing on the order. If the commissioner fails to commence a hearing within 15
business days after the request is filed or within a longer period to which the licensee consents, that order shall
be considered rescinded. Upon the hearing, the commissioner shall affirm, modify, or rescind the order.
(3) With the consent of the commissioner, a licensee which has been the subject of an order under subsection
(1) or (2) may resume providing financing assistance to business firms under such conditions as the
commissioner may prescribe.
(4) A person to whom an order is issued under subsection (1) or (2) may apply to the commissioner to modify
or rescind the order. The commissioner shall not grant the application unless the commissiOner determines that
it is in the public interest to do so and that it is reasonable to beiieve that the person, if and when the order is
modified or rescinded, will comply with this act.
Sec. 717. (1) If the commissioner finds that any of the factors set forth in section 715(1) are true with respect
to a licensee and that it is necessary for the protection of the interests of the licensee or for the protection,of the
public interest that the commissioner take immediate possession of the property and business of the licensee,
the commissioner may appoint a conservator for the licensee. The commissioner may appoint as conservator 1 of
the employees of the financial institutions bureau of the department of commerce or some other competent and
disinterested person. The financial institutions bureau of the department of commerce shall be reimbursed out
of the assets of the conservatorshi~ for all sums expended by the bureau to connection with the conservatorship
as expenses. Upon the approval of the commissioner, the expenses of the conservatorship shall be paid out of the
assets of the licensee. The expenses shall be a first charge upon the assets and shall be fully paid before any
final distribution is made.
(2) Under the direction of the commissioner, the conservator shall take possession of the books, records, and
assets of the licensee and shall take such action with respect to employees, agents, or representatives of the
licensee or any other action as may be necessary to conserve the assets of the licensee or ensure payment of
obligations of the licensee pending further disposition of its business as provided by law. At any appropriate
time, the commissioner may terminate the conservatorship and permit the licensee to resume the transaction of
its business subject to the terms, conditions, restrictions, and limitations the commissioner may prescribe.
(3) II' 0 the opinion of the commissioner it is appropriate that the licensee be liquidated, the commissioner,
with the attorney general representing the commissioner, may apply to the circuit court for the county in tehich
the principal office of the licensee is located for the appointment of a receiver for the licensee, i~ the
commissioner determines that any of the following are true:
(a) The licensee is insolvent.
(b) The licensee has suspended payment of its obligations, has made an assignment for the benefit oI its
creditors, or has admitted in writing itainability to pay its debts as they become due.
(c) The licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other re~ief
under a bankruptcy, reorganization, insolvency, or moratorium law.
(d) A person has applied for the relief described under subdivision (c) against any licensee and that licensee
has by an affirmative act approved of or consented to the action of the relief has been granted.
(e) The licensee is in a condition that makes it unsafe or unsopnd for the licensee to transact business.
(4) If a receiver is appointed under subsection (3), the receiver shall li~juidate the property and buslness of
the licensee in the manner provided for in sections 252 to 254 of the banking code of 1q69, Act No. 319 of the
Public Acts of l~69, being sections 487.552 to 487.554 of the Michigan Con~piled Laws, as if the licensee were a
bank.
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Sec. 719. (1) If, after notice and a hearing, the commissioner finds that a person has violated this act, the
commissioner may order that person to pay to the commissioner a èivil penalty in the amount the commissioner
specifies. However, the amount of the civil penalty shall not exceed $1,000.00 for each violation, or in the case of
a continuing violation, $1,000.00 for each day for which the violation continues. Money collected for a civil
penalty-under this section shall be paid into the state treasury and credited to the general fund of this state.
(2) This section does not apply to any act committed or omitted in good faith in conformity with an order,
rule, declaratory ruling, or written interpretative opinion of the commissiOner, notwithstanding that the order,
rule, declaratory ruling, or written interpretative opinion is later amended, rescinded, or repealed, or
determined by judicial or other authority to be invalid for any reason.
(3) The provisions of subsection (1) are additional to, and not alternative to, other provisions of this act which
authorize the commissioner to issue orders or to take other action on account of a violation of this act. A person
who is conviCted under section 819 on account of a violation of article S shall not be liable to pay a civil penalty
under subsection (1) on account of that violation. A person who pays a civil penalty under subsection (1) on
account of a violation of article 8 shall not be liable to prosecution under s~etion 819 on account of that violation.
ARTICLE S
- - CERTAIN UNLAWFUL ACTIVITIES
Sec. 801. (1) As used in this article, unless the context otherwise requires:
(a) "Advisor", means aperson who regularly provides legal, accounting, or management services or advice to
a licensee. - -
(b) "Associate" means, if used with respect to a licensee:
(i) A controlling person, director, officer, agent or advisor of that licensee.
(ii) A director, officer, or partner of a person referred to in subparagraph (i).
(iii) A person who controls, is controlled by, or i~ under common control with a person referred to in
subparagraph (i) directly or indirectly through 1 or more intermediaries.
(iv) Any close relative of any person referred to in subparagraph (i).
(v) A person of which a person referred to in subparagraphs (1) to (iv) is a director or officer.
(vi) A person in which a person referred to ~n subparagraphs (i) to (iv) , or any combination of those persons
acting in concert, owns or controls, directly or indirectly, a 20% or greater equity interest.
(c) "Close relative" means parent, child, sibling, spouse, father-in-law, mother-in-law, son-in-law, brother-in-
law, daughter-in-law, or sister-in-law.
(d) "Closing services" means services performed in connection with the providing of financing assistance.
Closing services includes, but is not Umited to, appraising property and preparing credit reports. Closing
services does not include a service performed after the providing of financing assistance. -
(e) "Short-term financing assistance" means financing assistance with a term of not more than 5 years.
(2) For the purposes of subsection (lXb):
(a) A person who is in a relationship referred to in that subdivision within 6 months before or after a licensee
provides financing assistance shall be considered to be in that relationship as of the date that licensee provides
that financing assistance.
(b) If a licensee, in order to protect its interests, designates a person to serve as a director of, officer of, or in
- any capacity in the management of a business firm to which that licensee provides financing assistance, that
person shall not, on that account, be considered to have a relationship with that business firm. This subdivision
does not apply if the person has, directly or indirectly, any other financial interest in the business firm or if the
person, at any time before the licensee provides the financing assistance, served as a director of, officer of, or in
anyother capacity in the management of the business firm for a period of 30 days or more.
Sec. 803. A person shall not willfully make an untrue statement of a material fact in an application or report
filed with the commissioner under this act, or willfully omit to state in such an application or report a material
fact required to be stated in the application or report. -
Sec. 805. A person having custody of any of the books, accounts, or other records of a licensee shall not
willfully refuse to allow the commissioner, upon request, to inspect or make copies of any of those books,
accounts, or other records.
Sec. 807. A person shall not, with intent to deceive a director, officer, employee, auditor, or attorney of a
licensee; the commissioner; or a governmental agency, make a false entry in the books, accounts, or other
14 -
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records of that licensee; omit to make an çptry in those books, accounts, nr other records which that person is
required to make; or alter, conceal, or destroy any of those books, accounts or other records.
Sec. 809. A licensee shall not provide, directly or incjireç8.ly, financing assistance to an associate of the
licensee.
Sec 811. A licensee shall not provide, directly or indirectly, financing assistance to discharge, or to free
other money for use in discharging, in whole Or in part, an obligation to an associate of that licensee. This
section does not apply to a transaction effected by an associate of a licensee in the normal course of that
associate's business involving a line of credit or short-term financing assistance.
Sec. 813. (1) A licensee shall not provide, directly or indirectly, financing assistance to a business firm to
which an associate of that licensee provides financing assistance, either contemporaneously with, or within 1
year before or after, the providing of financing assistance by the licensee, if the terms on which the licensee
provides financing assistance are less favorable to the licensee than the terms on which the associate provides
financing assistance to the business firm, If the financing assistance provided by the associate of the licensee is
of a different kind from the financing assistance provided by the licensee, the burden shall be on the licensee to
prove that the terms on which the licensee provided financing assistance were at least as favorable to the
licensee as the terms on which the associate provided financing assistance to the business firm.
(2) This section does not apply to any of the following:
(a) If the associate is a controlling person of the licensee and is also the only shareholder of the licensee.
(b) If the associate is a subsidiary of the licensee.
(c) A transaction effected by an associate of a licensee in the normal course of that associate's business
involving a line of credit or short-term financing assistance.
Sec. 815. An associate of a licensee shall not receive, directly or indirectly, from a person to whom that
licensee provides financing assistance, compensation in connection with the providing of that financing
assistance or anything of value for procuring, influencing, or attempting to procure or influence the licensee's
action with respect to the providing of the financing assistance. This section does not apply to the receipt of fees
by an associate of a licensee for bona fide closing services performed by that associate if all of the following are
true:
(a) The associate, with the consent and knowledge of the person to whom the financing assistance is provided,
is designated by the licensee to perform the services.
(b) The services are appropriate and necessary in the circumstances.
(c) The fees for the services are approved as reasonable by the licensee.
(d) The fees for the services are collected by the licensee on behalf of the associate.
Sec. 817. (1) By such orders or rules the commissioner considers necessary and appropriate, the
commissioner may exempt from sections 809 to 815, either unconditionally or upon specified terms and
conditions and for specified periotis, a person or transaction or class of persons or transactions, if the
commissioner finds that the exemption is in the public interest and that the regulation of the person,
transaction, or class is not necessary for the purposes of this act.
(2) In exempting a person or transaction or class of persons or transactions, the commissioner shall give
consideration, as considered appropriate by the commissioner, to conflict of interest provisions of federal law or
regulation that may be applicable to that person or transaction governing participants in federal financing
programs.
Sec. 819. (1) A person who knowingly commits an act which act violates this article shall be fined not more
than $10,000.00 or shall be imprisoned for not morethan 1 year, or both.
(2) This section does not apply to an act committed or omitted in good faith in conformity with an order, rule,
declaratory ruling, or written interpretative opinion of the commissioner, notwithstanding that the order, rule,
declaratory ruling, or written interpretative opinion is later amended, resci~ded or repealed, or determined by
judicial or other authority to be invalid for any reason.
(3) Nothing in this act limits the power of the state to punish a person for an act which constitutes a crime
under any statute.
ARTICLE 9
GENERAL PROVISIONS
Sec. 901. This act shall be liberally construed to accomplish its purposes.
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Sec. 908. A proceeding to promulgaterules or a proceeding regarding civil penalties under section 719 shall
be subject to the administrative procedures act of 1969, Act No. 306 of the Public Acts of 1969, being sections
24.201 to 24.328 of the Michigan Compiled Laws, Any other proceedings under this act are exempt from the
provisions of the administrative procedures act of 1969, Act No. 306 of the Public Acts of 1969.
Sec. 905. Except as otherwise provided in this section, the provisions of a licensee's incorporating statute
apply to the licensee. If a provision of the licensee's incorporating statute conflicts with any provision of this act,
this act controls.
ARTICLE 10
REPEAL
Sec. 1001. Act No. 117 of the Public Acts of 1963, being sections 487.851 to 487.867 of the Michigan Compiled
Laws, is repealed. A reference in another law of this state to a business development corporation under Act No.
117 of the Public Acts of 1963 shall be considered to be a reference to a BIDCO under this act.
This act is ordered to take immediate effect.
~ ~
Secretary of the Senate.
Clerk of the House of Representatives.
Governor.
(~6
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323
STATE OF MICHIGAN
JAMES J. BLANCHARD, Governor
MICHIGAN STRATEGIC FUND
P.O. BOX 30234, LAW BUILDING, LANSING, MICHIGAN 48909
(517) 373-7550
PETER PLASTRIK, President
January 1988
CAPITAL ACCESS PROGRAM
1ntro~uction
The Michigan Strategic Fund's (MSF) Capital Access Program, aunct~ed in
August 1986, is designed to provide banks with a flexible and non-'buroaucratic
tool to make business loans which are somewhat riskier than a conventional
bank loan, in a manher consi~tent with safety and soundness regulation. The
Capital Access Program can thus assist banks in expanding their markets and
better serving their customer base, and can have an important positive impact
on the creation of Jobs and improving the effectiveness of Michigan's economy
by supporting the growth and success of Michigan businesses. As of this
writing, the program has already assisted banks in financing more than 70
companies, and the pace of lending is Increasing. Continuing substantial
increases in the degree of bank utilization of the program are anticipated.
From the MSF's viewpoint, a key feature of the program Is the high degree
of leverage of public resources a relatively small amount of MSF funds can
generate a relatively large amount of bank lending. To date, the leveraging
ratio of private to MSF resources being achieved by the program is 17 to 1,
and is expected to increase.
From the bank's perspective, a central feature is the flexibility of the
program and its extremely non~bureaucratic administration. The bank has sole
responsibility for decIding whether or not and under what terms and conditions
to make the loan.
From Iho borrower's perspective, the key feature of the program Is that
it provides access to fInancing that might otherwise not be available. Ac~ess
to financing Is often a crucial ingredient In enabling a business to prosper
and grow.
This paper des~rlbes and discusses the program In some detail, and Is
intended to be helpful for descriptive purposes. The off Iclal legal document
specifying program parameters Is the Agreement entered Into between the MSF
and each participating bank.
PAGENO="0330"
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-2-
~ic Concept of Program
Although the Capital Access Program Is based on an insuring concept, it
is fundamentally different from the traditional type of insurance or guarantee
program, such as the SBA 7(a) program, which guarantees some percentage of a
loan on a loan by loan basis. Instead, Capital Access is based on a portfolio
concept.
If a bank participates in the Capital Access Program, a special reserve
fund is set up to cover future losses from a portfolio of loans that the bank
makes under the program. The special reserve is owned and control led by the
MSF, but It is earmarked in that bank's name. Thus, each bank participating
in the program has Its own earmarked reserve. A bank could withdraw funds
from its earmarked reserve only to cover losses on loans made under the
program.
Payments are made into a bank's earmarked reserve each time the bank
makes a loan under the program. The borrower makes a premIum payment, the
bank matches that payment, and then the MSF matches the combined total of the
borrower's payment and the bank's payment. The bank is allowed to recover the
cost of its payment from the borrower, such as through a higher interest rate,
up-front fees, or some combination. Up-front premium payments and fees can be
financed as part of the loan.
The actual level of payments to be made into the reserve at the time of
making any loan is determined by the bank, within certain parameters. At a
minimum, the borrower pays an amount equal to 1.5% of the loan amount, the
bank would match that with another 1.5%, and then the MSF would cgntribute 3%,
for a total of 6%. At the maximum, the borrower contributes 3.5%, the bank
another 3.5%, and the MSF 7%, for a total of 14%.
Thus, for any loan made under the program, an amount equal to anywhere
from 6% to 14% of the loan amount is paid into the bank's earmarked reserve.
After abank has made a portfolio of loans under the program, It might have a
reserve equal to, say, 10% of the total amount of that portfolio. In such a
situation, the bank could absorb a dollar loss rate of up to 10% on that
portfolio and stIll be co~plmteIy covered against loss. A key feature of the
program Is that the full amount in the bank's total reserve Is available as
needed to cover any loss from any of the loans made under the program. If
loans get paid pff without loss, the funds stay in the reserve.
The earmarked reserve enables a bank to be more aggressive in making
loans and expanding its market. However, if a ~ loss rate were to exceed
the coverage provided by the reserve, +he bank would be at risk for that
excess loss. Thus, there Is a clear buIlt-in incentive for a bank to be
prudent.
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-3-.
Nevertheless, since the reserve would enable a bank to withstand a
substantially higher loss rate than It could tolerate under its conventional
loan portfolio, the program enables a bank to prudently make "almost bankable
loans." For example, these loans might be loans to companies with good
management and~a good direction, but for one reason or another, such as lack
of sufficient track record, lack of adequate collateral, lack of sufficient
net worth, or other reason, can't quite qualify for a conventional bank loan.
Because the program is structured to provide a built-in incentive for the
bank to be prudent, there is no need for the NSF to be involved at all in
reviewing the bank~s decision on the loan. The reserve is there for the bank
to protect and use. The bank makes the loan and simply files a one page Loan
Filing Form with the NSF within 10 days ~f±~j the loan is made. Enrolling
loans under the program is thus designed to work as essentially an automatic
process. There is no processing delay, and virtu~ally no paperwork.
Flexibility is a key characteristic of the program. It is completely up
to the bank to determine how it wants to use the program. The bank sets its
own criteria for determining whether to make the loan, determines what types
of loans it wants to make under the program, and decides the interest rate,
fees, term to maturity, collateral requirements (If any), and other conditions
of the loan. Thus the market 1$ allowed to work, and intelligent private
sector decision making is facilitated. The loan can be short term or long
term, fixed or variable, secured or unsecured, amortizing loans or balloon
loans, term loan or line of credit, etc.
When filing a loan for enrollment under the program, the bank has the
option of covering an amount under the program which is less than the full
amount of the loan. This provides added flexibility, since borrQwer and bank
premium payments would then be based on this smaller amount. For example,
let's say that a bank makes a $300,000 loan under the program, but Is
convinced that under a worse case scenario the maximum possible loss on the
loan would be $200,000. The bank could decide to specify a covered amount of
$200,000 on the loan. In such an event the funds in the reserve could be used
to cover the first $200,000 iii principal loss on the loan, plus accrued
Interest, plus documented out of pocket expenses.
A key feature of the program is the flexibility it provides to enable a
bank to work with a borrower after the bank has made a loan to the borrower
under the program. After a loan has been made under the program the bank can
subsequently recast it as often as may be desirable. The bank can extend the
term of the loan, amend covenants, release collateral, etc., without having to
obtain approval from the NSF, or even reporting the change to the MSF.
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The bank also has the flexibility to refinance the loan, adding funds.
indeed, if the total amount of the refinanced loan does not exceed the covered
amount of the loan as previously enrolled, no new borrower or bank premium
payments need to be made Into the reserve, and the fact of the refinancing
does not even need to be reported. (Once a year, the bank would be asked to
file a simple report with the MSF containing merely a listing of loan number
and outstanding balance for all loans enrolled under the program.) For
example, If a $200,000 loan covered under the program has been paid down to
$50,000, and then is refinanced back up to $200,000, then no new premium
payments are owed. However, if the loan were instead refinanced up to
$300,000, then premium payments would be owed on the incremental $100,000
above the $200,000, but only if the bank wanted to cover that additional
$100,000 under the program.
Lines of credit are also treated with similar flexibility. In
establishing a line of credit and filing it for enrollment, the amount of the
loan, for the purposes of determining premium payments and the maximum covered
amount, shall be the maximum amount that can be drawn down against the line of
credit. Banks could use their normal approach, including informal
arrangements as applicable, in establishing a line of credit. A line of
credit, once established, could then be renewed each year, staying covered
under the program, without new premium payments being required (unless the
covered amount under the program is to be increased).
The collection and claims process is also designed to work in a routine,
nonbureaucratic way. The bank simply uses its normal method for determining
when and how much to charge off on a loan. At the same time that a bank
charges off all Or part of a loan, the bank would file a claim with the MSF,
with payment designed to be handled in a prompt and routine fashion.
Because of the payments that need to be made into the reserve, a loan
made under the Capital Access Program Is likely, to be a bit more expensive
than a' conventional bank loan. The premium payments Into the reserve are one-
time, up-front payments, the costs of which can be financed. Thus the longer
the financing stays on the books, the smaller is the increase in the
borrower's effective Interest rate. However, the transaction is still likely
to be a little bit more expensive than a conventional loan. Thus, borrowers
who can obtain conventional bank financing to meet their needs would normally
be better off with such financing, and competition within the banking industry
will work to steer such borrowers to conventional financing. From the
perspective of borrowers, the central thrust of the Capital Access Program is
that it can provide access to financing for many companies that otherwise
might not be able to obtain bank financing to meet their needs. Moreover,
financing under the Capital Access Program is likely to be much less expensive
for a company than alternative non-bank sources of financing, if any are
available.
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It is important that prospective borrowers under the program understand
that the loan is a priva+e transaction between the bank and the borrower.
While the program may assist a bank in being able to take more risk than
normal, It is still the bank that is bearing the risk of the loan, and is
responsible for the decision making.
Al location of Funds - Long Term intentions of MSF
in approving the program the MSF Board has initially allocated $5 million
to the program, which will support an estimated $100 million in lending by
participating banks. Especially noteworthy is the fact that the MSF Board,
in its resolution establishing the program and making this initial allocations
also incuded a strong statement of intent on the Board's long term intentions
regarding the program. The resolution stated that the Board intends that the
program be operated on a market driven basis, without limiting the aggregate
amount of loans that can be made under the program; that the Board believes
that the resources of the Michigan Strategic Fund should be more than enough
to cover any forseeable loan volume under the program for a number of years
into the future; and that the initial allocation of $5 million is only an
initial allocation, and the Board expects +0 provide additional allocations at
future times as needed to meet market demand. Thus a bank should be able to
participate in the program with confidence that it will have an opportunity to
build up a substantial portfolio of loans under the program, without fearing
that the program will run out of money.
Eligible Loans and Borrowers
The fundamental thrust of the program is to make eligibility as broad
based as possible so as to maximize the impact on Michigan's economy and l-o
avoid second guessing private market decisions. The borrower can be a
corporation, partnership, joint venture, sole proprietorship, cooperative or
other entity, whether profit or nonprofit, which is authorized to conduct
business In the State of Michigan. The broad based nature of the program has
been enhanced as of January 1988 with the inclusion of retail businesses as
eligible to receive financing.
The basic approach is to keep the program flexible so that each bank can
use the program in a manner which best suits the needs of the bank and its
customers. Keeping the program broad based will also assist banks in building
up a portfolio to take maximum advantage of the portfolio Insurance effect,
thereby making the program more attractive and effective. Moreover, the high
degree of leveraging of public resources supports keeping the program broad
based.
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There are however, a relatively small number of restrictions that are
either mandated by statute or are necessary to protect the basic integrity and
purpose of the program. These restrictions are described beiow.
1. BusIness Purpose in Michigan The proceeds of the loan must be
used for a business purpose within the state of Michigan. Generally,
therefore, the program is geared to Michigan businesses. In the
case of a company with multi-state operations, the key test is that
the primary economic impact of the endeavor financed by the proceeds
of the loan must be in Michigan.
2. ExcIusio~ of Housing - The MSF statute prevents the financing of
"that portion of an endeavor devoted to housing." Thus the proceeds
of the loan cannot be used for the construction or purchase of
residential housing. However, this is interpreted to mean permanent
housing. Thus loans to motels or hotels or for the construction of
motels or hotels are eligible.
3. PassIve R~ai Estate Owner~hip - The loan cannot be used to finance
passive real estate ownership. Passive real estate ownership would
occur if a company were to buy land or buildings simply as an
investment, without developing or improving the real estate in any
way, apd without intending to use it for its own business
operations.
it is important to stress, however, that except for the restrictions
against passive real estate ownership and housing discussed above,
the program can be used for real estate financing. For example, the
program can be used to assist a compony to finance the acquisition
of land or buildings intended to be used in the business operations
of the company. in addition, the program can be used to finance the
activities of a developer or builder in acquiring real estate for
development or in constructing or renovating a building. In the
case of a loan to a developer for construction or renovation
financing, the loan under the program should be intended to cover
the period through the construction or renovation phase. The
permanent financing can be also be included, if the borrower will be
the company that will use the reel estate for its own business
operations.
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-.7..
4. Refinancing Prior Debt Which is Not In Prograip - A bank is not
permitted to take an existing loan on its books (or on the books of
an affiliate) which is not In the program and simply refinance it,
without adding new money, and put the refinanced loan under the
program. However, if a bank ref inances an existing loan and adds
new money by increasing the outstanding balance, it Is permissible
to cover under the program an amount not exceeding the amount of.the
new money. For example, if an existing loan, not under the program,
has an outstanding balance of $200,000, and that loan is refinanced
with a new balance of $300,000, the refinanced loan can be enrolled
under the program, but the covered amount could not exceed $100,000.
5. Conflicts of Interest A bank is not permitted to use the program
for "insider" transactions. Insider transactions are defined to
include a loan to an executive officer, director or principal
shareholder of the bank, a member of the immediate family of such an
executive officer, director or principal shareholder, or to a
company controlled by any of these people. The basIc definitIons
used in this conflict of interest prohibition tie In to basic terms
used in the Federal Reserve's Regulation 0, which the bank has to be
familIar with in any event for their normal operations.
6. ~ - There are no borrower size requirements or minimum or
maximum loan sizes. It Is recognized, of course, that the structure
of the program will tend to focus the program to assisting small and
medium sized companies. However no arbitrary limits are provided.
It should be noted, however, that the maximum amount to be paid by
the NSF Into a bank's earmarked reserve in connection with any one
borrower shall be $150,000 in any three year period, unless the NSF
has approved, in writing, a greater payment. With the NSF making
payments of between 3% and 7% of the loan amount, a $150,000
contribution would support a loan of anywhere from $2.1 million to
$5 mIllion, a large loan indeed. Providing for advance
authorization beforo the $150,000 lImit is exceeded will assist the
NSF in monitoring the sufficiency of Its ownal local-ed funds.
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330
QQJlection and Claims
The process for a bank getting reimbursed for losses on loans made under
the program Is intended tø be as routine and nonbureaucratic as the process
for enrolling loans under the program. The MSF simply relies on the bank to
exercise reasonable care and diligence In its collection activIties. if a
loan gets into trouble, the program calls for the bank to determine when and
how much to charge off on an enrolled loan In a manner consistent with the
~ normal method for making such determinations on Its conventional
business loan. A bank would file a claim under the program at the time it
charges off all or part of a loan. The claim may include the full amount of
principal charged off, plus accrued interest, pius out of pocket expenses.
(if the amount of the loan that the bank covered under the program is less
than the amount of principal charged off, then the amount of principal and
accrued interest included in the claim shall not exceed the principal amount
covered under the program, plus accrued interest attributabie to such covered
principal amount.)
in keeping with the extremely nonbureaucratic nature of the program, the
claim form submitted by the lender to the NSF is only a half-page form. The
program envisions prompt and routine payment.
The program is structured so that when the bank makes a loan and then
enrolls It in the program, the bank is automatically making a small number of
representations and warranties to the MSF that the ioan complies with program
requirements. if the bank later suffers a loss on that loan and properly
files the claim form, the only grounds for denial of the claim would be If the
representations and warranties made by the bank at the original time of the
enrol iment of the loan were known by the bank to be false at the time the loan
was filed for enrollment.
The ciaims process allows a bank to recover its loss at the time It
recognizes the loss, prior to having to exercise its collateral rights or
other legal remedies in connection with the loan. However the bank would be
expected to continue to exercise its collateral or other rights in a manner
such as it would do for a conventional bank loan, if there were a subsequent
recovery from the exercise of such rights, so that the amount of loss
ultimately were less than the amount for which the bank had been reimbursed
from the earmarked reserve, the bank would put the relevant amount of the
recovery, net of out of pocket expenses, back into the earmarked reserve.
This is similar to the process that a bank would follow in putting recoveries
on conventional loans back into the bank's internal ioan loss reserve.
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As described above, the intent of the program is for the bank +0 be fully
responsible for collection activities and for the MSF to stay out of the
bank's way. However, as a safeguard against the extremes ituatlon where a
bank is abusing the intent of the program by ignoring its obligation to
exercise reasonable care and diligence In Its collection activities, the MSF
will reserve for itself, in limited circumstances and as a last resort, the
right to be subrogated to the rights of the bank. The subrogation would apply
to any collateral, security or other right of recovery, in connection with a
loan, which has not been realized upon by the bank. This provision could only
take effect after the bank has filed a claim and has had Its loss fully
covered. It is hoped that the MSF will never have to exercise this right of
subrogation.
Maintenance of the Re~erve Fund
A central concept of the program is that the MSF owns the funds in the
bank's earmarked reserve, but that these funds are legally dedicated solely to
cover losses on loans made by the bank under the program. Legally, the MSF
actually pledges the funds in the reserve fund to be available to pay claims
on loans under the program.
For administrative convenience for both the MSF and the bank, and to
provide an extra benefit to the participating bank, it is the plan of the NSF
to open up an account at the bank, and deposit the monies in the bank's
earmarked reserve right at the bank. The plan, as it is now being
implemented, in~ôlves establishing a money market deposit account in the NSF's
name at 1-he bank's published rate of interest,
It should be pointed out that although the above procedure Is consistent
with the ful I intent of the MSF, and there are no plans to do otherwise, the
legal Agreement between the bank and the MSF in no way binds the MSF to
maintain the funds in a deposit account at the bank. Thus, for example, if a
bank abuses the intent of the program,~the MSF will have the flexibility to
close that deposit account and deposit the monies in the reserve elsewhere.
However, this wouldn't change the legal status of the reserve as dedicated
solely to cover losses from loans that the bank makes under the program.
Moreover, in the event that the MSF does not deposit the funds in an account
at the bank, the funds may be invested or deposited only In 1) direct
øbligatiofls of the United States government or' the State of Michigan, or'in
obligations the principal and Interest of `which are unconditional ly guaranteed
by the United States or the State of Michigan, or 2) a deposit account at a
federal ly insured depository institution.
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Half of the interest earned on the funds in the bank's earmarked reserve
will stay in the reserve, to help build it up. The MSF is authorized to
withdraw the other half of the interest for use by the MSF f or whatever use
the MSF Board determines.
Although the MSF technically owns the funds in the reserve, it is
intended and expected that banks will develop a proprietary interest in the
reserve. The reserve earmarked for a bank takes on the character of an off
balance sheet asset of the bank, which enables it to be more aggressive in
its lending activities. The bank controls the amounts of payments going into
the reserve and the reserve is reduced only when a bank suffers a loss on a
loan made under the program. The program rewards good performance, in that as
loans are successfully paid off, the funds stay in the reserve, and actually
increase over time through the earning of interest. However, if at some point
in the future the bank were to completely drop out of the program, and after
all of the loans previously made had all been paid off, the MSF would
ultimately be able to withdraw the funds from the reserve.
Bankers sometime ask why the bank wouldn't be able to get back some or
all of the funds from the reserve in the event that they have dropped out of
the program and the loans have been paid of f. The primary answer is that a
key provision in maintaining the structural integrity of the program is that
the bank can only gain access to the funds in their earmarked reserve to cover
losses on loans made under the program. If a bank knew that it could
ultimately withdraw funds from the reserve after dropping out of the program,
this might create an incentive for the bank to put conventionally bankable
loans under the program, because the bank might reason that it will ultimately
get the money back anyway. By contrast, if the only way that a bank can gain
access to the funds in the reserve is to cover losses from its program loans,
the only way that a bank can ultimately get any advantage from the program is
to use it for its intended purpose, as a flexible tool to enable the bank to
expand its markets by taking more risk than it otherwise could take.
The program contains a formula for addressing the effective dropping out
of the program by the bank. if for a consecutive 24 month period the amount
in the reserve fund continuously exceeds the outstanding balance of all of the
bank's enrolled loans made since the beginning of the program,.the MSF is
authorized to withdraw any such excess to bring the reserve down to an amount
equal to 100% of the outstanding balance. As a practical matter, this formula
would only come into play for abank that has effectively dropped out of the
program. Even if a bank has been inactive for a long period, if it begins
making loans during the 24 month period, the aggregate outstanding balance
would generally quickly exceed the reserve. The formula is thus intended to
give the MSF the ability to withdraw funds from the reserves earmarked for
banks that have effectively dropped out of the program, but to do it in a
manner that in no way Jeopardizes the protection that the reserve provides for
any loans still outstanding.
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-.11-
Early $tage lncentLve~
How does a bank proceed in the early stages of its participation In the
program, before a substantial reserve has been built up?. Many banks will
understandably have a tendency to be rather cautious Initially. As the
reserve begins to build up, and as the bank gains more experience under the
program, the bank may gradually evolve to a more aggressive posture, expanding
its marOins that much further.
Even if a bank is unfortunate enough that one of its early loans in the
program gets into trouble, it is likely to be some time before the loan
actually defaults, and by that tIme hopefully the bank will have a portfolio
of loans and have bul It up an adequate reserve. Nevertheless, other things
being equal, there is some extra risk attached to these early loans made
before a substantial reserve has built up.
Thus, in order to assist a bank to build up the reserve more rapidly and
to address risk issues in the early stages of a bank's participation in the
program, two special features have been included in the program. The first
special feature applies to the first $2 million of loans that a bank makes
under the program. This feature provides that the NSF will contribute a
greater portion to the reserve. While the minimum and maximum payments for
the borrower and the bank would remain the same, the NSF, rather than simply
matching 100% of the combined total of the borrower and the bank, will instead
contribute an amount equal to 150% of the combined total of the borrower and
the bank. Thus, In the minimum case, the borrower contr~ibutes 1.5%, the bank
1.5%, and the Strategic Fund 4.5%, for a total of 7.5%. lhthe maximum case,
the borrower would contribute 3.5%, the bank 3.5%, and theStrategic Fund
10.5%, for a total of 17.5%. This first special feature is designed to help
build the reserve more rapidly, and to give the bank an extra incentive to
begin to use the program.
The second special feature applies to the first $5 million of loans that
a bank makes under the program. If one of ihose loans suffers a loss ~and at
the time of the loss there Is not enough in the reserve to fully cover that
loss, the bank would InitIally be able to wIthdraw all of the amount in the
reserve at the time of the loss, to cover the loss as much as pO~sslble. If
the bank then continues makiog loans under the program and begIns to build the
reserve back up, the bank would be allowed to withdraw from the reserve at a
subsequent time in order to fully cover the earlier loss. (The only
restriction is that the amount subsequently withdrawn to cover the earlier
less cannot exceed 75% of the amount in the reserve Immediately prior to such
subsequent withdrawal.) `Thus, even at the beginning of its particIpatIon in
the pro~ram, the bank has the comfort of a portfolio Insurance etfect, because
it knows that if in the long term its lOsses are kept to a reasonable level,
it will be fully protected against loss, and the bank'won't suffer due to
unlucky early lOss5s.
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The Process for a Bank to Sign Up for the Progr~p
The MSF Board has approved a master form of Agreement to be separately
entered into between the MSF and each bank that wishes to participate in the
program. Entering into this Agreement does not commit a bank to make any
loans under the program, but does spell out the full and official parameters
that apply if a bank makes loans, and the obligations of the MSF and the bank
under the program.
In its resolution approving the form of Agreement and authorizing the NSF
staff to enter into such Agreements, the MSF Board stated that "it Is the
policy of the Board that such Agreements should be entered into with any
depository institution, which has its principal office located in Michigan,
that wishes to enter into such Agreement and that has sufficient experience
and capacity to participate in the program, and that such depository
Institution should be considered to have such experience and capacity absent
any credible evidence to the contrary."
Consistent with the entire approach to the program, the process for a
bank to sign up to participate is thus being kept simple and routine. Staff
is utilizing a half-page applIcation form to obtain information on a
depository institution's year-end commercial and industrial loans outstanding
for each of the last three years. Absent any credible evidence that a
depository institution lacks sufficient experience and capacity to participate
In the program, staff is signing up lenders that wish to particIpate by
entering into the Agreement.
Responslbl~
The Capital Access Program has been structured throughout to give banks
the maximum possible freedom to make intelligent private sector lending
decisions. Structural incentives are built into the program to promote
program goals. Nevertheless it is also Important to emphasize that the MSF is
relying on the participating banks to be responsible. The ability of the NSF
to keep the program simple and effective will be sustained if the
participating banks attempt to adhere not only to thp letter of the program
requirements, but also to the spirit and intent of the program.
In order to be able to implement the program in a fully nonbureaucratic
manner, the MSl~'needs to be able to prevent the program from being abused. So
that the NSF can move quickly If necessary to stop abuses, the MSF retains, in
the legal Agreement entered into with each participating bank, the absolute
discretion to terminate a bank from the right to make new loans under the
program. (This wouldn't affect the status of loans already made under the
program.) Obviously the MSF's objectIve is to have as many banks as possible
use the program successfully. Thus it is the NSF's intention to enforce this
provision against a particular bank only if such bank has exhibIted a pattern
of abuse of the intent of the program. It is hoped that this authority will
never have to be used.
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335
As a bank begins to use the program, to assist the bank in particular
cases it wil I probably be helpful for bank staff from time to time to seek
informal clarifications regarding the objectives and intent of the program.
The MSF staff will endeavor to provide quick responses. The MSF plans on
making this program a model for government responsiveness and effectiveness,
so that the program can have maximum benefit for banks, Michigan businesses,
and the state.
PAGENO="0342"
336
STATE OF MICHIGAN
REPORT AND RE(XMENDATION$
August 1, 1986
EQUAL ACCESS TO CREDIT FOR
WOPEN BUSINESS OWNERS
PAGENO="0343"
337
TABLE OF CONTENTS
PAI~E NLJ~R
Background 1
Executive Summary 2
Summary of Testimony & Issues 4
Summary of Existing Legislation . 8
Working Group Specific Recommendations 12
Legislation 12
- Monitoring & Reporting * . 13
- Loan Fund 13
Pubi Ic Awareness 14
Working Group Members 16
Co-Sponsors
- Lansing 17
- Flint 18
Jackson 19
Southfieid 20
APPENDIX (Available upon request)
S. 1486-H.R. 1575 Equal Credit Opportunity . . . . A
Equal Access to Credit Bii I B
Community Reinvestment Act C
Section 147 A - Penal Code D
Analysis of House Bill 5355 E
TESTIMONY (Available upon request)
PAGENO="0344"
338
BACKGROUND
The annual appropriatIon act, PublIc Act 112 of 1985 contaIned
a new reporting requirement for Local Development Services
Bureau In the Commerce Department. Section 8 (4) of Public Act
112 required the Office of Women Business Owners to study state
laws that affect equal business credit and truth~ln~lending for
women business owners. The boIlerplate alsO states that the
Women Business Program should propose new legIslation which
will give women equal credit opportunities and Improve their
access to both private and public financing.
Pursuant to this requirement the Office of Women Business
Owners established a workIng group and held 4 publIc hearings
throughout the state providing women the opportunity to discuss
their experiences while requesting and or obtaIning business
loans. The working group studied state and federal laws that
affect equal busIness credit and have made recommendatIons to
Insure equal access to credit for women.
Page 1
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EXECUTIVE SUMMARY
Women Business Owners in Michigan own 36% of the businesses and
are the fastest growing ~segment o~f the small business
community. Women are starting businesses five times faster
then men. It has been projected that women will own 50% of the
businesses by the year 2000.
In spite of this phenomenal growth rate women entrepreneurs~
major obstacle ifl the development and expansion of their
businesses is equal access to capital.
In March and May of 1986, Doug Ross, Director of the. Michigan
Department of Commerce, met with 35 top women business owners
from around the state to discuss issues and strategies. The
number one concern of this group was .their difficulties in
obtaining financing.
The testimony given by the women at the four public hearings
identified one overriding concern, in their opinion, women do
not have equal access to credit and are discriminated against
in the business and commercial loan process. Lenders perceive
women~-owned businesses as high risk investments due to
mI~ac.c~.piLQn about women's ability, experience and commitment
to operate successful businesses. Women are charged excessive
amounts of interest and coilateral (up to 5 times the loan
amount) and co~signatures are required even from women who have
attained personal credit incomparable amounts. Furthermore,
84% of the businesses owned by women are in the category of
service, retail or wholesale, and in banking terms, have "soft
assets" which lenders perceive as poor collateral for loans.
Therefore, due to the type of business owned by women,
additional perceptual discrimination is experienced.
Existing laws such as the Equal Credit Opportunity Act prohibit
discrimination based upon age, sex, race or religion and have
significantly improved womens ability to obtain personal loans.
Unfortunately, legislation did not go far enough and specific
exemptions from the requirements of Regulation B of the Federal
Reserve Board granted to lenders, have made It easier to deny
commercal and business credit to women or offer loans with
discriminatory terms.
Page2 .
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340
It is therefore, the recommendations of this working group to:
1. Support the present US House and Senate Equal Access
to Credit Bill;
2. Enact state legislation paralleling the federal
legislation;
3. Monitor the commercial loan process;
4. Develop reporting requirements;
5. EstablIsh p01 Ides 1-0 enforce fair lending practices;
6. Support the development of a Women's Business
Industrial Development Corporation (BIDCO);
7. Develop a publ Ic education and awareness component.
The goal of these recommendations is to provide the women of
this state equal access to credit enabling them to participate,
compete and prosper equitably in the business communities of
Michigan.
A detailed appendix of the Legislation and copies~of the
testimony from the four public hearing is available upon
request. Submit all such requests to:
Barbara Gentry
Michigan Department of Commerce
Office of Women Business Owners
P~O. Box 30225
Lansing, Ml 48909
Telephone Number: 517/335-2166
Page 3
PAGENO="0347"
341
SUMMARY OF TESTIMONY & ISSUES
The Michigan Department of Commerce, Michigan Department of
Civil Rights and the Michigan Womens Commissi9n, co-sponsored
four pubi Ic hearings throughout the state regarding women's
acces.s to capital. The Financial Institution Bureau was
represented on the panel and in each community, local co-
sponsors represented the Chambers of Commerce, Women Business
Owners, Women's Divisions of the Chamber and Small Business
Centers. The co-sponsorship is listed in the Table of
Cont!nts. The locations and dates were:
Southfield July 21,1986
Jackson July 22, 1986
Flint July 23, 1986
Lansing July 24, 1986
At these hearings the women were asked to share their
experiences in requesting or obtaining commercial Iqans. They
were asked to include such information as:
* What type and amount of collateral was pledged to secure
the loan?
* What interest r8tes were charged?
* Were co~~signatures required?
* What type of business Is owned?
* Was notice of denial provided, and what were the reasons?
Women were not required to disclose their names nor the name of
the lending institution unless they so desired. Many women did
not testify because they were concerned with reprisalsor loss
of their existing banking relationship. As one wbman stated,
"I do not want to Jeopardize my chance to go to the well, even
though it only dribbles out to me." Several women wrote
letters providing testImony which are included In the appendix.
In general, the testimony clearly defined the discrimination
women experienced in ~ihe commercial loan process. Women are
unanimous in their opinion that they were discriminated against
by lenders because they were women and perceived by lenders:
1, As not having the experience, ability or commitment to run
a business successtully; S
2. as owning businesses for hobbies, a way to pass the time,
or just to make "extra" money.
Page 4
PAGENO="0348"
342
Businesses owned by women are generally in the banking category
of "soft assets" (service, wholesale and retail business),
which are generally perceived as higher-risk Investments than
manufacturing assets. To date there is no documentation to
support any of these ~sstimpII~as.
The most flagrant abuses and discriminatory loan practices are
in the areas of co-signatures (when women have proven credit
worthy in their own right) and excessive collateral pledged to
secure loans. Because lenders r~e.L~.e women as poor risks,
they require additional co-sIgnatures from (usually) husbands,
sons, fathers, or uncles and attach most of the tangible assets
(often in excess of five times the amount of the loan) that the
women own. One woman business owner needed a small loan for a
piece of equipment. This woman has established a long and good
personal credit history and is also employed as a full-time
teacher. When she went to the lending institution, she had to
pledge her house, furniture, and her stamp collection. "My
goodness" she said, "What is sacred?" "In the whole process of
not only purchasing a home and having a career as a teacher
with a very stable income, I Just couldn't bel ieve it. I have
never had to go through this sort of thing for credit
whatsoever. ~
The most outrageous testimony was from a .woman who had been
employed by a drilling company for 19 years. The owner was 75
years old and wanted to sell. "More or less as Job security at
my age, I figured it a little hard to get a new Job, so I
decided I would try to buy It." She started applying for loans
in 1983 and finally received her loan in 1985. One lender
actually said, ~ you rather start a dress shop."
Another leAder asked her If she was capable of schedul lng Jobs.
This company was located in Ohio with six employees and assets
of $495,000 and the woman wanted to relocate the business in
Michigan. After two years of seeking private and publ ic funds,
she was finally granted a loan of $120,000 from a bank and had
to pledge all the assests of the company (machinery, building,
and equipment), her personal assets, and a second mortgage of
$75,000 on her home, all totaling $700,000. Along with this
collateral, the previous owner of the company had to put'
$30,000 in CD's in the bank as security until this woman had
paid off the first $30,000 of her $120,000 loan. She also had
to take out a ife insurance p01 icy for the loan amount. The
company is now in Michigan, has 22 employees and grossed over
$695,000 in her first year of operation. This woman's son, who
recently graduated from college, went to work for her in
November 1985. She has made him vice president and given him
1,000 shares of stock.
Page 5
PAGENO="0349"
343
Six months ago she appl led for a $20,000 working capital loan,
for payroll secured by $116,000 in receivables and the bank
made the 25 year old son co~sign. Two months ago she requested
$17,000 for a new truck and, again, her son had to co~sign in
her statement, "1 don't feel that I should have a 25 year old
son sign because I have been divorced for 20 years and the bank
couldn't get a husband to sign. I feel they really took me.
When It came to collateral, they Just took everything. I don't
think that was necessary because it would be different If I
didn't know what I was doing. I worked for `Phe company for 19
1/2 years. I do know what I'm doing. I don't know anything
about a dress shop, but I do know the drilling business. I
still have trouble convincirrg them."
Another woman testified that she started a temporary
secretarial service company four years ago. She has had a
steady growth and remains in the black. Sh~ has approximately
100 clients. She went to the bank for a $10,000 equipment
loan. The bank requested her car and other equipment as
collateral. She said, "I finally got my commercial loan, I
really felt good about it, but, you know my husband had to sign
for me and it's like being a child. It's like, we'll give you
the loan but daddy has to be there to make sure that It's going
to be paid. That's not fair. "What does this mean for me?
Three years from now, will I still have to have my husband's
signature and a lien on my house for a loan? When can I get
credIt on my own? My clients have confidence in me. How come
the bank doesn't have that much confidence In me? I can go
into any retail store In this town and get a $5,000 credit
limit by Just signing my name on a piece of paper, but I can't
even go into the bank to get nothing without somebody standing
there holding me up."
Most women testifying have expressed an ability to obtain
personal loans in small amounts. in most instances, they get
personal loans for their businesses. They can obtain personal
credit limits below $5,000 or $10,000 but It is difficult to
obtain larger lines of per~onaI credit. One of the women said
she has six credit cards totaling $15,000 and she uses that
borrowing power for her business. The problem is that the
interest rate is between 18% and 24%, which is very expensive
for a small business. These interest rates deter significantly
a woman's abilIty to expand the business, in spite of these
obstacles, women are still succeedIng.
PAGENO="0350"
344
Single or divorced women testified that It was even more
difficult for them to obtain loans because they did not have
that additional Income from a spouse or a male to co-sign for
them. A single women who has owned a successful manufacturing
company for six years testified that she went to a lender for
$25,000 working capital and expansion loan. The loan officer
had her pledge all of her personalassets, started counting her
rings and charged her 3% over prime. He then required her
father to co-sign. Her father has borrowed hundreds of
thousands of dollars on his signature and could have loaned her
the money at prime, but she is still trying to get commercial
credit in her own right. As most women stated, "When will this
end? Are our daughters going to be faced wIth this?"
Several women doing business with the state testified that
lenders would not take purchase orders as collateral. They
could not get loans from lenders to deliver the products or
services for which they had been awarded the bids. One woman
said, "The banks told us that contracts with the state was not
real collateral, only paper", and would not loan the operating
capital. Several women lost valuable contracts because they
did not have sufficient capital to perform.
One woman has lost over $400,000 in contracts because she could
not obtain the operating capital.
The economic range of the problem encompasses women
entrepreneurs who are interested in business ownership to
create wealth to economically disadvantaged but talented
entrepreneurial women who have no tangible collateral to secure
loans.
1. A woman who owns a waste recovery company and has a
$60 million project could not get fundIng in this
state and has gone t~ the International market where
the Austrian government is entering into a joint
project with her to finance the facility.
2. Minority women expressed experiences of clearly
defined racial discrimination. One woman testified
that her banker was willing to trade sexual favors
for loans. Older woman expressed awareness of their
inability to obtain loans due to their age.
All of this discrimination is subtle and dIfficult to prove.
It is not possible to prosecute attitudes, yet It Is possible
to enact laws that change behavior.
The following segment discusses the existing federal and state
laws that affect equal business credit and truth in lending In
both the publ Ic and private market.
Page 7
PAGENO="0351"
345
SUMMARY OF EXISTING LEGISLATION
~izcrmn±_L~a~
I~L~QI1AL.CREDITOtPORflLNI.TL.LCX of 1974 (ECOA) (Appendix A)
prohibits discrimination in credit transactions on the basis of
race, color, national origin, sex, marital status or age. A
number of provisions are contained in the Act which are
designed to protect against discriminatory practices.
The Act provides for the promulgation of regulations by the
Federal Reserve Board (Fed), authorizes the Fed to make
classifications and distInctions, and Specifically authorizes
the Fed to exempt from the provision of the Act any class of
business or commercial transactions under the narrowly defined
circumstances.
Regulation B, which was promulgated by the Fed under this
statutory authority, affords special treatment to certain
commercial credIt transactions and in addition, exempts mJJ.
business and commercial credit transactions from thS provisions
of the Act relating to the following:
(a) notificatIon of adverse action unless requested by the
borrower within 30 days of notice~of denIal, including
written statement of reasons for the adverse action;
(b) retention of records, including information used in
evaluating the application unless specifically requested
in writing by borrower within 90 days of the adverse
action; and
(c) Information concerning marital status.
(d) notification to credit applicants for the need to request
the retention of credit files and Written Statement of
reason for denial,
Pen~tLng LLLa±I.Q.n
Bills to amend the Equal Credit OpportunIty Act (ECOA)
(Appendix B) were introduced simultaneously in the US House by
Congressman Parrer~ J. Mitchell and US Senate by Senator `Robert
Dole In March 19, 198g. This legislation would strengthen the
ECOA to rescind the exemptions for commercIal and business
loans.
Page t
PAGENO="0352"
346
Exemptions from some protections of ECOA are the basis for what
appears to be an industry-wide perception that business credit
is not subject to any provisions of the ECOA. As a result,
women and minorities are still subjected to subtle
discriminatory practices that are difficult to detect or prove.
in the 98th Congress, during Small Business Committeehearings
on H.R. 3832, the Women's Business Ownership Act of 1984,
Chairman Parren 1. Mitchell agreed to work with Congresswoman
Lindy Boggs in finding solutions to the problems facing women
business owners and asked the women's groups, who appeared as
witnesses, to bring their recommendations. Congresswoman
Boggs, the National Association of Women Business Owners
(NAWBO), and the Congressional Caucus on Women's Issues
presented Equal Access to Credit as a key issue and supported
rescinding the current exemption of business credit
transactions from certain provisions of the ECOA. Removal of
the business credit exemption has emerged as an important issue
to minority business concerns as well.
On March 19, 1985, Parren Mitchell introduced H.R. 1575 on
behalf of himself and Congresswoman Boggs. H.R. 1575 amends
the Equal Credit Opportunity Act of 1974 (ECOA) to restore the
protection of the Act to business credit transactions except
for narrowly defined classes or distinctions. Moreover, future
such exemptions must be made pursuant to methods designed to
permit open scrutiny, public comment, and due process.
H.R. 1575 accomplishes this by subjecting any ECOA business
credit exemption to the hearing process, conducted according to
the Administrative Procedures Act (APA), with formal
determinations and findings, and limiting any such exemption to
a five-year period after which time another hearing would be
required.
Arguments against the bill are the same arguments made against
the original ECOA legislation. Loan officers are reluctant to
keep records or to provide a written statement of reasons for
denial of a loan application. They claim H.R. 1575 will make
loans to small business harder to get.
The ECOA, however, never intended a business credit exemption.
The ECOA legislative history clearly states that business and
commercial credit were to be subject to the same protections
against discrimination as other types of credit transactions.
The ECOA provides for exemptions or classIfications and
distinctions, but on.L.y if there is an "express finding" that
appl ication of the Act's provisions would not further the goals
and purposes of the Act.
Page 9
PAGENO="0353"
347:
H.R. 1575 clarifIes, that original intent and closes a
regulatory lo~pi~oie... Valid distinctions can still be drawn and
Justifiable exceptions made, but by. formal proceedings only.
The bill has been incorporated Into H R 2472, the Women's
Economic Equity Action `(EEA')' package introduced by the
Congressional Caucus on Women's issues, with widespread
bipartisan support.
H.R, 1575 was referred to the~ Subcommlttee'~fl Consumer Affairs
of the House Committee on Banking Frank Annunzio Chairman
An identical bill has been introduced in the Senate by Senators
Dole, Byrd, and others.
~
The federal Community Reinvestment Act (CRA) `provides that
"regulated financial institutions have ~(a). continuing and,'
affirmative obligation to help meet the credit needs of the
local `communities in which they are chartere~." Federal
regulators have, been given a mandate by Congress to use~ their.
powers of regulation and examination to encourage banks to meet
their o.bligá+ions. ~Federal reguiati9ns require'that the record
of the institution In. meetlr.g credit needs must be taken Into
account in connection with the approval of bank applicatIons
for changes in corporate structure.
Since enactment of P.A. 177 of 1985, Michigan law has also
provided for a community investment assessment by the
Commissioner of Financial Institutions as a condition of
approval of an interstate acquisition or merger. See Appendix
C.
The commissioner must consider among other factors spelled out
in federal regulations:
- the activities of the bank in assessing community credit
needs and communication with the communIty regarding the
credit services the bank provides;
- evidence of illegal `or discriminatory acts;
the bank's origination' of residential mortgages, home
improvement and rehabilitation loans, small business and
small farm loans or the purchase of such loans originated
`in the local community; ` `
the participation of the bank in governmentally insured,
guaranteed, or subsidized programs for housing, small
business, or small' farms;
Page 10
PAGENO="0354"
38
- The CRA process creates opportunities for individuals end
organizations within a community served~ b~ a banking
organization to assess and comment on a ~ performance
in meeting their cred~+ needs and to challenge an
appi ication if those needs are not being met.
~ECTiQLJ4ih ~f the Michigan Penal Code (~ppCndix D) provides
for non-discrimination in decisions to extend credit based upon
race,~color, religion, national origin, marital status, sex or
physical handicap excepting certain non-profit corporations.
The Act makes such unlawful discrimination a misdemeanor,
punishable by a fine of up to $1,000 and also permits a civ II
action for damages upon finding of a violation.
THE ELLIOTT -LAR~L~EY1L RIGHTS_A S a statute which
prohibits unlawful discrimination in areas of employment,
housing, pubi Ic accommodations, and pubi Ic servic~è and
education, based on race, religion, color, national origin,
age, sex, marital status and in employment; body, height,
weiOht and arrest record. The Act generally'~ sets the
procedures far handling such complaints, inciu~Iflg remedies for
viol ations.
Page 11
PAGENO="0355"
349
EQUAL ACCESS TO CREDIT: WORKING GROUP SPECIFIC RECOMMENDATION
Leg 1 1 at ign
Problem 1:
Because woman~owned businesses are perceived as a high risk for
commercial or business loans excessive collateral and co-signatures
are unnecessarily required from the women who are already credit
worthiy in their own right.
Recommendation 1:
Promote the passage of the Federal Re~ulation on Equal Access To
Capital by:
1. The Office of Women BusIness Owners' communication of its
findings and r~otmnendatIons to the U.S. House Banking
Committee and the MichIgan Delegation.
2. Working wIth the federal commIttee and various women
business organizations in this state to support the
enactment of this bill; and
3. EnlIst the support of the state's legislative liaison to
lobby this issue.
In addition, a broad legisla+ive proposal patterned after the Federal
Equal Access to Capital Bill should be lnfroduóed and supported on a
state level.
Problem 2:
Women continue to be discriminated against, oh the basis of sex, age,
marital status and race in the commercial credIt market.
Recommendation 2:
That proposals be made to the legIslature to clarify the coverage~of
the Elliott-Larsen Civil Rights Act (ELA) in the area of public
accommodations so that the prohibitions contained therein on
difference of treatment in the granting of any privilege Including
that of commercial credit extension or commercial lending pi~hc+ices,
which may be causally conditioned upon region race, sex national
origin and age, etc And furthermore that the study be made of the
problems which women may encounter in elforts to obtain fair and equal
access to personal credit, for possible ihciusioh In future
legislation.
Page 12
PAGENO="0356"
850
1~1onItortng & Rèporiing
Problem 3:
Women continue to experience discrimination in the form of
differential terms while obtaining commercial loans including; higher
interest rates, excessive collateral, unnecessary co-signatures and
short term loan's. Presently, there is no system to compare, maintain
and document the variations in the terms and conditions of the loans.
Recommendation 3:
Develop a system using a standardized form whereby federal and state
chartered lending institutions report the activity of business loan
requests on a quarterly basis, including but not limited to the
following information:
- amount of loan
-. value of collateral pledged S
- term of loan
- co-signatures and relationship of co-signer
gender and race of applicant
reason for denial or variation term.
In order to assure that all, licensed lending institutions are using
relevant economic criteria in granting commercial credit, lenders
shall retain records on commercial credit applications for a period of
not less than 25 months. The Financial Institutions Bureau and the
federal banking agencies should use these~ ~existing regulatory
authorities t~ examine for `compl lance with Equal Credit Opportunity
Laws using this data as a starting point and take appropriate
enforcement action, when necessary. In addition, to examining `for
compliance with EcOA, the Financial institutions Bureau and the
federal bank regulatory agencies shall assess the record of each bank
in affirmatively promoting commercial `lending to' Women Business Owners
and shall make the results of this assessment a key factor in their
Community Reinvestment Act rating.
~o~n.Fun~l
Problem 4:
Eighty-four percent of the business owned by women in this state are
*.ln the area of service, wholesale and retail. In banking terms, these
are businesses with' soft assets and are percei.ve4 to. be high risk
investments, therefore finaflc.'ing is more difficult lo `obtain than for
a business with tangible assets'such as manufacturing.
Page 13
PAGENO="0357"
351
RecommendatiOn 4:
Support and encourage the formation of a Women Business and indMstriai
Development Corporation (BlD~O). With the investment flexibility of
a non-bank lender, the BID~O could invest ifl businesses that would
otherwise have difficulty obtaining credit because they are perceived
to be a high risk investment for conventional lenders. The BIDCO
would, thereby enhance Michigan's re~ernergeflCe as a viable business
enterprise state.
Problem 5:
Women business owners continue to lose state contracts because they
cannot obtain the operating capital to perform on the state contracts.
This affects their ability to develop prosperous, viable businesses.
Recommendation 5:
The Legislature amend Public Act 428, P.A. 1980 to provide that any
woman or minority business owner denied commercial credit to perform
on a state or federal contract may bring such denials to the attention
of the ~tate~s Affirmative Action Officer, the Lieutenant Governor,
who will contact the appropriate regulatory agency to review the
reason for denial.
?ubi Ic Awareness
Problem 6:
Women business owners are unaware of the laws that prohibit
discrimination in the loan process and their rights and remedies in
the event that a loan is granted or denied on discriminatory terms.
Recommendation 6:
Estabiish a clearing-house and dissemination system for information
regarding the commercial loan process and that this ciearing.hOuse
sponsor workshops addressing these issues and publish brochures
outlining the rights of women in the commercial loan process.
Further, that It should produce materials, conduct educational
programs, and provide training to Women Business Owners so that they
can more fully exercise their rights under the Community Reinvestment
Act, E~LA and EcOA at state and federal levels.
Page 44
/
PAGENO="0358"
352
Problem 7:
As evidenced in the testimony, both lending institutions and women
have perceptions and attitudes about each other that conflict with
their ability to do business in a mutually beneficial manner.
Recomendat ion 7:
Promote commun lcat ion I I nkages between women bus I hess owners and
lending institutions, including but not limited to the following
recommendations:
a) Co~.sponsor meeting with lenders and women business owner
groups to discuss issues, clarify obstacles and design
solutions;
b) Host conference bringing in lenders who have extensive
experience in lending to businesses with soft assets to
discuss their programs and encourage Michigan lenders to
adopt similiar approaches.
C) Develop a voluntary review board, similar to the "Voluntary
Mortgage Review Board," comprised of representatives of
financial institutions, local government and women's organi-
zat ions. These groups woul d convene periodical ly to review
credit applications of business women who believe they have
been denied credit unfairly and would provide the
opportunity for re-appraisal and possible loan commitment.
Pege 15
PAGENO="0359"
3~8
WORK 1MG, GROUP MEMBERS:
MICHiGAN DEPARTMENT OF COMMERCE
DEPARTMENT OF CIVIL RIGHTS
M1CHIGAN WOMAN'S COMMISSION
WORKING GROUP CHAIR:
BARBARA GENTRY
MICHIGAN DEPARTMENT OF COMMERCE
OFF ICE OF WOMEN BUSINESS OWNERS
P.O. BOX 30223
LANSING, MI 48909
TELEPHO~ NUMBER: 517/33~'2166
Page 16
PAGENO="0360"
Michigan Women's Commission
611 Ottawa Street
P.O. Box 30026
Lansing, Michigan 48909
Panelist: Maria Velasquez
Commissioner
Michigan Department of Commerce
525 West Ottawa
P.O. Box 30225
Lansing, Michigan 48909
Panel ist: Barbara Gentry, Director
Off ice of Women Business øwflers
Michigan Department of Civil Rights
303 West Kalamazoo
Lansing, Michigan 48909
Women Business Owners of Greater Lansing
205 South Larch Street
Lansing, Michigan 48912
517/487-6286
Panelist: Gloria Fleming, President
PANEL I ST
Peggy Bryson, Director
Research & Urban Investment
Financial Institutions Bureau
111 South Capitol
Lansing, Michigan 48933
854
LANSING HEARING
c~Q-SPONSORS
Business ~ Council
Lansing Regional Chamber of Commerce
P.O. Box 14030
Lansing, Michigan 48901
517/487-6340
Panel 1st: Martha Hertz
Page 17
PAGENO="0361"
S55
FLINT HEARING
çO-SPONSOR~
Michigan Women's Commission Flint Area Chamber of Commerce
611 Ottawa Street 708 Root Street
P.O. Box 30026 Flint, Michigan 48503
Lansing, Michigan 48909 313/232!7101
Panel ist: Tessie Sharp Panel ist: Larry Ford, President
Commissioner
Flint SmaU Business Center
Michigan Department of commerce 708 Root Street~
525 West Ottawa Flint, Michigan 48503
P.O. Box 30225 313/232-7101
Lansing, MIchigan 48909
Pat Martin, Director
Panel 1st: Barbara Gentry, Director
Off ice of Women Business Owners
Michigan Department of Civil Rights Women's Division of the Flint Area
303 West Kalamazoo Chamber of commerCe
Lansing, Michigan 48909 708 Root Street
Flint, Michigan 48503
~13/232-71 01
Women Business Development Center
708 Root Street, Suite 325A
Flint, Michigan 48503 Panel 1st: Charlotte Brannstrom
313/239-0311 Executive Vice PresIdent
Panel 1st: Sudie Ware, Director
EANELt$T
Peggy Bryson, Director
Research & Urban Investmónt
Financial InstItutions Bureau
111 South Capitol
Lansing, Michigan 48933
`Page 18
PAGENO="0362"
356
JACKSON HEARING
~O~SP0N1~QR~
Michigan Women's Commission
611 Ottawa Street
P.O. Box 30026
Lansing, Michigan 48909
Panelist: DeLois McDonald
Commissioner
Michigan Department of Commerce
525 West Ottawa
P.O. Box 30225
Lansing, Michigan 48909
Panel 1st: Barbara Gentry, Director
Office of Women Business Owners
Michigan Department of Civil Rights
303 West Kalamazoo
Lansing, Michigan 48909
~NEL1$T
Peggy Bryson, Director
Research & Urban Investment
Financial Institutions Bureau
111 South Capitol
Lansing, Michigan 48933
Linda Friese, Vice President
The Forum
Greater Jackson Chamber of Commerce
401 South Jackson Street
P.O. Box 80
Jackson, Michigan 49204
Page 19
PAGENO="0363"
357
SOUThF,IELD JIEARI*
co-sPONsoR$
Michigan Women's Commission
611 Ottawa Street
P.O.. Box 30026
Lansing, Michigan 48909
Panelist: Dr. Bernadine Denniflg
Comm iss Fóner
Michigan Department of Commerce
525 West Ottawa
P.O. Box 30225
Lansing, Michigan 48909
Panel ist: Barbara Gentry, Director'
Office of Women Business Owners
Wayne State University
6001 Cass Avenue, Room 214
Detroit, Michigan'~ 48202
Panelist: Nancy Grose, Coordinator
Career & Professional Development
National Association of Women Business Owners
12606 inkster
Redford Township, Michigan 48239
Panelist: Pearl Hoiforty, President
Michigan Department of Civil Rights
303 West Kalamazoo
Lansing, Michigan 48909
PANE~~.lS~
Peggy Bryson, Director
Research & Urban Investment
Financial `institutions Bureau
111 `South Capitol
Lansing, Michigan 48933
Page 20
PAGENO="0364"
358
GENERAL STATISTICAL INFORMA'flON(eonthiued)
What Is yourtitle? : :i~
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~~sident ~ 2
0 Chief Executive Officer 3
0 Chief rsnancial Officer 4
0 Chief Operating Officer
0 ChiefInfonnation Officer
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IS. Is this a minority-owned
business?
~Yes ~ ~0,"- ~S?~Ls. t.vs~ww, as.,
0 No ~ `~ 2
16. Is this company:
)~`Privately held ` as
0 Publicly held 2
17. Since you became the owner of your business, what have you learned that no one told you?
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Please feel free to makea~slditional comments: (If referring to a specific question, please note the question
number and section).
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Thank you for your time anJ'*~siatance~ This survey is anonymous and your opinions will remain completely
confidential. summary of the results will be sent to you prior to public availability~
Survey design by:
Marketing Resource Group
and Moore & Associates Inc.
32
PAGENO="0365"
379
GENERAL STATISTICAL INFORMATION (c nt1nuei~
14. What is your title?
Please feel free to make addido
nuinher and section).
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rringto a specific question, pleasenotc the
~ ~i1~'~' fb~. ~t'2i~ fl1Le~'
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77 ~ ~ 4,~, ~ ~(4444%~4~%! ~ 9~
~
f~Chairpersoei :: - -- ` so
0 President 2
~ Chief Executive Officer
0 Chief Financial Officer a
0 Chief Operating Officer
O Chief Information Officer
0 Other(specify)
15. Is this a minority.owned * 0 Yes. .. i so
business? l~No 2
16. Ia this company: ~3 Privately held i so
o Publicly held 2
17. `Since you became the owner of your business, what have you lçarned that no one told you? so
- .i(*4,, ~ c~jtM-' , ~f~J~((4. ~ ~.. 04
- . a. - ~.. I.J As ~. ~ O4'Le.O~ L' _______
(I 0~
Thank you for your time and assiatancC This survey is anonymous and your opinlonewill remain completely
confidential. A summary of the results will be sent toyou prior to public availability.
PAGENO="0366"
360
~ ~
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PAGENO="0367"
8
6
PAGENO="0368"
362
GENRALSTATISTlCALlNFORMAUON(contlnue~
14. What is yourtitle?.
~
.:
,
*
0 Chafrpeseon . .~ -
~Psesident .: .
0 Chióf Executive Officer
0 Chief Financial Officer
0 Chief Operating Officer a
0 Chief Information Officer a
O Other (specify) .
15. is this a minority-owned
business?
~Yea ... .~ . . i ii
JJNo
16. Ia this company:
,
~`Privately held
0 Publicly held
17. Since you became the owner ofyourbumissesa, whathave you learned thatisoone told you?
~ ~ ~
Pl~4~e~~Zt,onaJcommenta (Urefemng to a specific question please note the question
e~ ~ ø~ ~ 2&7
-.-.~ rn,~ ,,,.
Thankyou for yourtime and assistance. Thissurvey it anonymous and your opinions will remain completely
confidential. A summary of the results will be sent to you prioT to pub1i&çvaiIabillty~
Survey design by:
Marketing Resource Croup
and Moore & Associates Inc.
12
PAGENO="0369"
14. What is your tide? : C) Ch*lrperson
D chletExecutive ~
ci c let ~cW OffiCer
~ Chief Operating Officer
0 Chie~1sif~nnation Officer *
W Other(speclfy) ~~iiv~r
1 15 Is this a mlnority.owned DYes i sj
business? *No
r~. * ~ held
I t)Pul)hclyheld 2
17, SInce you becaise d*eownerofyour busmesa, what have you learned that no one told you?
~`lease feel free to make Jdittonal c~nunents: ~Ifreferrusg to a apecliic question, please note the question
number and section).
~
1 Thank you for your time and assistance~ This survey is anonymous and youroplnjoaa will remain completely
conliclentjaj. A summary of the results will be sent to you prio~ topublk availability
`h ~ ~O.4ik: ~(~S'CIWstMJa5e "~4o~.n~
~ ~ I~rn4L
`itJe~j st4~4d (4~(
363
~
L1
Survey design by:
Marketing Resource Group
and Monte & As*oclates Inc.
PAGENO="0370"
~64
GENERAL STATISTICAL lNFORMA11ON(cOflti~We4~
-S
14. `What is your title? " - -
-
~
.
I Chairperson 1 0
MPresident a
~ chief Executive Officer
C] Chief Financial Officer 4
o Chief Operating Officer
o Chief Information Officer
~ Otber(specify) Pkfra~ ~ 1~~Sf,t~c' V
15. Is this a minority-owned
business?
0 Yea 151
~ No 2
16. Is this company:
Privately held i u
O Publicly held 2
17. Since you became the owner o(yotsr business, what have you learned thai no one told you?
1.4 ~ ~ ___________
5,
54
Is-
Please feel free to make additional comments: (If referring to a specific question, please note the question
number and section).
`Va... I.4~4tA fI" I WCVaY i.,Iq~t Tt~iss'.t tOtiPt Q5S1(s's t~,s(d ~
`IL (~s .I~ ) t&.
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Thank you for your time and assistance~ This sw~vey is anonymous and your opinions will i~emain cosnpletely
confidential. A summary of the results will be sent to you prior to public availability.
Survey design by:
`Marketing Resource Group
S and Moore & Associates Inc.
12
PAGENO="0371"
865
GENERAL STAflSTICAL flIMATION (continued)
14. Wisat is your title? - ---
*
*
*
-
~
~
~isirger~ofl - - - --- ` is
~Presidcnt 2
*O Cluef Executive Officer
E1 Chief FbiancW Officer 4
0 Chief Operating Officer
0 Chief Information Officer
0 Other(specify) -~ -
15. Is this a minority-owned
business?
lR~fe. i as
ONo 2
16. Is this company:
t~ivate1~ held as
0 Publicly held
17. Since you beàasne theowner of youzbitsiness, what hsvc you learned that noonetohi you? as
Tho~'~r o~kie~s c~k ~se~c~ ~ ~
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number and section).
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Thanltyou for ydurtime and assistance; Thiseurvey is anonymous and your qpijtionswill remaincompletely
confidential. A summary of theresults will be sent to you prior to publics ailàldlity.
* Survey design by:
Marketing Resource Group
and Moore & Associates Inc.
.12
PAGENO="0372"
366
GENERAL STATIStICAL INFoRMATION (continued)
14. What Is your title?
15.
16.
Is this a ininorit~.owned
business?
0 Yes
~
*
i ii
2
Is this company:
~4~ivetely held
0 Publicly held
i$i
2
_____________- * Survey design by:
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0 Chief OperatingOfficer
0 Chief Information Officer
0 Other (specify)
17. Since you became the owner of your business,what have you learned that no one told you? as
~Lt4~d ~ i4W~ ç~~ØY~ A~1L_ `~
Please feel free tomalr4 Idditionsi comments: (If refeTring to a specific question, piease flote the question
number andaection). - . ____
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confidential. A summary of the rts~ts wil~/e sent toyou prior to public availability.
PAGENO="0373"
367
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PAGENO="0374"
368
GENERAL STA2'1STICALINFORMAflON (continued)
14. What Is yourtitle? -
~
*
~
~
IJ cLak~~".:. S
1~President 2
C] Chief Executive Officer
0 Chief Financial Officer
0 Chief OperatingOfficer
o Chief Information Officer
o Other (specify) 7
15. Isthisamiflority-owued
business?
~Yea 157
0 No a
16. Is thiseompany:
Privately held
o Publicly held 2
) ~2e~ J4~1 ,~ c4~ ~A-~ ~ Marketing Resource Group
I ~Lt / _~I ~ andMoore&A,soc'ates Inc.
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17. Since you became the owner of your business, what have you learned that no one told you?
%~, ~ ~ ~i'c~' `~S9t1'~ii
Please feel free to make additional comments: (If referring to a specific question, please note the question
numberand section).
.4
Thankyon for your time and assistance. This survey is anonymous and your opinions will remain completely
confidential. A summary of the results will be sent to you prior to public availability.
~L~d42~
PAGENO="0375"
369
I ~ ~
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PAGENO="0376"
370
GENERAL s'1SI1CALINFORM.mON(Oontinut(l)
14. What isyourtitle?
..
*
.
0 Chairperson i a
~~aldese 2
0 Chief ExeCutive Officer
0 Chief linancial Officer 4
o Chief Operating Officer a
O Chief Information Officer
0 Other (specify) ._._.-. .~-. 7
15. Is this a minority-owned
business?
~`Yea i 5'
0 No 2
16. Is this company:
~~Privately held . i sa
0 Publicly held 2
17. Since you became the owner of your business, what have you learned that no one told you? a
Please fee' tree to make 1~cIstional comments (If referring to a specific question please n~te the qu sbon
nuipher and secton). . .
~J ~2~L4~ i~ ~ ~iLt2~ ~
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~~LL/~t6 i~., ~ 7~
Thank you for your time and assfatanc~ This aurtey fsanonymous and your opinions will reanaincompletely
confidential. A summary of the results will be sent to you prior to public avaiIability~
Surve~designby:
Marketing Resoueye Group
and Moore & Associates Inc.
PAGENO="0377"
~371
J2~
Survey design by:
Marketing Resource Group
and Moore & Associates Inc.
PAGENO="0378"
312
GENERAL STATISTICAL INFORMATION (eontlnue~
14. Whatisyourtitle?
.
.
tJ.chairperaon ~. i as
~Preside~ - -
0 Chief Executive Officer . 3
o Chief Financial Officer 4
o Chief Operating Officer .
0 Chief Information Officer a
0 Other (specify) .. ~. 7
15. Is this a minority-owned ..
business?
0 Yes . . , a,
,~4o . 2
16. Is this company:
,~Privately held
o Publicly held 2
17. Since you became the owner of your b mess, what have you o one you? -
i~o /~ ~ #o ~ ,Q~ L~-7/1fl~J /g.p~d `vS-' is
~ (~-~~- `-~.. ~ `°~~
Please feel freeto snake additional comments: (If refemngto a specific question, please note the question
nurnbj~an~on). ~ ~, .~ ~
4~t4~J j~. ~` c4~ ~
~
Thank you for yourtime and assistance. This survey is anonymous and your opinions will remain completely
confidential. A summary of thc.resuhs will be sent to you priorto public availability.
I2*~
Survey design by:
Marketing Resource Group
and Moore & Associates Inc.
PAGENO="0379"
878
- ~-
I am becoming increasingly bitter, as a business owner I take so many
risks, put my entire savings and home on the line - and cannot seem to
win, financially. For the first time this year, we sent employees to
u nemployment in January. Now I have three who are very resentful about
being called back unless we can give thea full time work they "cannot
afford to work" because they will "lose mónef if they come back.
I have a former employee wLO is on the verge of winning a $25 000+
workman's coup claim because she begged us to let her stay on the job
she said she needed the job for her mental he&ithp in the meantime she
h ad ca~pals tunnel syndrome and when it worsen4d and- she would not allow
anyone to help her with the lifting, etc she quit and later filed for
unemployment fly choice at the time, I guess, was to keep her and risk
the workman's coup claim, or fire her and risk unemployment claim.
Our entire society is not recognizing that people have choices and are
r esponsible for those choices and their outcome,- I have taken the
responsibility for mine, and am taking the responsibility for everyone
e ise's too. In spite of the fact that we grossed over One million dollars
last year, I took $11,000 out of this business. I could earn more as
a ~Oaøhier at Neijer's and 1 would get a day off. As long as you tax
s avings interest, pay people not to .~work, allow people to have unwanted
children by making airoftion anything but.totally available, and do -not
teach personal responsiblilty in ichools, the responsible among us will
continue to support all the otherS. I see the day approaching when those
"others" will be so great in number that the backs of the - responsible
carrying them will just break under the load. What will you do then?
Society will collapSe. I used to like the freedom of being my own boss.
I now spend my time filling out government forms, requests for wage
information, and all kinds of crap, in addition to ~a]J'ing to accountants
about taxes, layywer about the coup plain etc etc I have very little
time do what ~ used to love design and I feel I might as well work
- for someofle elSe, have no risks, and earn more. - *- - --
If anyone hal an answer to this letter, I'd certainly appreciate hearing
from you.
By the way, the very responsible people who work for inc as managers
all feel exactly the same way. $hawn fleore was killed by a man who was -
not responsible. my office manager's car was stolen by a man who was
not responsible, fly best friendS car was just stolen by a woman who
was not responsible and the Sotathfield police would not take action to
p rosecute, my front door was broken last week, and the crap goes on and on
the gun killings in Detroit, the crime rate, false coup claims, the ease
of filing for ban}'rupcy all are results of our lack of willingness to
take a stand against irresponsiM]~tty If I could, I would leave tomorrow
and move to Seattle, and work a 40 hour week, and live in a relatively safe
environment I have, bosever, a ~ million dollar inventory that ties me
to earth, so I ain't going no where. `ust don't think I em a michigan
* business owner totally out of my love of michigan or my love of worxing
- 7 0~l00 hours a week trying to stay afloat. - - - - .* - -
Can anyone hear me? EVER!ONE r~nGw is sicrTeT ~thli5Wit~ing$,
- Daren Otis
r~- ~ ~ -
PAGENO="0380"
GENERAL S1ATISTICALINFORMATION (continued)
at is yourtitle?
- -- ..:.
*
.
.
-
~i)eraon - - so
DPresidcnt -- - 2
0 Chief Executive Officer
0 Chief Financial Officer
0 Chief OperatingOfficer a
0 Chief Information Officer
o Other (specify) 7
15. lx this sminority'owned
business?
0 Yea i 51
2
16. Is thiscompany:
~T'~tely held 151
O Publiely held . 2
17. Since you became the owner of your business, what have you learned that no one told you?
- ~. - ,.st ~--~--~
Please feel free to make additional comments: (If referring to a specific question, please notetbe question
number and section).
Thank you for your time and sssistanc~ This survey is anonymous and your opinions will remain completely
confidential. A summary of the results will be sent to you prior to public availability.
Survey design Ily:
Marketing Resource Group
and Moore & Associates Inc.
374
as
55
so
12
PAGENO="0381"
375
. -
GEE LSThTflCLINFORMA~flON(OO1OinUe~flt
-~ 14 What is your title? t~ CbilrpersOn -~- *.
~Pse$Ident ~--~---- s
0 Chi~f~ecutive Officer a
0 Chief Pinaiscial Officer . 4
fl Chief~~OfflCer
C] chief Information Officer
C] Other (speclfr)
15. Is this a minority-owned 1J Yes
* business? ** **~ ~No
16. Is this company: ~ Privately held i ss
0 Publicly held .
17. Since you became the owner of your business, whatha~'e you learned that no one told you?
*~:
Please feel free to ijialto additional commefltt: (Itreferrlflgto aspecific question, please notethequestlon
2.E~
~
Thanic you fo yout time and assistance. This eurveylt anonymous and your opinions wiliremam çompietdy
confidential. A summary ctthe resUlItwill beoenttoyOu prior to public availability.
~ a
M~ureaGcoup
~
~
~
~
:0!'
PAGENO="0382"
376
GENERAL STATISflCALINFORMA11ON(eonthuled)
14. What as yourtule?
*
~
~
0 Chairperson a ea
o President 2
0 Chief Executive Officer
o Chief Financial Officer 4
0 Chief Operating Officer
05hlefIn$orination Officer 6
(R~Otber (specify)
15. latbis a minority.owned
business?
0 Yes a as
ONo 2
16. Is this company:
~i~vate1y held a ii
o Publicly held 2
17. Since you became the owns; of your business, what have you learned that no one told you? as
M4i,,i244~'~Z~c' .4rr,Ptt,J a a~e.-&ZZü~.' /
iii~j~,2~ Ji~.,* ~ ,1
PleaJfeel free to make ad~tio~~l coa,~nsentat(If referring
flu c...
~ / ~`JI1~J'd~ ~-2~ ~
to a specific question, please note the question
~
~a~z~f/
Thankyoli for youa~time and aaaiataflc~ This surveys anonymous and your opinions will remain completely
confidential. A luminary of the results will be sent to you prior t~ public availability.
Survey design lay:
Marketing Resource (roup
and Moore & AsociAtes Inc.
12
PAGENO="0383"
14. What I. your title?
~
~
.
l~ Chairperson
Prts1d~nt 2
0 Chief Eaecutive Officer
0 ininti*lOfficei' 4
0 Chief Operating Officer
o Chief Infonnation Officer *0
0 Otlser (specify)
161
15 Is this * inlnority.owned
business?
0 Yea
~.No 2
16 Ia this company
~rivately held
O Pulslicly held 2
17. Since you becamethe ownerOf)tiur busineas,wh*t have you learnedthat nootic toldyou? as
~ ~ -~ ~. ~J~4 ~-:
dL..~D ~ ~
Please feel free to mal~ adchtsonal commente &refcmngtOl specific question please notethe question
number and section).
~at~ ~ ~ ~ ~
~~~1X4-~1t ~2/ AI4, ,~4 ~ `-~
~ -~ ~ ~
~ A~Ls ~ ,,~ ~ .Q:o~..
- ci -
Thank you foryour time and assistance. This survey'S anonymousand your opinions will yemalocompletely
confidential. A aununary ó(the resultS will be sent to you prior to public availability.
Survey design by:
Marketing Resource Group
and Moore & Associates Inc.
377
I2~~
PAGENO="0384"
378
ç~E~ALgfl&11STlCALlNFORMAflON(cOnt1DUed)
14. What i~yourtitle?
~
*
*
~
.
0 Chairperson , ~
0 J~resident 2
0 CbtefE~cutlve Officer 3
Ii Chief Fin cia! Officer 4
0 Chief Operating Officer
OChief Information Officer
0 Othcr(apecify)
L5 Is diii a minority-owned
business?
~R(.Yes 10
0 No 2
16. Ia this company:
~Private1y hold i us
0 Publicly held 2
17. Since you became the owner of your busineu, you
A1~k I41IrJA~' )JOCL) Th'~k o~tNThd m
2
P feel free make additional co ents: refemng to a specific question, please note
number and *on).
c~4~d fLr,c. 0
~
,~- c~à ~ ~1A ~-~! ~
the question
~
~
Thanltyou foryourtime and auhance. This aurvey.isanonymous andyour opinions willremain completely
confidential. A summary of the results will be sent to you prior to public availability.
Survey design by:
Marketing Resource Group
and Moore & Aaaoclates Inc.
12
PAGENO="0385"
14. i~tisyourthe? -~-
~
- -
.
.
Ochairpeson i so
~ Presldenti 2
CiChief Executive Offiecr $
i~ ChietFinancial Officer 4
~J a~fO~e~M~ Officer - -________ -
Q ChieflufonnationOlficer $
tJ Other (specify) 7
15. is this a minority.owned
business?
Yes i a,
ONe . - 2
16. Is this company:
.
CS~Ps4vs,teIy held i as,
~JPub1iclybe1d
I?. Since you became the owner of your business, what have you learned that no.one soldyon? as
.i~ rtoF. ~ ~ .~
Please feel free to make additi(~nal comments: (If referring to a si~ciflc question, please note the question
ssum),er and section). -
tp~L. ~. .~- ~ ~FLO ~f. ~~z4) ~Qa~1~
piJ~.
ç~ ~. ~C~k . (~ `cIL.. ~O cL~ ~
4(~ .~ ~ 4 ~
Thank you for your time and assIsta~?ce. This survey is anonymous J~sd your opinions x~llreinaIn completely
confidential. A summary of the results will be sent to you prior to public availability.
~C) S&~Q~ UXeL
~&L ~
~94v~~o ~
~379
GENERALsTAn.gncA1-.INmRMATION(eossunue$~ .
-I
ko(-.ocf ~ ti ~ ç~
~1
Survey design by:
Marlccaing Resource Group.
and M~torv & Associates Inc.
-32
88-199 0 - 88 - 13
PAGENO="0386"
380
GENERAL SL4]1SJICAL INFORMAIION(conllnued) ~
14. What iayourtide?
:~.
* -
.
..
ID ~ ,
2
Ohief~cuti~Offlcer ... a
ID OuefFlnancialOffloer
ED Chief Operating Officer
0 Chief Information Officer a
~ Other(speci~) ~
.15. lsthaamino ~
business?
ONo .
16. lathis company: ...
~
lj Prisately held i to
OPubliclyheld .
17. Since you became the owDer ofyourbuaineaa, whathaveyou Ieaefled that nàOne told you? -
~ ~ ~c ~ ~ ~
#~icd/~Ø ~ /
PJea~e feel freeto make additlonslconunents: (If referring tea specific quOstlon, please note thequestion
Ii ran section.
~ dJg~~ / ~4(~~% ~4~I~k4~
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~/i~ta .. a4~ 7L ___________
~ ~d~41i4W.a- JDE ~.#as P~M!~
%ank~oiifor yourthneandassistance.This survey Is anonymóusandyouroplnions wflremdnconfetoly
confidential. A summary o(the results teSt beseni to you priorto p1 Mis aeailability~
~ ~ Surseyttesign h~
4 Marheting Resource Group
~ and Moore & Associates lao.
a ~5V~ 5t~54~ ~ s'4~i1em.~ ~_ 1~
~7'~*'~o~e- a~J.-~ ~. ~
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/4e*orv, /ite /*`t.;. ~ i~aes~. ~ &o ~ j~,, r~-
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PAGENO="0387"
381
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PAGENO="0388"
382
~ ~ ~
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PAGENO="0389"
883
CENLSTAflSflCALU~EOflMAflON(eont1nued~
~ ~PtflO~~~]
c~ ~ om~
- tichier~nancia1ofnoer -
1~ Chief OperatingOfficer
~ ~*f~o~adon Officer ~
t~) Otlsr(specify) vI'~C. ~
is; Ifitblaa~orj~~_ ~ a
bueineu? ONo 2
16. Ia thie company: t~1~ri~ateiyitei~
CJJ~ubliclybeId 2
.4~44~ "~ ~
V -
Please feel fOjsAè ad o1~aIèoznmeñt~: (L(I~ef rt4ng a specific question pleaee flote the q~se$ion
~
S!aydcsiply
Marhetin~flesoirceGroup
and Moore &Aaeocj*tes Inc.
~ ~
PAGENO="0390"
GENERAL SEtTIS'IICALINFORMAIION (cout1nuei~
14. ~at the?~-~-~
~
*
Chairperson .... I is
~`Premident 2
0 Eascutbe Officer . .
Q~hiefFiuancialOfflcer
0 ~hiefOperstingOfflcer ~---- --*--- -~ s
0 ~efinfo~adon ~cer . I
0 Otker(sfy) -
7
- -,..
.
~-
IS Iathiaamnority.owned
business?.. .
... .
0No .. 2
16. Ia this company:
.
., 1~'Pnvately held ~. i as
OPubliclyheld 2
17. Since you became theowner ofyourbuslne.s, wh*t have youlearned that noofle told you?
-` ..~ ~ ~`. ~ ...~ ..i .~-.
1.-
Please feel free to make additional comments: (If refe~ring (~ specific question,pleaae note,the question
numberand section).
~ .I4~L~ i42]2~
J1~,id~~_ ~ ~4. ~- ~ `1-~ ~
~ ~ ~ ~ ~ ~ ~ ~1~
~ fr4~L c~L2~) ~
Thankyou foryourtlme anf.~slstance~ This anyvey is auonymousLi ypnyopi~io~s will remai*s~ompl~t~ly,.
confidential. A summax7 e(thevesujte will be sent to yoaprior to public avw~labllity~
Survey design by:
Marketing Resource Creup
and Moore & Associates Inc.
384
is
II
Is
12
PAGENO="0391"
885
GENERAL STA]ISUCAL INFORMA11ON(eontinued~ -
it What isyourtltle? -
-..~.......-...-...
.
-
* .~. - ........... ... . ~. -.
~
,...
qchalrpezuoe~ -
0 ~ ~cer
a r~cndomom
0 ~~ccat~Officer
a ~ef~oomsdon Offionc
liOther(specify) .
15 ii this asulnority-owned - -
business? .
`t1'~.. ~-`~±~~`
ONe 2
16 Is this compsny
.
U»=1c~astelyhe1d
OPubllclyheld .
17. SInce you became the ow~erofyour business, what have youloarned that noonetold yOu?
rspese led jiwe co maxcedditlonal cominenta
4~~ff
:.(ff referrlngto a specific question, plessi~t'oIe thequestlosi
4
confidW.thèhawi~enttouortopithhavshllity~
Surveydeslpbp
Marketln1 Resource Ciomp
and Mocee & Associates lem
PAGENO="0392"
386
GENALSTATI~11CALJN1~ORMA11ON (condnued~ ~- -
14 Wat~yur~de?~~ awperon~ - -
1- r~_ - - LJPtesIdeaat
I 0 chief Executhe Officer a
______________- .~. 0Cief?h~~cWOfflcer -- - 4
0 chief ~ Omcer a
OClefInf~rmatlonOfficer a
~Other(specify) OWntV~ ..
15 Iathiaamlnorky.owued
Lualneu?
E~4. a'
0Nà . -. - a.
~: ~
~~$W~h~ld .
£DPUbliclyheld a
Paaae~fedfrnatomake additional I~ontmenta:-(Ifnafeflin~tóa apec1fl~qu
a'wnberend ~5~)
IL ~\ttt~ ~Vtt~a~i ç~V ~rtS6~& ~
4~ t-~&4 w1 ~ ~
~ ~ ~
eition, pleaae~otet~equeef~c
sJ~#~ ~
~
17. Size you becametheowneretyourbusinesa, wizat ~ ~ ~ Wd)~0iz?
SI
confidential. A summary of the retuks wIHbe de*ttoyOtiptió~topublk valla$illty.
Survey dasiphyr
Marketln~ Resource Crcup
and Moore & Associates Inc.
~12~
PAGENO="0393"
387.
GEN1~RAL CALJT~~FORMAflON(eonth*Ue~
What Is yourtltle~
~
*
~
fJ petyon~~ - - * *
0 President -. -
OChief Executive Officer a
o (~hIef}inancsal Office 4
1J Chief Oper ring Offlce~~
~~hiefkfoumstion Qfflcer . - -. a
l~Other(specify) I2iJeet/O~~r*Thr
-
~
15. is this a minority-owned
business! " -
IJJes ` a'
No ~
16. Is this company:
~ivetely held as
o Publicly held 2
17. Since you became the ownerofyour budneøa, whatbsve you learned that no one *oldyou? as
~8t~7~ ~v'~j ~ 4' ~hp:#('cf 7~ i-~-c-~~'~ ~-:
_~2'b 7~Z)x `~nSi 71, zS/~i ~ 7- 4?4,-,,&x' ~
Please feel free to make additional comments: (lfreferringto a specific question, please note the question
number and section).
-~ 4' ,~4,1r;4~r ~r 5~'C4 I 5p~5i'J,2/1~V 4#p~i~r x~7~ ~Z-
.~4'/ h~ ~aW 4~ ~ie7 ~-4'~ed* 4~t, ~ D~a?~J~ /-~
t°~ü'~ te~ 71) S~r ~y 14~a4h ~-V~t~ (i~/ ~
i ~4"/ mod (tu~i~ ~re ~6 *`e ,~rez1~4
Thank youforyour time and aasistanc~ This survey is anonymous sndyour opinionawill remain completely
confidential. A summary of the results will be sent to you priorto public avsiIability~
~sf a/f `~ "v ~ ~ ~"~Y ~ ~ Survey design by:
:z~ r ,4~r# a~rc~d ~`- ~~a~#' 4,
Sc~a/ 5~evi~': ~L~t ~6 ~4'tX. .Z c~'t j9~V 74~/t 4~"~ M?~
~a~1~" ~ ,4 4e t~'ir. `~e1~( S'4' ~ i~1~'~
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-- :::~ ~ ~ ~ AVo7~~5
o~ ~9~d ,4e1 Ø~YZ~ $~ ,U S41e ,~, --
PAGENO="0394"
388
~et ~e4a~' ~i'~r#7~_9;Vfd7m~411' vs/I ,ca4-e
~ iVe ~ ___
-~-- - ~a7'~ ~re ate Ad/et 5~/ij~4~e~
pteøv%?'/y 46e~~- eøiy-=--~~
PAGENO="0395"
389
GENERAL STATIStiCAL INFORMATION (continued)
14. What Is your tIde?
*
.
0 ChaIrperson ISO
~Preeident 2
0 Chief Executive Officer 3
O Chief Financial Officer
o Chief Operating Officer
O Chief lntonnatlon Officer
0 Other(specify) 7
15. Is this a minority-owned
business?
0 Yes is
0 No 2
16. Is this company:
XPrivately held i so
O Publicly held 2
17. Since you became the owner of ur business, what have you learned that no one told you? is
4&ti) 71~~L ~J~4~4#. ~ ~J~4 ~ 4~( ~
~ a~ Ail.k~,. ~tL~ ~4J
P ease feel free to malt tional comments: (If referring to a specific question, please note the question
number and s~cd n). ft,
vfl~tz~j (i)) ~ ~ ~ ~ 4~
~
mWfl~e i~t~nce~ 1Iu'~ey uanonymousan~ona~41f~aiVf1?e~
eonfldential. A summary'df the results will be sent to you prior to public availability.
Survey design by:
Marketing Re~ource Group
and Moorv& Associates Inc.
~ ~- ,%~
12
PAGENO="0396"
390
16th Floor ~STouche Ross
Telephone 313 446-1500
Telex: 230462 TA DEl
Daniel J. Kelly
Chairman of the Board
Group Managing Partner- Michigan Practice
May 2, 1988
Representative John J. LaFalce
Chairman, House Small Business Committee
U. S. House of Representatives
2367 Rayburn House Office Building
Washington, D.C. 20515
Dear Mr~ LaFalce: -
Women busine~ owners are the fastest growing segment of the.
nation's small busine~s community. For more than a year, Touche
Ross has been working with the public and the private sector-s in
Michigan-to support and heighten public ah~areness of the
increasingly significant role of women as entreprerie~zrs an~
employers and creators of jobs, products, services and
industries.
Women business owners are a constituency of significant size and
growing importance. They own four out of every five of the
nation's neW busthesses. They are undoubtedly the most
entre~~ejieurja1 business segment. And their, track record and
actompl-ishments are remarkable -- often in spite-: of a lack of
traditional education or training in business practices and
techniques.
In Michigan we are attempting to give them their due. Last year
we conducted the first annual opinion survey of the state's
women business owners.. In 1987 and 1988, two of the state's
leadihg women business owners were honored with P~thena Awards
and named Michigan Woman Entrepreneur of the Year. In December
1987, women owners. of the state's top 50 privately held
companies were recognized at a luncheon at which Michigan
Governor James J. Blanchard was the keynote speaker.
We view the support of these business owners as vital to the
economic growth of the nation, particularly in the service
sector. We therefore strongly enä6urage initiatives' by both
government agencries and private enterprises to provide access to
funding, education, technical assistance and procurement
opportunities for women Owned businesses.
Sincerely,
~ ~
Daniel J. Ke1l~J
Touche Ross International
PAGENO="0397"
PAGENO="0398"
392
1987 Survey of Michigan Women-Owned Businesses
April - March, 1987
METHODOLOGY
The source list of 3,500 Michigan women owned businesses for this
study was provided to Touche Ross & Co. by the Department of Comrneróe,
the Office of Women OwnedBusinesses.
The women owned businesses were then sent a questionnaire, desLgned in
collaboration with Moore & Associates, Inc. and Marketing Resou~e
Group, Inc., and approved and finalized by Touche Ross, The Michigan
Woman Magazine a~d Anthony Franco, Incorporated. Also included ~ith
each questionnaire was a personalized cover letter written byAnthoDy
Franco, Incorporated in consultation with MRG. A follow-up post c~rd
was sent 14 days after the initial mailing.
From the original list of 3,500, 621 questionnaires were returned for
a response rate of 17.7%. A 15% response rate is considered necessary
to provide reliable data. The average response rate for this type~oE
study is usually 15%-20%. All responses in the study remaine~5
confidential.
Following completion of the survey, the data was ~ubjected to com~ute~
analysis using MRG's inehoii~e Oroastabulation program. The result was
a series of crosstabulations employing 34 independent variables
Marketing Resource Group, Inc. is pleased to present the fin4ingso~
this study to Touche 1~oss & Co., and The Michigan Woman Magazine. c, ,
Merk.t$flgR.sburcr
* *
PAGENO="0399"
893
A Touche Ross Survey
In conjunction with
The Michiga~i Womai~ Magazine
1987 Survey of Womén~Owntid
Businesses in Michigan
Please mark all applicable boxes and return the completed survey in tile
enclosed self-addressed, postage-'paid envelope by March 16, 1987. We
welcome any additional comments you wish to make on any questich. Space
is provided for that purpose at the end of the questionnaire. We thank
you very much for your special attention.
MICHIGAN BUSINESS CLIMATE
1. Generally speaking, what do you
feel are the zuQst important
problems facing husinesses in
Michigan today; that ia, the
problems that you are~most
concerned about?
(CHECK ALL THAT APPLY)
33% - Competition from Big Business
64% - Cost of Liability Insurance
11% Fore~ign Competition
28% - Government Regulations
17% - Interest Rates
39% - Labor Costs
39% - Labor Quality
63% -, Taxes
13% - Other
2. How important do you feel the
following steps are in order to
improve Michigan' $ business
climate?
a. Changes in Busineas t~a~ ~truoture
b. changes in Individual Tax dtr~cture
c. Purther Changes to Reduce Costs
Related to Workers' Compensation
d. Increased AvailabUity o~ Low-Cost
Government FiRancing
e. Easing of Re~u1ation and Reporting
Requirements
f. Easing of Environmental Standards
g. Advertising and Marketing the
State (Yes! Michigan Campaign, etc.)
~. Improving the State's University
System
i. Containing Health Care CostS
j. Improving the Public Edtication
System (grades M-1~)
* = Less than 1%
Very
ImpoFtant
74%
40%
Somewhat
Imp
25%
51%
Not At All
Important
1%
9%
73%
24%
3%
40%
40%
20%
31%
8%
49%
42%
14%
50%
31%
27%
59%
4'7% 22%
48% 25%
33% 7%
Marketing RHoiarc. Group, Inc.
PAGENO="0400"
GENERAL ECONOMIC OUTLOOK
394
G~nerally speaking, do you feel 2% - Greatly Improve
the economy for the balanoe of ~2% So5iet~hat Improve
the year will: ~47% - Remain About the Same
17% - Somewhat Deteriorate
G~eatly Deteriorate
8% - Increase Greatly
56% - Increase Somewhat
34% - Stay About the Same
2% - Decrease Somewhat
0% - Decrease Greatly
26% - Value Added Tax
8% Pera Income Tax Inorease
21% Corporate Tax Increase
45% - OilImport Tax
1% - Lessthan 5%
6% - 5 to 6%
10% - 6 to 7%
19% - 7 tO 8%
27% 8 to.~%,,
25% - 9 to 10%
12%' - Above 10%
20% - Above 2,500
15% - 2,401 to 2,500
16% - 2,301 to 2,400
13% -~ 2,201 to 2,300
12% - 2,101 to 2,200
11% - 2,001 to 2~100
7% - 1,901 to 2,;000
4% - 1,801 to'*1,~9O.0
1% 1,701 to.l,800
4. In 12 months, the inflation rate
will be:
2. Do you think business taxes will
increase, stay the same, or decrease
in 19877
3. If business taxes were to be
increased, which o~ the following
would you most favor?
(CHECK ONLY ORE).
10% - Less than 2%
27% - 2 to 3%
31% - 3 to 4%
20% 4 to 5%
12% - Above 5%
5. In ~2 months, the prime ~abe~ill ~e:
6. Which of the following do you feel
will be most effective in helping to
reduce the federal deficit?
7 In'12.months,tbe Dow Jones.
Industrial Averaqe will be:
2% - Increase Taxes
62% - Reduce Government Spending
36% Combinatio~ of Both
Ms,ksthlg Rsouvc. Otoup. Inc.
PAGENO="0401"
GOVRNMENf ~ROG9AMS
895
1. Which, if any, o~thé fo11gtdt~g
Michigan Department of Coi~flmerce
services/programs have you
utilized?
(CNECI< ALL T}1AD APPLY)
2a. Are you aware of the O~f~f ice
of Women Busine%e~owhørb ir~ the
Michigan Depart~nt~ p~ ~oB~merce?
2b. If YBS, have you pet~odally 1~ad
any contact with the Office of
Women Business Owners?
INDIVIDUAL COMPANY OUTLOOI(
1. D~ you expect your sales to
increase in 1987?
12% - Ombudsman
2% - Piriancing
9% - Procurement
14% - Small Business Centers
10% ffl~~ority'Sus. En~erpr~is,e
24% - t4cNuen Bus. Owners Services
* - Technical Deployment
1% - Import/Bxport Assistance
1% - Manufacturing Service
2% - New Bnterprise Services
57% - None of the above
66% - Yes.
34% - NO
41% - Yes
59% * No
48% - Definitely Yes
37% - Probably Yes
13% - Probably No
2% - Definitely NO
2a. Do you expect your real earnings 33%~Detih~el~ ~
(total revenues less total expenses - 40% - ~roba1~ly ~(aâ
net of inflation) to increase in l987?~ 22% - Pzobab.ly No
5% - Definitely No
2b. If Y55, by ~h~t peroe~tage ovar
1986 éarOings?
3a. Do you plan to expan~P your
work~orce in 1987?
3b. If Y8f5; by what percentage?
28% - 1 to ~%` -~
36% 6 to 1Q%
10% - 11 to 15%
9% - 16 to 20%
17% - More than 20%
20% - D~finitely ?es
33% - Probably Yes
33% - Probably No
14%, - Definitely No
55% 1 to 5%
20% - 6to 10%
5% - ii to isa
6%~1~to20%
Market~na Resotwco Group, Inc
PAGENO="0402"
4a. Are you considering relocating
your business in 1987?
5a. Are you considejing expanding
your business in 1987?
7% - Definitely Yea
10% - Probably Yes
25% - Probably No
58% - Definitely No
7% - Within the City o~ Detroit
7% - From Detroit to the Suburbs
or Outstate Area
3% - From the Suburbs or Outstate
Area to Detroit
70% - From One Suburban or Outstate
Area to Another
13% - Out of State
20% - Def~ite1y Yes
25% - Probab~y. Y~s
33% - Probably No
22% - Definitely No
MPANY MANAGEMENT
1. Rank the management areas that
you plan to focus attention on this
year. (Scale of 1 to 5, with 1 being
the highest priority)
14% - Within the City of Detroit
8% - From Detroit to the Suburbs
or Outstate Area
5% - From the Suburbs or Outstate
Area to Detroit
58% - From One Suburban or Outstáte
Area to Another
21% - Out of State
(Low) Ref./
Four Five D.K
5% 7% 27%
396
4b. If YES, where?
Sb. If YES, where?
(High)
Avera~ One Two Three
a. Productivity 2.08 36% 16% 9%
6% 11% 8%
8% 9% 10%,
b. Recruitment
c. Financing
d. Cost Control
& Reduction
e. Marketing
f. Plant
Improvements
q. New. Products
n. Research
& Developement
i. Other
3.45 8%
3.17 11%
2.48 20%
2.30 28%
3.77 3%
3.08 10%
18% . 50%
14% 48%
3.58
3.07
20% 15% 7% 8% 29%
17% 14% 7% 7~ . 27%
4% 7% . 6% 16% 64%
9% 8% 7% 13% 53%
4% 6% 5% 5% 15% 64%
2% * * * 2% 95%
Merkettng Rscurc Group, Inc.
PAGENO="0403"
In which area(s) of business
expertise do you feel you need to
develop additional skills?
(CHECK ALL THAT APPLY)
71% - Pay Raises
25% - Benefit Inoteases
22% - Profit sharing
8% - The Potential For or
Aotual Ownership of
the Business
22% - Promotions
47% - Training Opportunities
12% None of th~ above
897
2. Which of the following do you use
on a regular basis as a business
consultant?
~` (CMECK ALL THAT APPLY)
a. Banker
b. Lawyer S
c. Accountant
d. Chamber of Conunerce
e. Independent Consultant
f. Relative
g. Friend
h. Business Associate
1. Co-owfle,r of Business
~. Other
3.
Was that advisor
Male Female
30% 18%
49% 9%
60% 21%
10% 11%
10% 9%
25% 11%
16% 20%
25% 27%
16% 12%
3% 2%
None
54%
45%
21%
82%
83%
66%
67%
54%
73%
95%
57% - Finance
55% - Marketing
36% - Management
26% - Leadership (personal
and professional)
34% - Presentation/Negotiation
57%-Yes S
43%-No
66% - Acco~inting/Finance S
19% - Material and Prod. Control
39% Consumer/vendOr
Mailing List4
2% - Assembly and Manufac-
turing CoOtrol
11% - Marketing Analysis
54% - AdministratiO~ (word
* processing, etc.)
8% - Product Design
16% - Desk-top Pu~1ishing
28% - Other
4. Does your business have a
business plan?
5. In what areas do you presently
use computers?
(CHECK ALL THAT APPLY)
6. Which, if any, of the following
incentives do you use with
employees?
(CHECK ALL THAT APPLY)
PAGENO="0404"
7. Which, if any, of the following
steps have you taken to contain
employee health benefit costs?
(CHECK ALL TEAT APPLY)
8a. Does your company have a 401-k
plan?
8b. If NO, are you considering im-
plementing a 401-k plan?
Pa. Approximately how much did
your company spend on print
advertising in 1986?
9b. Approximately how much did
your company spend on radio/TV
advertising in 1986?
COMPANY FINANCING
1, Approximately how muc0~ capital
did you have for start up?
898
12% - Increased Medical Deductibles
5% - Increased Medical Co-Pay
Percentages
8% - Switched to ENO-type
Medical Coverage
1% - Switched 1o PPO-Type
Type Medical Coverage
3% - Changed to Self-Funded Medical
Coverage
75% - None of the above
7%-Yes
93% - No
15% - Yes
85% - No
23% - Less than $100
23% - $100 to $500
16% - $501 to $1,000
13% - $1,001 to $2,000
13% - $2,001 to $5,000
13% - More. than $5,000
80% Less than $100
7% - $100 to $500
3% - $501 to $1,000
3% - $l~001 to $2,000
3% - $2,001 to $5,000
4% - More than $5,000
24% - Less than $1~0Q0
9% - $1,000 to $2,000
17% - $2,001 to $5,000
15% - $5,001 to $10,000
14% - $10,001 to $20,000
13% - $20,001 to $50,000
3% - $50,001 to $75,000
5% - $75,001 or more
Ma,k.ting R.eourc. Group, Inc.
PAGENO="0405"
3a. How many banks or ot$r let1di4~g~
institutions have ygu approao)~ed
for a loan for your business for
start-up, opeThtions, expansion, or
any other purpose?
31% ,- One
21% - Two
10% - Three
3% -Four
1% - Five
2% - More than Five
2% - Hone
3b If you have approached one or
more, in general do you feel you
were treated fairly by the lending
institution (5)?
4a. Do you currently have a business
loan?
67% - Yes
33% - No
48% - Yes
52% - No
4b. If YES, what type of collateral was
used to secure this financing?
(CHSCK ALL THAT APPLY)
5a. How much collateral was required
for your loan?
47% - Bus. Owned P1a~it and Equip.
30% - Business Owp~d Recei~rables
18% - Other business Assets
31% - Your House or Car
25% - Other Assets Owned by You
20% - Other
26% * Less Than Loan Amount
3B% Equal to X~oan Amount
36% - Greater. Than Loan Amount
3.99
2.
Please indicate what percentage
of your start-up capital came from
each of the following categories.
(Be sure the percentages you write
in add to 100%.)
a.
b.
c
d.
e.
f.
Average ~ 125%
Self, EarninGs 29.21% 52%. 7%
Self, Smuings 40.71% 40% 8%
Lenders 13.88% 73% 2%
Private Investors 3.28% 87% 1%
Friends, Rel. 11.77% 73% 5%
Other 2.47% 89% *
,
26-50%
11%
15%
7%
2%
7%
1%
.
5~9~% 100%
3%, 18%
3%' 26%
6% 4%
1% 1%
2% 5%
* 1%
Ref.
DK.
8%
8%
8%
8%
8%
8%
Mlrk.t~nR.seurc. Group. Inc.
PAGENO="0406"
Sb. If GREATER THAN THE
AMOUNT OF THE LOAN,
how much greater?
400
6a. Have YOU experienced difficulty
finding a carrier for your company's
liability insurahce policies?
Gb. If YES, why?
58% - 200%
12% * 201 to 300%
8% - 301 to 400%
7% - 401 to 500%
15% - Greater than 500%
34% - Could Not Find Carrier
68% - Cost of Ins. Too High
13% - Other
7. Do you carry personal disability
insurance?
45% - Yes
55% - No
COMPANY STATISTICAL INFORMATION
1. Which of the following best
describes why you started your
business?
26% - Economic Reasons
22% - Experienced Creative
Frustration in Other Jobs
49% - Like Deihg My Own Boss
16% - Needed to Have More Control
Over My Time
8% - Had Reached a Dead-End on
Corporate Ladder Elsewhere
25% - Found a Market Niche
17% - Other
* 31% - Yes
69% - NO
2. How long have you owned your
own business?
2% -
6% -
28% -
32% -
17% -
7% -
3% -
5% -
1 Year or Less
1 to 2 Years
2 to 5 Years
5 to 10 Years
10 to 15 Years
15 to 20 Years
20 to 25 Years
Over 25 Years
Marketing Resource Group, Inc.
PAGENO="0407"
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PAGENO="0408"
7. Which business classification
best describes your company?
8. Is your business space:
9. Where is the principal office of
your business located?
402
8% - Cdm~rU~tion
2% - MaD1~acturing
(aOto~re~lated)
6% - Manufacturing
(non-auto-related)
1% - High Tech. Manufacturing
1% - High Technology Research
1% - Computer Hardware Sales
2% - Computer Software Sales
19% - Retail
3% - Finance
6% - Health Care
2% - Insurance
5% - Real Estate
31% - Service
(including restaurants)
5% - Wholesale, Distribution
2% - Transportation
24% - Other
49% - Leased
31% - Owned
22% - Home-based
8% - Detroit
- Suburban Detroit
4% - Ann Arbor Area
11% - Lansing Area
3% - Grand Rapids Area
5% - Flint Area
5% - Bay City/Midland/Saginaw
27% - Elsewhere in Michigan
GENERAL STATISTICAL INFORMATION
The following questions will be used for statistical purposes only. All
information will be kept strictly confidential. This background information
will be extremely important in our analysis and crucial to the success of
this research.
1. What are the approximate
number of hours in an average
work week in your business?
6% - Less than 20
6% - 20 to 30
17% - 31 to 40
37% - 41 to 50
25% - 51 to 70
9% - More than 70
2. Are you employed by any business
other than your own?
13% - Yes
87% - No
Marketing Reaource Group, Inc
PAGENO="0409"
3. How has owning a busine~s affedted
you in the following categories?
a. Personal Health
Stress
c. Personal Relationships with
Business Associates
d. Personal Relationships with
Family ahd Friends
4. In which of the folio~dn.g orgaiii-
zations do you have a current
membership?
(CHHCK ALL THAT APPLY)
8. What is ydür ~sarital Statu$?
Gotten Remainéd~ Gotten
Bettet AbQut the Same WorSe
19% 65% 16%
13% 40% 47%
52% 4~% 4%
29% 52% 19%
47% - State/Local Chamber(s)
9% - State/Local Economic Clubs
23% - Women-Owned Business Org.
22% - Other Local Business Clubs
or O~ganizations
39% - Trade Association
8% - Business and Professional
Women (B&PW)
10% - National Fed of Independent
Businesses (NFIB)
7% - Small Business Association
of Michigan (SBAM)
19% - Oti~~r
19% - None
40% - Republican
20.% Democrat
24% - Independent
14% - NO Preference
1% - Other
8% - Sihgle
67% Harried
16% - Divorced/~eparLted
6% - Widowed
3% - Head of Household
403
5. On political tssuès, do you cor~èider 8% - Very Conservative
yourself ~to b~: 35% - Somewhat Conservative/More
Conservative Than Liberal
27% - Neither/Middle-of-the-Road!
Moderate/Both
24% - SomewhSt Liberal/More
Liberal TWan ~onhervativS
6% - Very Liberal
6. Generally speaking, do yo~ think
of yourself as:
GENERAL STATISTICAL. INFORM~TI0N ~continued)
7. What is your approximate age? * - 18 tO 24
S 12%-25to34
40% - 35 to 44
28% - 45 to $4
16%-55to64
3% - 65 and Over
MerketlnQRosOurCe Group, Inc.
PAGENO="0410"
404
9. Do you have any ~children 17 years 59% - None
of age or younger living in your 22% - One
household? 19% - 2 to 4
* - 5 to 6
0% - More than 6
10. What is the last grade of school 2% - Some High School or Less
you completed? 13% - Graduatec~ High School
2% - Vocational/Technical School
36% - Some College
20% - Graduated College
27% - Post-Graduate Work
11. What is your main racial or ethnic 92% - White
heritage? 4% - Black
* - Hispanic/Puerto Rican
1% - Native American
2% - Other
12. Which of the following income 1% $ 0 to $5,000
groups includes your TOTAL 2% - $5,001 to $10,000
FAMILY INCOME in 1986 before 5% - $10,001 to $15,000
taxes? 5% - $15,001 to $20,000
* 11% - $20,001 to $30,000
13% - $30,QOl to $40,000
13% - $40,001 to $50,000
* 49% - Over $50,000
~3. What percentage of your personal 29% - Less than 25%
income came from your own 14% - 25% to 49%
business? 11% - 50% to 74%
46% - 74% to 100%
14. What is your title? 4% - Chairperson
62% - President
5% - Chief Executive Officer
2% - Chief Financial Officer
1% - Chief Operating Officer
1% - Chief Information Officer
32% - Other
15. Is this a minority-owned 37% - Yes
business? 63% - No
16. Is this company: 100% - Privately held
* - Publicly held
Thank you for your time and assistance. This survey is anonymous and your
opinions will remain completely confidential. A summary of the results will
he sent to you prior to public availability.
Marketing Resource Group, Inc.
PAGENO="0411"
The 1987 benphmark Touohe Ross/lbs Mi~higan
Woman. poll `of women-owneØ businesses in
Michigan surveyed the opinions Of `3,500
predominantly privately-held businesses.~, The
source list was drawn from publicly ~vailable resour-
ces, and the survey collaborators believe this is the
first time attitudes, co ems and buainess. frends
voiced by Michigan women busine5e owners have
been solicited statewide.
Touche Ross mailed the questionnaire, designed by
Marketing Resource Group, Inc. and Moore & As-
sociates Inc., In MarOh 1987~ Also iftdluded With
each questionnaire was a personalized cover letter.
A follow-up post card was sent 14 days after theJni-
tial mailing~
From the original list of 3,500, 621 questionnaires
were returned for a re~ponse rate of 17.7 pere~j~t,
A 15 .percent response rate is considered hecessary
to provide reff able daf a All lndlvldL$aI.responses in
the study remain confidentjal.
Following pompletlo~ of the survey,, the data were
subjected to computer ahalysis using MarketIng
Resource Group's in-house cross-tabulation
program. The resuft was .~ serl~s of cross'tabula-
lions emplo~ilng 4a fridependept variables, In acidi-
tiop, Moore & Asspolate~ t~buIated respopses to the
open-ended survey question "Since you became the
owner of you~ business, What have you learhed that
no one told you?"
One of the main reasons for conducting the survey
was,to establish a baseline concerning the opinions
of Miohigar~ women business owners. According to
the Michigan Department of Commetce Office of
Women Business Owners, these business' exeox-
tives represent'the fastest growing segment of Small
business nationally, one which is growing at five.
times the rate of male-owned businesses.
Nationwide, four out of five new businesses are
women~owned. Michigan ranks amorr~ the top five
states for women-owned businesSes (156,000). In
1970, women owned~oflly 4.5 percent of Michigan,
businesses; in 1980, 28 percent; afld~in 1985, 36
percent. Women are projected to Own 50 percent of
all businesses by 2000.
What follows are the resufts of the survey and a
sutnmary of each of the folloering majOr question-
nairesections.
Michigan BusinesS ClImate
* General Economic Outlook
* Individual Company Outlook
* Legislation and Government Regulations
` `CopipanyManagetnent'
* `COmpany E(nancing
* Company Statistics
405
~MICHIGANWOM4N ` ~ST~ucheRoss
`
. A Touche Ro&~ Survey
hi ~~onjwiction ~s*h
The `Michigan Woman Magazine
`
.
`
1987 SURVEIOF WOMrN.OWND
`BUSJNESSESL~'4 MICHIGAN..
PAGENO="0412"
MICHIGAN BUSINESS CLIMATE
Survey respondents indicated the most important is-
sues they face in doing business in Michigan in
1987 are the high cost of liability insurance (64 per-
cent of respondents) and taxes (63 percent), each
of which claims a significant share of business
profits. Smaller, youngerbusinesses are the most
vulnerable to these costs.
Having identified the high dost of doing business in
the state as a major concern respondents indicated
ihey tavor a numberóf legislative and social reforms
to address these issues. They want to see changes
in the business tax structure (74 percent), further
changes to reduce costs related to workers' compen-
sation (73 percent), containment qf health care
costs (59 percent) and improvement in the public
education system (grades K~12) (71 percenl).
With respect to company liability insurance nearly
one-third (31 percent) of the respondents reported
difficulty in finding a carrier and two-thirds (68 per-
cent) of those indicated the cost of the insurance
was too high.
More than one-half (55 percent) of the respondents -
- who run predominantly small and emerging busi-
nesses -- are at risk as a result of carrying no per-
sonal disability insurance to sustain them in the
event an accident prevents them from working.'
GENERAL ECONOMIC OUTLOOK
Survey respondents generally voiced pessimism
about the state of the national economy. Nearly
one half (47 percent) anticipate stagnation or a
downturn (18 percent) during 1987.
Tax Issues
If taxes were to beincreased in 1987 -- and 64 per-
cent of the respondents believe they will be --
women business owners favor increasing business
taxes via an oil Import tax (45 percent) or a value
added tax (25 percent) as opposed to increasing cor-
porate or personal taxes.
In order to reduce the federal deficit, respondents
strongly favor reducing government spending (62
percent) as opposed to increasing taxes (2 percent)
or a combination of both alternatives (36 percent).
406
Economic Outlook
Within the next 12 months, 87 percent of the respon-
dents believe the Dow Jones Industrial Average will
remain higher than 2,000 -- and of these, 20 percent
believe it will rise above 2,500.
The majority (63 percent) of respondents believe the
inflation rate will be greater than 3 percent during
the next 12 months, and 12 percent believe it will be
greater than 5 percent.
INDIVIDUAL COMPANY OUTLOOK
Although respondents are not particularly optimistic
about the. state of the national economy, they are
generally optlm~stic (85 percent) about increasing
their sales in 1987. Nearly three-fourths of them (73
percent) expect their real earnings -- adjusted for in-
flation -- to increase during the year. The most op-
timistic (17 percent) said real earnings will increase
by more than 20 percent.
This optimism is further reflected in plans for expan-
sion. In order to increase sales~and accommodate
demand for goods and services, 53 `percent of the
respondents' expect to hire more employees in 1987
and 45 perCent of them are considering expanding
their businesses.
While 83 `percent of the respondents said they had
`no plans to :relocate their businesses, a majority of
those who may relocate (87 `percent) will remain in
the state.
COMPANY MANAGEMENT
In matters relating to their operations, survey respon-
dents placed greatest emphasis on developing their
managerial skills in marketing and finance. They
rated productivity and cost Control/reduction as key
areas on which they plan to foous attention.
Respondents tend to use professiOnals, as opposed
to friends and colleagues, as business advisors.
The most frequently used advisor is an accountant
(60 percent) and the Second l)Io$t frequently us5d is
a lawyer (49 percent).
Respondents also use long-range plans and other
business toolS to keep their companies competitive.
More than half (57, percent)'of the businesses sur-
PAGENO="0413"
407
veyed have a business plan. `Two-thirds (66 per-
cent) use computer systems for aocountirtg and
finance, 64 percent for administration (word process-
ing), 39 percent for consumer/vendor mailing lists,
and 16 percent for desk-top publishing purposes.
The majority (71 percent) of the respondents offer
pay~raise~ as employee incentives and 47 percent
offer advanced training opportunities'. Smaller num-
bers of them offer benefit increases (25 percent),
profit sharing (22 percent) and promotions (22 per-
cent) to keep employees, and while 8 percent offer
the potential for ownership of ihe business. Finally,
93 percent ~t the respondents do' not have a 401-k
plan in place, `and 85 percent are not considering im-
plementing such an employee benefit,
Although 59 percent of the respondents expressed
the need to contain health care costs, 75'percent of
them have taken no steps In this direction. `he
~Smaller, younger firms are the least likely to imple-
ment changes in this area, presumably because'the
accrued `savings would be relativèl~irisl~nifio~nt and
small firms lack available health care options..
When. polled about marketing tools such as print or
elect~onic advertising usage during 1986, 13 percent
of the respondents said they spent more than
$5,000 for electronic media ads, while 4 percent
reported spending the same amount on print adver-
tising. Most (62 percent) spent less than $1,000 on
print and 80 percent spent less than $100 on
electronic advertising. SeMce companies allocated
resources in this area more frequently than other
respondents.
Nearly one-third (31 percent) of the smaller, yOunge~
respondents use desk-top publishing systems,
presumably for newsletters and flyers, as an alterna-
tive to other types of advertising.
COMPANY FINANCING
Michigan women business owners responding to the
survey tend to be self-starters who use their own
savings (41 percent) or earnings (29 percent) to
start their companies, as opposed to using lenders
(14 percent) or private inv8stors (3 percent).
To maintain adequate working capital, 52 percent of
the respondents have bank loans. However, firms
older than two years are twice as likely as their
younger counteiparts to have loans. More than
three-fourths of the respondents (77 percent) use
their business assets (47 percent use busfnese~
owned plants and equipment and 30 percent use
business owned receiyables)to secure financing.
Three-fourth's of the survey respondents were re-
quired' to'put up collateral equal to or greater than
the amount `of their loans in order to secure finar~c-
ing. More specifically, 58 percent were required to
put up 200 percent collateral and 15 percent were
asked for more than 500 percent collateral.
COMPANY STATISTICAL INFORMATION
Most survey respondents started `their businesses
for personal reasons and not purely economic
reaSOnS. About half (49 percent) expressed the
desire to be their own' boss, »=2 perceht experienøed
creative fru'stration in other jobs, 16 percent needed
to have more control over their own time, and 8 per-
cent féltthey had reached a dead end `on the cor-
porate laddé~ elsewhere.
This survey reflects a natiOnél trend among Women
who leave corporations beset by mergers and ac-
qulsitlonato begin thelrbw~lbusinesses, It atsa mir-
rors a 1986 Korn-Ferry International survey that mdi-
Oated a clear limit to upper level career opportunities
for women professionals. The 1986 study reported
that women held only 2 percent of the jobs at the
level of senior vice president and above in the For-
tune 500 industrial and service companies.
More `than a quarter (28 percent) of the respon-
dents' businesses have been ln'exsstence for two to
five years, 32 perOent for five to 10 years and 17
percent for 10 to 15 yaars~ AbOUt 86 percent of the
respondents work in their businesses on a full-time
basis.
Respondents reported that their businesses are
structured in several ways, Among them are 66 per-
cent as corporatIons, 30' percent as sole proprietor-
ships, 4 percent as partnerships and less than 1 per-
cent as franchises.
Survey responses also indicate that women-owned
businesses `in. the state have experienced a steady
increase in total gross revenues between ~983 and
1986,
Of the businesSes responding to the questionnaire,
nearly a third (31 percent) are in the service area,
followed by 19 percent in retaIl, 8 percent In con-
structlon, 6 percent in non-automotive manufactur-
Ing, 6 percent In health cares 5 percent in real es-
tate, and 5 percent in wholesale distribution. Two
percent of the respondents described their products
or services as being in the auto-related manufactur-
ing sector.
Respondents put fl long hours on the job with near-
PAGENO="0414"
408
ly three-fourths (71 percent) working more than 40
hours per week. More than one-third (37 percent)
work between 41 an~l 50 hours, 25 percent work be-
tween 51 and 70 hours, and 9 percent work more
than 70 hours per week.
Being the owner of a business affected respondents
most significantly by increasing personal stress (47
percent). More than halt (5~ percent) of them indi-
cated that their personal relationships with business
associates had improved.
Politically, most Of the respondents classify themsel-
ves as conservative (43 percent) as opposed to mid-
dle-of-the-road (27 percent). or liberal (30 percent).
Nearly one-half (47 percent) of the respondents
belong to state or local chambers of commerce, and
39 percent to trade organizations. About one-third
(31 percent) also use women's organizations
(womefl-owned business organizations and Busi-
ness and Professional Women's chapters) to inter-
act with peers,
The Office of Women Business Owners In the
Michigan Department of Commerce has a high de-
greeof awareness among the respondents (66 per-
cent), and 41 percent of them have had contact with
the office.
Other state services used by respondents include
the Small Business Center (14 percent), the office of
the Ombudsman (12 percent) and the Office of
Minority Business Enterprise (10 percent).
The younger and smaller companies responding indi-
cated they use these services more than larger busi-
nesses, in part to assist them with regulations as-
sociated with doing business In the state.
A composite profile of the average respondent indi-
cates that 87 percent are at least 35 years old, 67
percent are married, 59 percent have no children
under 17 living at home and 83 percent have ad-
* vanced educational backgrounds ~- including 20 per~
cent. with college degrees and another 27 percent
who have undertaken post-graduate studies.
PAGENO="0415"
409
!MKBK~N WOMAN
~STouche11oss
A Touche Rós~ Survey
I
in conjunction with
The Michigan Woman Magazine
1987 SURVEY OF WOMEN.O\VNED
BUSINESSES IN MICifiGAN
~::i,. ~ . .
Please mark all applicable boxes and return th~ completed survey in the enclosed se1f~a~1dressed, postage~paid
envelope by March 16, 1987. We welcome anyadditional comments you wish to make on any question. Space is
provided for that purpose at the end of the questionnaire. We thank you very much for~'our special attention.
MICHIGAN BUSINESS CLIMATE
1. Generally speaking. what do you
feel are the mostimportant
problems facing busInesses in
Michigan today; that is, the
problems that you are most con.
cerned about?
(CHECK ALL THAT APPLY)
~
~
33% Competition from Big Business
64% CostofLiability Insurance
11% Foteign Competition
28% GovemmentRegulations
17% Interest Rates
39% Labor Costs
39% I,aborQuality
63%l'axes
13%ther
2. How important do you feel the
following steps are in order to
improve Michigan's business
climate?
a. Changes in Business lhx Structure
b. Changes in Individual1~ix Structure
c. Further Changes to Reduce Costs
Related to Workers' Compensation
d. tncreased Availability of Low.Cost
Government Financing
e. EasingofRegulationand Reporting
Requirements
f. EasingofEnvironmentliStandards
g. Advertising and Marketing the
State (Yes! MichiganCainpaign, et~)
h. Improving the State's University
System
i. Containing Health Care Costs
j. Improving the Public Education
System (grades 1(42)
Very Somewhat Not At All
Important Important Important
~
74% 25% 1%
40% 51% 9%
.
73% 24% 3%
40% 40% 20%
~
37% 49% 14%
8% 42% 50%
~
3~% 47% 22%
.
27% 48% 25%
59% 33% 7%
71% 25% 5%
~
PAGENO="0416"
GENERAL ECONOMIC OUTLOOK
410
1. Generally speaking, do you feel
the economy for the balance of
th~ year will:
~
2% Greatly Improve
32% Somewhat Improve
47% Remain About the Same
17% Somewhat Deteriorate
1% Greatly Deteriorate
2. Do you think business taxes will
increase, staytbesgnw, or decrease
in 1987?
~
8% Increase Greatly
56% Increase Somewhat
34% Stay About the Same
2% Decrease Somewhat
0% Decrease Greatly
3. If business taxes were to be
increased,which of the following
would you most favor?
(ChECK ON~LY ONE)
26% Value Added Tax
8% Personal Income Tax InCrease
21% Corporate Tax Increase
45% 011 Import Tax
4. In 12 months, the inflation rate
willbe:
10% Less than 2%
27% 2to3%
31% 3to4%
20% 4to5%
12% Above 5%
5. In 12 months, theprimeratewillbe:
1% Less than 5%
6%5to6%
10%6to7%
19% 7to8%
2741 8to9%
25% 9 to 10%
12% Above 10%
6. Which of the following do you feel
will be most effective in helpingto
reduce the federal deficit?
2% IncreaseTaxes
62% Reduce Government Spending
36% Coatbination of lloth
7. In 12 months, the Dow Jones
Industrial Average will be:
~
20% Above 2,500
15% 2,401 to 2,500
16% 2,301 to 2,400
13% 2,201 to 2,300
12% 2,101 to 2,200
11% 2,001 to2,100
7% 1,901 to2,000
4% 1,801 to 1,900
1% 1,701 to 1,800
2% l,700orbelow
2
PAGENO="0417"
GOVERNMENT PROGRAMS
411
1. Which, if any, of the following
MichigjinDepartmentofConunerce
services/programs have you
utilized?
(CHECK ALL THAT APPLY)
~
~
12% Ombudtman
2% Financing
9% Procurement
14% Small Business Centers
10% Minority Business Enterprise
24% Women Business Owners Services
* Technical Deployment
1% Import/Export Assistance
1% ManufactUring Service
1% New Enterprise Services
57% None of the above
2a. Are you aware of the Office
of Women Business Owners in the
Michi~nDepsrtmentofCommerce?
66% Yes
34% No
2b, Zf YES, have you personally had
any contact with the Office of
Women Business Owners?
41% Yes
59% Nb
INDiVIDUAL COMPANY OUTLOOK
1. Do you expect your sales to
increase in 1987?
.
~
48% Definitely Yes
37% Probably Yes
13% Prnbably No
2% Defthitely No
2a, Do you expect your real earnings
(total revenues less totalexpenses-
net of inflation)to increase in 1987?
~
33% Definitely Yes
40% Probably Yes
22% Probably NO
5% DefiñitelyNo
(question continued on next page)
88-199 0 88 14
3
PAGENO="0418"
I1b~DWIDUAL C~$ PANY OUTl~OOK (continued)
412.
2b~ If YES, by what percentage over
1986 earnings?
~
28% Ito 5%
36% 6 to 10%
10% lltol5%
9% 16to20%
17% Morethan20%
3a. Do you plan to expand your
workforce in 1987?
,
~
20% Definitely Yes
33% Probably Yes
33% ProbablyNo
14% Definitely No
3b. If YES, by whatpercentage?
~
.
~
55% 1 to 5%
20%6tolO%
5% 11 to 15%
6% 16to20%
14% Over 20%
4a. Are you considering relocating
your business in 1987?
~
7% Definitely Yes
10% ProbablyYes -
25% Probably No
58% Definitely No
4b. If YES, where?
~
~
7% Within the City of Detroit
7% From Detroit to the Suburbs or Outstate Area
3%~ From the Suburbs or Outsiate Area to Detroit
70% From One Suburban or Outstate Area to
Another
13% Outof State
5a. Are you considering expanding -
your business in 19871'
20% Definitely Yes
25% Probably Yes
33% Probably No
22% Definitely No
5b. If YES, where?
14% Within the City of Detroit
8% From Detroit to the Suburbs or Outstate Area
5% From the Suburbs or Outstate Area to Detroit
58% From One Suburban or Outstate Area to
Another
21% Outof State
4
PAGENO="0419"
COMPANY MANAGEMENT
413
1. Rank the management areas that
you plan to focus attention on ti~ls
year. (Scale of 1 to 5, with 1 being
the bighest~priority)
a. Productivity
b. Recruitment
c. Financing
d. Cost Control and Reduction
e. Marketing
f. Plant improvements
g. New Products
h. Research and Development
i. Other (specify)
(High) (Low) Refused/
~ ..L .2. .2. .4. ~ Don't Know
~
2.08 36% 16% 9% 5% 7% 27%
3.45 8% ~% 11% 8% 18% 50%
3.17 11% 8% 9% 10% 14% 48%
2A8 20% 20% 15% 7%~ 8% 29%
i30 28% 17% 14% 7% 7% 27%
~ 3% 4% 7% 6% 16% 64%
3.08 10% 9% ~% 7% 13% 53%
358 4% 6% ~% 5% 15% 64%.
3.07 2% * ~ * 2% ~95%
2. Which of the following d~you use
on a regular basis as a business
consultant?
(CHECKALLTHAT APPLY)
a. Banker
b. Lawyer
c. Accountant
ti Chamber of Commerce
e. Independent Consultant
f. Relative
g. Friend
h. Business Associate
i. Co-owner of Business
j. Other (specify)
Was that advisor?
~
30% 18%
49% 9% 4~%
60% 21% 21%
10% 11% 82%
10* 9% 83%
25% 11% 66%
16% 20% 67%
25% 27% 54%
16% 12% 73%
3% 2% 95%
3. In which area(s) of business
expertise do you feel you need to
develop additional skills?
(CHECK ALL THAT APPLY)
57% Finance
5~%. Marketing
36% Management
26% Leadership (personal andprofessIonal)
34% Presentation/Negotiation
4. ~)oes your business have a
business plan?
57% ?es
43%~ No
5. In what areas'do you prese~ntly
use computers?
(CHECK ALLTHAT APPLY)
~
66%Accounting~Plflance
, 19% Material and Production Control
39% Cdnsumer/VendorMailingLists
2% Assembly and Manufarturing Control
11% Marketing Analysis
54% Mministtation(wordprocessing, dc)
8% Produrt Design
16% Desk-top Publishing
28% Other
S
PAGENO="0420"
COMPANY MANAGEMENT (continued)
414
6. Which, if any, of the following
incentives do you use with
employees?
(CHECK ALL THAT APPLY)
.
~
71% Pay Raises
25% Benefit Increases
22% Profit Sharing
8% The P~tefltia1 Por orActual Ownership of the
Business
22% Promotio~s
47% Training Opportunities
12% None of the above
14%Other
7. Which, if any,of the following
steps have you taken to contain
employee health benefit coats?
(CHECK ALL THAT APPLY)
12% Increased Medical Deductibles
5% Incseased Medical Co-Pay Pescentages
8% Switched to lIMO (Health Maintenance
Organization).Type Medical Coverage
1% Switched to PPO (Preferred Provider
Organization).Type Medical Coverage
3% Changed to Self~Funded Medical Coverage
75% Noneof the above
Be. Does your company havea 401-k
plan?
7% Yes
93% No
8k If NO, are you conaideringim-
plementing a 401-k plan?
15% Yes
85% No S
9s. Approximately how much did
your business spend on print
advertising in 1986?
S
Print
(Newspapers, magazines, etc.)
23% Less than $100
23% $lOOto$500
1~% $501 to$1,000
13% $1,001 to$2,000 S
13% $2,001 to $5,000
13% More than $5,000 S
9k Approximately how much did
your business spend on radio!IV
advertising in 1986?
S
~
RAeIioITY
80% Less than $100
7% $~00 to $500
3% $501 to$1,000
3% $1,001 to$2,000
3% $2,OOito$5,000 555
4% More than $5,000
6
PAGENO="0421"
415
COMPANY FINANCING
1. Approximately bow much capital
did you have for start-up?
.
24% Less than $1,000
9% $1,000 to $2,000
17% $2,001 to$5,000
15% $5,001 to $10,000
14% $10,001 to $20,000
13% $20,001 to $50,000
3% $50,001 to $75,000
5% $75,001 or more
2. Please indicate what percentage
of your start-up capital came from
each of the following categoi~~s.
(Be sure the percentages yost write
in add to 100%.)
Self, Earnings 2921%
Self, Savings 40.71%
L~JetS 13.88%'
Private Investors 3.28%
Fri~nds,Relatives 11.77%
Other 2.47%
3a. How many banks or other lending
institutions have you approached
for a loan for your business for
start-up, operations, expansion, or
any other purpose?
`
31% One
21% Two
10% Three
3% Four
1% Five
2% More than Five
2% None
Sb. If you have approached one or
more, in general do you feel you
were treated fairl~' by the lending
institution(s)?
67% Yes
33% No
.,
4a. Do you currently have a business
loan? `
48% Yes
52% No
4k If YES, what type of collateral ~
used to secure this financing?
(CHECK ALL THAT APPLY)
47% Business Owned Plant and Equipment
30% Banness Owned Receivables
18% Other Business Assets
31%. Yotwftouse or Car `
25% Other Assets Owned by You
20% Other
Sa, flow mucb~collateral teas required
for your loan? `
<
26% Less Than the Amount of the Loan
39%'Equal to the Amount of the Loan
36% Greater Than the Amount of the Loan
(question continued on flext page)
PAGENO="0422"
COMPANY FINANCING (continued)
416
flb. ~ GREATER ~
58% 200%
AMOUNT OF THE LOAN,
12% 201 to 300%
how much greater?
8% 301 to 400%
7%4OltoSOO%
.
15% Greater than 500%
6a. Have you experienced difficulty
findinga carrier for yourcompany's
liability insurance policies?
31% Yes
69% No
6b. If YES, why?
34% Could Not Find Cather
68% Costof Insurance Too HI~h
13%Other
7. Do you carry personal disability
insurance?
4~% Y~s
55% No
COMPANY STATISTICAL INFORMATION
1. Which of the following best
describes why you started your
business?
26% Economic Reasons
22% Experienced Creative 1~rustration in OterJobs
4~% LilceBeing My Own Boss
1~%~Nee4ed to Have More Control Over My Time
8% Had Reached a Dead-End on the Corporate
Ladder Elsewheee
25% Pound a MarketNiche
17% Other
.
2. How long have you owned your
2% 1 Year or Less 17% 10 to 15 Years
own business?
6% Ito 2 Years 7% 15 to20 Years
28% 2 to 5 Years 3% 20 to 25 Years
32% 5 to 10 Years 5% Over 25 Years
3. What were your approximate total
gross revenues in the following~
:
years? (CIRCLE APPROPRL4TE.
NUMBER FOR EACH YEAR)
i.2a4 J.28~ i2~
a. Less than $25,000
b. $25,000 to $50,000
26% 20% 18% 16%
c. $50,001 to $100,000
15% 16% 14% 13%
d. $100,001 to $250,000
18% 18% 17% 16%,
e. $250,001 to $500,000.
f. $500,001 to $7~0,000
17% 19% 22% 20%
10% 13% 12% 15%
g. $750,001 to $1 Million
h. Between $1 Million and $3 Million
i. Between $3 Million and $5 Million
6% 5% 5% 7%
2% 3% 5% 69~
4% 4% 6% 7%
j. More than $5 Million
1% 1% 1% *
(specify)
1% 1% 1% 1%
(question continued on next page)
8
PAGENO="0423"
417
COMPANY STATISTICAL INFORMA11ON~cont1nued)
4. Iryour businets afuil.~tlme4pat~t-
time, or Spare-time activlty~for
you?
86% Full-time
11% Pn'~time
3% Spare-time
5a. Is the business a:
66% Corporation
30% Sole proprietorship
4% Partnership
Q% 1~ranchise
.
5b. Ifitssacorporationorpartner
ship, what percentage of the
busmess do you own.
3%0%to3O% 1%91%to99%
15% 31%toSO% 34% 100%
12% 51% to 65% 29% Refused/Don't Know
5% 66% to 90%
,
5c. flwmauycners,nOtinClU~g
tl~ere?
33% None 4% Three 29% Refused/Don't
26% One 1% FourorFive
6% Two 1% Over Five
6. Over the past year, what was the
av~ragenumberoffUu1-andpart~
time employees employedbyyour
company (notipg~~)?
13% I4one 14% 11 to 70
33% l'to3 6% 21to50
31% 4w 10 3% 51 orMore
7 Which business classification
best describes your company?
~
~
~
~
8% Construction
2% Manufacturing (auto-related)
6% Manufacturing (non-auto-related)
1% High Technology Manufactaring
1% High Technology Research
1% Computer Hardware Sales
2% Computer Software Sales
19% Retail
3% Finance 31% Service (including restaurants)
6% Health Care 5% wholesale, Distribution
2% Insurance 2% Transportation
5% Real Estate 24% Other
8. Is your business space:
~
49% Leased
31% Owned
22% Home-baSed
9. Where is the principal officëof -
your business located? ~.
~
-.
8% Detroit 3% 6~nd ItaPids Area
~ Suburban Detroit 5% FlInt Area
-4% Ann Arbor Area 5% Bay City/Midland/Saginaw Area
11% Lansing Area 27% Elsewhere in Michigan
9
PAGENO="0424"
GENERAL STATISTICAL INFORMATION
418
The following questions will be used for statistical purposes only. All infomnation will bekept strictly confi-
dential. This background information will be extremely important in our analysis and crucial tcst~e success
of this research.
1. What are the approximate
number of hours in an average
work week in your business?
6% Less than 20
6% 2(3 to 30
17% 31 1040
37% 41to50
25% 511070
9% More than 70
2. Are youemployed by any business
other than your own?
13% Yes
87% No
3. How has owninga business affected
you in the following categories?
a. PersonalHealth
b. Stress
c. Personal Relationships with
Business Associates
d. Personal Relationships with
Family and Friends
Gotten Remained Gotten
J~,gflg~ ~h9nt the Same
19% 65% 16%
13% 40% 47%
~
52% 43% 4%
,
29% 52% 19%
4. In which of the following Organ-
izations do you have a current
membership?
(CHECK ALL THAT APPLY)
*
~
`
.
47% State/Local Chamber(s) of~ommerce
9% State/Local Economic Clubs
23% Women-Owned Business Organizations
22% Other Local Business Clubs or Organizations
39% Trade Association
8% Business and Professional Women (B&PW)
10% National Federation of Independent
Businesses (FNIB)
7% Small Business Association of Michigan (SBAM)
19% Other
19% None
5. Onpolitical issues, do you consider
yourself to be:
~
~
~
8% Very Conservative
35% Somewhat Conservative/More Conservative
ThanLiberal
27% Nelther/Mlddle.of.the.Road/Moderate,'Both
24% Somewhat Liberal/More Libetal Than
Conservative
6% Very Liberal
6. Generally speaking, do you think
of yourself as:
40% Republican
20% Democrgt
24% Independent
14% No Preference
1% Other
10
PAGENO="0425"
419
GENERAL STATISTICAL INFORMATION (continued)
7. What is your approximate sge~
,
*
~
* 18 to 24
12% 25 to 34
40%35*o44
28%43to54
16% 55t064
%65andOvcr
8. What is your marital status?
~
~
~
8% Single
61% MarrIed
16% Divoil~ed/Separated
6% WidOwed
3% Hegd of Household (singlewlth dependents)
9. Do you have any children 17 years
of age or younger living in your
household?
~
59% None
22% One
19% Zto 4
* Sto6
0% More than 6
10. What is the last grade of school
you completed?
~
~
*
23~ Some High School or Less
Ii% Oñiduated High School
2% Vocationalffechnlcal School
36% Some College
20% OmduatedCollege
27% Post-Graduate Work
1L Whatia you* main racial gr ethnic
heritage?
.
~
92% White
4% Black.
* Hispanic/Puelto Rk*n
1% Native American
2%Other
12. Whichof the following income
groups Includes your TOIAL
FAMILY INCOME in 1986 ~
taxes?
,
.
1% $0 to ss.ooo
2% $5,001 t~ sio,ooo
5% $10,001 to $15.000
5% $15,001 to $20,000
11% $20,001 to $30,000
13% $30,001 to $4000()
13% $40,001 to $50,000
49% Over $50,000
13. What percentage of your personal
income came from your own
business?
29% Less than 25%
14% 25% to49%
11% 50% to 74%
46% -74% to 100%
PAGENO="0426"
420
GENERAL STATISTICAL INFORMATION (continued)
14.
What is your title?
4% Chairperson
62% President
5% Chief Executive Officer
.
2% Chief Financial Officer
1% Chief Operating Officer
1% Chief Information Officer
3~% Other
15.
Is this a minority-owned
business?
37% Yes
63% No
16.
Is this company:
100% Privately held
* Publicly held
17. Since you became the owner of your business, ~bat have you learned thatno one told you?
Please feel free to make additional comments: (If referring to a specific question, please note the question
num1~er and section).
Thank you for your time and assistance~ This survey is anonymous and your opinions will remain completely
confidential. summary of the results will be sent to you prior to public availability.
Survey design by:
Marketing Resource Group
and Moore & AssociinesInc.
12
PAGENO="0427"
421
ôTouche Ross
* . Providii~g Comprehensive
Professional Financial Services
to Private and Emerging
Companies
Contact:
John C. Fovessesi
* *s Touche Ross
200 Renaissance Center, 16th F1oo~
Detroit, MI 48243
* * (313) 446.1500
PAGENO="0428"
422
Results of the 1988
Survey of
Michigan Women Business Owners
A Touche Ross survey in conjunction with Michigan Woman magazine
Touche Ross &.Co., 200 Renaissance Center 16th Floor, Detroit, MI 48243-1274
PAGENO="0429"
423
~S Touche Ross
A Touche Ross Survey
in conjunction with
Michigan Woman Magazine
Results of the 1988 Survey of
Michigan Women Business Owners
INTRODUCTION
In May 1988, Touche Ross and Michigan previous year. The degree to which educational
Woman magazine conducted the second annual reform has become a major business issue is re-
survey of the state's woman-owned businesses. flected in the- finding that only 4 percent of this
Surveys were sent to 2,645 small and medium year's survey respondents reported that Michigan's
sized privately-held businesses, and responses were high school graduates are adequately, trained to
received from 406 of the companies polled. A meet the skill levels required in their businesses.
complete description of the methodology employed Twenty-three percent reported that new hires
for this survey can be found at the end of the require minimal training, 38 percent said they re-
executive summary. quire substantial training and 35 percent said they
are poorly qualified.
EXECUTIVE SUMMARY Among the most frequently cited proposals for
improving the state's public education system were
A. MICHIGAN'S BUSINESS CLIMATE requiring teachers to pass periodic examinations (78
percent), requiring students to pass basic proficiency
The Issues Facing Michigan Businesses examinations (77 percent) and requiring a manda-
tory core curriculum in all public schools (61 per-
For the second year in a row, the state's women cent).
business owners suggested that tax and unemploy-
ment compensation reforms should be major priori- The Governor's Record in 1987
ties for the Michigan legislature in 1988. Respon-
dents ranked single business tax reform, reducing By a ratio of 3:1, survey respondents gave
the cost of workers' compensation and property/ Governor Blanchard a positive rating for improving
sales tax reform for businesses as their top three the state's business climate. Although respondents
priorities and gave lowest priority to defeating from all regions of the state gave the Governor high
legislation to institute parental leave as an employee marks, he received his lowest ratings in suburban
benefit. Detroit and mid-south Michigan and from older
Having identified the cost of doing business in companies (those in business for more than 20-
the state as a major concern, respondents ranked years).
four areas (from among eleven) astheir priorities in
order to improve the state's business climate: Michigan's Economic Outlook
i Changing the business tax structure Slightly more than half (52 percent) of the
(82 percent of respondents); respondents expected domestic car sales to remain
* Reducing the cost of workers' the same during l~88, and 32 percent expected sales
compensation (73 percent); to increase. Forecasts about the increase in new
* Improving the state's public education home sales in Michigan were more optimistic as 53
system (grades K-l2) (68 percent); and percent of the respondents expected an increase and
* Containing health care costs (62 percent). 32 percent expected sales to remain at 1987
levels.
Improving the state's educational system re- Overall, a majority (81 percent) of respondents
mained high on the list of priorities, as it did the expected the local economy to improve or remain
the same in 1988.
PAGENO="0430"
424
The 1988 Presidential Campaign
Nearly two-thirds (64 percent) of the respon-
dents indicated that they expect reductions in the
federal budget deficit to be the major economic
issue of the 1988 presidential campaign.
Although most respondents were concerned
about increases in business taxes, they apparently
would not vote their pocketbooks in a presidential
election. In a preference poll of Bush vs. Dukakis,
respondents split; their votes evenly between the two
candidates. When Dukakis was matched against
Jesse Jackson, the Massachusetts Democrat received
the nod from 75 percent of the respondents.
Nearly three-fourths (74 percent) of the respon-
dents anticipated that business taxes will increase if
a Democrat is elected president this fall, while less
than half (44 percent) expect an increase if a Re-
publican is elected to the White Hobse~
`B. NATIONAL ECONOMIC OUTLOOK
A majority of respondents (81 percent) was
optimistic that the national economy will improve or
remain the same for the remainder of 1988. This
opinion remains the same as that expressed in the
1987 survey.
A majority of respondents (70 percent) favored
the use of tarriffs and trade barriers to protect
American industry. Although nearly all (94 percent)
of the respondents indicated that trade restrictions
imposed on~American-made goods Were not appli..
cable to their businesses, because they do not
export products, more than a third (37 percent)
expect the U.S./Canadian Trade Agreement to open
new markets.
C. LEGISLATION AND GOVERNMENT
REGULATION
1986 Tax Reform Act Loses Popularity
Prior to its implementation, most sectors of the
American business community strongly supported
the 1986 Tax Reform Act. Since its implementa-
tion, support has declined Steadily, as reflected by
67 percent of the survey respondents who today
either somewhat or strongly oppose the legislation.
One possible reason for declining support m~y
be that 68 percent, of the survey respondents indi-
cated that their. 1~87 taxes had increased.
D. COMPANY MANAGEMENT
Operational Priorities in 1988
Operational priorities in 1988-1989 remain the
same as last year's with attention focused on pro-
ductivity (72 percent), cost control and reduction
(63 percent) and marketing (61 percent).
Other management priorities surveyed included
training (which received,high priority mention by
40 percent of the respondents), financing (32 per-
cent), new products (26 percent), recruitment (19
percent), plant Improvements (14 percent) and R&D
(14 percent).
As previously mentioned, those surveyed gener-
ally were optimistic about the health of the t;iational
economy. This optimism also was reflected in their
assessment of the health of their own companies.
A majority of respondents (72 percent) was
opti*tistic about increased sales in 1988, and more
than half (52 percent) expect sales to increase by
more than 10 percent. This optImism is reflected
further in the expectatio'ñ of .4Z percent of the
respondents to expand their workforce, white
an additifinal 51 percent expect to `retain current
staffing levels.
A. majority of respondents (80 percent) rely on
referrals as the primary method for selling their
products and services to business clients. Joining
civic groups (29 percent) and professional organiza-
tions (46 percent), were other highly ranked meth-
ods of selling products and services.
Workplace Regulations
A Substantiaf majority of the `respondents'(~79
percent) favored testing' workers for the use of
illegal' drugs. However, only about one-fourth (23
percent) of all respondents indidatéd their companies
have instituted a testing policy. Overall, 2 percent
of the respondents report testing only new employ-
ees and 21 percent test all employees.'
More than' three-fourths of the respondents (76
percent) also favor legislation banning smoking in
the' workplace:
With iespect to implementing an AIDS policy in
their companies, a substantial majority of respOn-
dents (89 percent) reported they have done nothing.
Ten percent of them reported having instituted a
program to educate employees about' AIDS and 2
percent of the respondents `have developed guide-
lines to deal with eitiployees who have AIDS.
2
PAGENO="0431"
425
E. COMPANY FINANCING
Less than one-ba1~ (46 percent)o~ the respoñ-
dents in this survey indicated that they have busi-
ness loans.
In order to finance expanded operations in
1988, less than one-half of this survey's respondents
(43 percent) indicated they plan to borrow money.
Working capital (53 percent), the purchase of equip-
ment (34 percent) and market expansion (24 per-
cent) were the most frequently mentIoned uses for
borrowed funds Funding for inventory expansion
real estate and product development purposes was
mentioned by 23 percent, 17 percent and 7 prcent
of the respondents, respectively.,
Mor~ than one-third (39 percent) of the respon-
dents reported that banks charge them the prime
rate -- or at most a point over theprime -- for
short-term loans. Foürty-four percent of th4m
reported being charged two or more points over the
prime for shornterm loans.
When asked about the sources of"start-up funds
for their companies, 83 percent of the respondents
indIcated they had used personal savings. Sli~htIy
more than one.fourth.of. the respondents (27 per-
cent) cited financial institutjons and 12 percent
named private investors (multiple responses were
permitted) Seed capitalists venture capitalists and
government loans were cited by only 1 percent of
the respondents and suppliers by 3 percent.
Nearly one-half (46 percent) of the xespon~ents
reported starting their businesses with $10 000 or
less in capital and 36 percent reported having
between $10,000 and s5o;ooo in resources..
Start-up capital was secured principally by
business assets, including plant, equipment and
receivables (42 percent of the respondents), while 55
percent reported using personal assets such as homes
and automobiles as collateral.
Employee Benefits
In order to be more cost effective, nearly one-
third (30 percent) of the survey respondents indi-
cated they have changed employee health plans~
Of the companies that Instituted cost'cutting
procedures, 8 percent. reported replacing Or termi-
nating a defined benefit plan and 5 percent imp1e~
mented a flexible or "cafeteria-style" plan,
Respondents indicated that the most common
employee incentives they use are pay raise$~ (70
percent) and bonuses (59 percent), followed in terms
of popularity by training opportunities (35 percent)
and benefit increases (25 percent).
* Nearly threefoUrths (75 percent) of the respon-
dents reported that they had no company pension
plan. Of those companies with such a plan, 10
percent reported that the October 19th crash had
adversely affected their company pension fund and
IS percent reported no change.
F. A PROFILE OF COMPANIES SURVEYED
A maJority (91 percent) of respondents reported
having 25 or fewer full-and part time employees
More than .two4lt'ths (41 percónt) of the companies
surveyed have been inbUsiness more than 10 years.
A majority of respondents represented the
following business c1assiticationS~' 31 percent `serv-
ice; .19 percent retail; 7 percent construction; 6
percent health care 5 perCent manufacturing (non
automotive related) 4 percent wholesale distribu
tion 4 percent real estate; `and 3 percent manufac-
turing (automotive-related).
Nearly three-fourths (71 percent) of the respon-
dents represented companies organized as corpora-
tions, and 25 percent represented sole proprietor-
~hips. . Only .4 percent were organized as partner-
ships.
In terms of 198? annual sales, 95 percent of the
respondents reported less than $3 million in sales
Of that group~ 11 percent report between $500,000
and $1 million, and Ii percent reported between $1
mi1lj~n and $3 million.
These statistics reflected sales increases over
198~ when sales of $1 to $3 million were reported
by only 9 percent of the respondents.
G. A PR~OFILE OF WOMEN
BUSINESS OWNERS SURVEYED
A majority of companies surveyed (87 percent)
are non-minority owned businesses.
Ninety percentof the respoUdents are more
than 35 years ofage., and' more than two-thirds (69
percent) are married.
More than three-fourths (86 percent) of the
respondents have attended college nearly one fourth
(23 percent~'comp1eted college and 25 percent did
post-graduate work.
In terms of thCir political preferences, respon-
dents identified themselves as Republicans (35
percent), Democrats (21 percent) and Independents
(28 percent). An additional 16 percent expressed no
preference or other.
PAGENO="0432"
426
Respondents tend to work long hours. Nearly METHODOLOGY
one~half (47 percent) work more than 50 hours a
week, and 22 percent reported working more than The second annual Touche Ross/Michigan
60 hours a weekS Woman magazine survey of woman-owned Michigan
When asked to rank priorities among business, businesses sampled the opinions of 2,645 predomi-
community involvement and family life, family life nantly `privately-held companies.
received the highest priority rating from 60 percent More than three-fourths (76 percent) of those
of the respondents and their businesses were ranked completing the survey were the `president, CEO or
first by 39 percent. `chair of their companies, and 41 percent of the
Even though respondents tehd to Work long companies are more than 10 years old.
Jiours and divide their time `between work, family ~Touche Ross mailed the quesiionnaire, designed
and community involvement, amajority'(74 percent) in coilaboration~ with Marketing Resource Group,
of respondents reported being able to devote a Inc. (Lan~lng) *nd Anthony M. Franco, Inc. (De-
satisfactory amount of' time to~both their profes- troit), in May 198& A personalized cover letter also
sional and personal lives. `" was included with `the questionnaire, `and a follow-
When `asked how their work affects their per- up postcard was sent `14 days after the initial mail-
sonal health, stress level and personal relationships ing.'
with `both business~asspciates and family and From the `original list of 2,645 companies,
friends, 81 percent of the respondents reported their obtained from' publiâly available reference sources,
work has had no affect on their personal health and 406 questionnaires `were returned, for a response
93 percent reported no affect On their family life, rate of 15.3 percent. A 15 percent' response rate is
However, 55 percent of the respondents mdi- considered' necessary to provide rel'ibble data~ All'
cated work has increased their stress level. ` individual responses in the study i~é'mâin confided-
When asked why they started their businesses, tiaL `
respondents reported they wanted to be their own `The data `weró' subjected to computer analysis to
boss (33 percent), economic:reasons (23 `percent), prodttce a series of cross-tabulations.
creative frustration (22 percent) and `to develop a , `in addition to demographic informatiOn, opifl~-
market niche (`20 percent~ Other possible responses ions were sOlicited on a number'of `topical ares,
included having reached a dead-end on the corpo- including:'
rate ladder and the ability to retain more conttol'
over their time. ` Michigan's Business ClImate
A majority of respondents (51 percent) reported The General Economic Outlook
1987 pre-tax family income greater than $50,000. Individual Compiny Outlook'
Nearly one-third (32 percent) reported that their Individual Company Regulations
business provides between 75 and 100 percent of Legislation and GOvernment Regulatiofl
their family' income. " Foreigü Trade `
Nearly three-fourths (72 percent) of the respon- Company Management
dents reported that their personal net worth' is in Company Financing
excess of $100,000. `A majority of `respondents also
reported controlling their own personal finances,
while Only 10 percent reported delegating that task,
to someone else. For further information contact:
John C. Fovenesi
Partner,
The Enterprise Group
Touche Ross `& Co.
200 Renaissance Center
16th Floor
Detroit, MI 48243-1274
(313)' 446-1500
4
PAGENO="0433"
427
MICHIGAN ~BUSINESS ~1IMATE
1. Please rank the following Issues from I to 7 (with 1 being most
important) according to their Importance to your business and as
to the seqtiènce ~jou feel th~è Issues should be coñsiderèd by the
Michigan legislature.
Respondents Rankings
a Defeat legislation instituting 7
parental leave employee benefits
a Reducing the cost for unemployment 2
compensation insurance
* Further improving workers' 6
compensation laws
* Reform product liability laws
to establish reasonable limits
In product liability litigation
a Property/sales tax reform 3
for business
a Contain health care costs 4
a Single business tax reform
2. In comparison to neighboring states, do you feel the business
climate in Michigan under Governor Blanchard has:
13 % Greatly improved
45 96 Somewhat improved
22 96 - 1~emained the same
15 96 - SOntewhat deterior~aged *
4 96 - Greatly deteriorated
3. In which of the following areas should Michigan toOus its
economic development effo~ts? (CHECK ALL THAT APPIM*
20 96 - Large automotive and heavy industrial plants
55 96 - Start-up companies
62 96 - High technology companies
57 96 - service industry companies
26 96 - Retail companies
60 96 - Convention and tourism related activities
69 % - Improving quality of education
26 96 - Exporting *
21 % - Attracting foreign business
9%- Other *
S
PAGENO="0434"
428
4. How Important do you think the following steps are in order to
improve Michigan's business climate?
Very Somewhat Not at all
important important important
* Changes in 82% 18% 0%
business tax
structure
a Changes in 45%, 47% 9%
individual tax
structure
* Further changes 73 % 26 % 1 %
to reduce costs
related to workers'
compensation
r Increased 37% 47% 16%
availability of
low-cost government
financing
a Easing of regulation 38 % 48 % 14 %
and reporting
requirements
* Easing of 9 % 43 % 49 %
environmental
standards
* Advertising and 34% 50 % 16 %
marketing the
state (Yes! Michigan,
etc.)
* Containing health 62 % 34 % 4 %
care costs
* Improving the state's 33 % 51 % 16 %
university system
a Improving the public 68 % 27 % 5 %
* education system
(grades K-12)
* Improving * 32 % 57 % 12 %
labor-management
relations
6
PAGENO="0435"
429
5. Which, if any, ot the f'oltowing Michigan Depart~heni of
Commerce servicei have you used? (CHEC}~ ALL T1~AT~
APPLY)
17 % - Ombudsman
3 % Michigan Strategic Fund
9 % - Procurement
20 % Small Business Center
8 % - Minority Business Center
24 % Otfice of Women Business Owners Services
1 % Technical Deployment
2 % - Import/~xport AsSistance
I % Manufacturing Service
3 % New Enterprise Services
54 % - None of the above
6. Are you awai~e of the Office of Women Business Owners
Services in the MichigaC Department of Commerce?
61 % - Yes
42%- No
7. If you have had personal contact with the Office of Women
Business Owners, have you been assisted with
10 % - Financing
17 % - Marketing
16 % - Procurement
23 % - Business management
62 % - Referral service
8. Do you expect 1988 domestic car sales with
1 % - Greatly increase
31 % - Somewhat incredsé~
52 % - ~emain about the same
16 % - Somewhat decrease
* - Greatly decrease
9. Do yotj expect 1988 new home salesin iligan will.,
7 % - Greatly increase
46 % Somewhat increase
32 96 - Remain abotrt the same
14 % - Somewhat decrease
* - Greatly decrease *
10 Are Michigan s high school graduates adequately trained to
meet the skill levels your business tequiss?
4 % - Well qualified
23 96 - 1~equire minimal training
38 % - Require substantial training
35 % - POorly dualified
I
PAGENO="0436"
430
11. Are college graduates of Michigan's university system ade-
quately trained to meet the skill levels your business requires?
21 % - Well qualified
52 % - Require minimal training
23 % - Require substantial training
4 % - Poorly qualified
12. How can the state's public education system (grades K-12) be
improved)? (CHECK ALL THAT APPLY)
33 % - Equalize per pupil funding of schools
43 % - Reduce the number of students per teacher
38 % - Increase educators' pay, such as offering performance
bonuses
10 % - Institute a voucher system
77 % - Require students to pass basic proficiency exams
78 % - Require teachers to pass periodic examinations
61 % - Require mandatory core curriculum in all
public schools
20 % - Other
GENERAL ECONOMIC ~UTLOO1(
1. Generally speaking, do you think the economy for the balance of
the year will:
Local National
* Greatly improve 2 % 2 %
* Somewhat improve 36 % 33 %
* Remain the same 43 % 46 %
* Somewhat deteriorate 18 % 19 %
a Greatly deteriorate 1 % I %
2, If you believe it will deteriorate, when do you expect a downturn
in the U.S. economy?
10 % - Within the next 6 months
35 % - 6 to 12 months from now
27 % - 12 to 18 months from now
3 % - 2 years from now or longer
26 % - Not applicable/will not deteriorate
3. What would you expect to be the major economic~ issue of the. 1988
presidential campaign? (CRECK ONLY ONE)
64 % - Reducing federal budget deficit
15 % - Reducing the trade deficit
7 % - Reduce defense spending
6 % - Funding fOr Medicare/catastrophic health care coverage
3 % - Trade restrictions
6%- Other
8
PAGENO="0437"
431
4. If the presidential election were being held today~ and George
Bush was the Republican candidate and Michael Dukakis was the
Democratic candidate, who would you vote for? (candidates listed
in alphabetical order) (CHECK ONLY ONE)
50 % - George Bush
50 % - Michael Dukakis
5. If George Bush was~tbe Republl~an candidate and Jesse Jackson was
the Democratic candidate, who would you vote for? (candidates
listed in alphabetical'order) (CHECK ONLY ONE)
75 % - George Bush
25 % - Jesse Jackson
INDIVIDUAL COMPANY OUTLOOK
1. Do you expect yOui~ sales to increase or decrease in 1988, and by
what percentage?
20 % Increase by more than 20 percent
32 % - Increase by 10 to 20 percent
20 % - Increase by less than 10 percent
17%- Remainthe same
4 % - Decrease less than 10 percent
5 % - Decrease by 10 to~ 20 percent
2 % - Decrease by more than 20 percent
2 Do you plan to expand or decrease your workforce in 1988 and by
what percentage?
8 % - Increase by more than 20 percent
15 % - Increase by 10 to 20 percent
19 % - Increase by less than 10 percent
51 % - Remain the same
3 % - Decrease by less than 10 percent
I % - Decrease by 10 to 20 percent-
3 % - Decrease by more than 20 percent
INDIVIDUAL COMPANY REGULATIONS
.1. Do you favor or oppose testing workers for the use of illegal
drugs?.
48 % - Strongly favor
31 % - Somewhat favor
15 % - Somewhat oppose
7 % - Strongly oppose
9
PAGENO="0438"
432
2. If you have instituted mandatory drug testing for employees, who
do you test?
2 % - Only new employees
21 % All employees
77 % - Not applicable
3. Which, if any, of the following steps have you taken with respect
to AIDS and your employeeS? (CHECK ALL THAT APPLY)
10 % - Instituted a program to educate employees about AIDS*
2 % - Developed guidelines to deal with employees that have
AIDS
* Instituted a program to screen potential employees
for AIDS prior to hiring
89 % - Nothing done at this time
4. Do ~yOu favor or oppOse legislation banning smoking in the
workplace?
56 % - Strongly favor
20 % - Somewhat favor
12 % - Somewhat oppose
12 % - Strongly oppose
LEGISLATION AND GOVERNMENT REGULATION
1. If a Democrat is elected president, do you think new business
taxes will:
30 % - Greatly increase
44 % - Somewhat increase
23 % Remain the same
3 % - Somewhat decrease
o % Greatly decrease
2. If a Republican is elected president, do you think new business
taxes will:
5 % Greatly increase
39 % - Somewhat increase
50 % Remain the same
7 % - Somewhat decrease
1 % - Greatly decrease
3. If taxes were to be increased, which of the following would you
most favor?
14 %. - Value added tax
10 % - Personal income, tax increase
12 % - Corporate tax increase
22 % - Oil import tax
43 % - Sales tax
10
PAGENO="0439"
4~3
4. Today, which statement best expresses your opinion `of t~se 1986
Tax Reform Act?
2 % -` Strongly favor
32 % - Sàmewhat favor
42 % Somewhat oppose
25 % - Strongly oppose
5 Based on your experience to what extent have c~hanges in the tax
code affected your taxes in the last year?
17 % Greatly increased
51 % Somewhat increased
24 % - Remained the same ".
8 % - Somewhat decreased
* Greatly decreased
FOREIGN TRADE.
1. In general, do you favor or oppose the use of tariffs and trade
barriers to prOtect American indi~stry?
28 % Strongly favor
42 % - Somewhat favor
20 .% - Somewhat oppose
11 % Strongly `oppose
2. Are the trade restrictions foreign nations irnpo~e on' Amerièan-
made goods preyenting you fr~m..exporting more of. you~ company's
products?
1 % - Restrictions are a major hindrance ioinc~ag~our
export,sales
3 96 - Restrictions are somewhat of a hindrance
2 96 Restrictions are not a hindrance
94 96 - Not applicable/company does not export products
3. Do you expect the US./Canadian Trade Agreement to `open new
markets?. .
37%- Yes
14%- No -
49 % - Not tamiiiar~with the Agreement . ` `
11 .
PAGENO="0440"
434
COMPANY MANAGEMENT
1. How do you sell your product(s) or service(s) to business
prospects or clients? (CHECK ALL THAT APPLY)
40 % - Cold calls
80 % - Referrals
40 % - Direct mail
60 % - Advertising/Øint
6 % - Advertising/TV
15 % - Advertising/radio
34 % - Attend trade shows/conventions
16 % - Join private clubs
33 % - Join trade associations
29 % Join civic groups
46 % Join professional organizations
2. Please rank the following management areas as to its prIority
this year with your company.
* Highest Middle Lowest
priority priority priority.
* Productivity 72 % 23 % S %
* Recruitment 19 % 30 % 50 %
* Financing 32 % 37 % 31 %
*Costcontrol 63% 29% * 8%
and reduction
*Marketing 61 % 27 % 11 %
*Plant 14% 28% 58%
improvements
*Ne~jthducts * 26 % 30 % 43 %
*Research 14% 29% 57%
and development
* Training 40 % 37~ % * 23 %
3. Have you changed your employee health plan in order to be more
cost effective?
30%- Yes
70%- No
4. Which, if any, of the following steps have you taken to'contain
other employee benefit costs? (CHECK ALL THAT APPLY)
5 % - Implemented a flexible or cafeteria-style benefit plan
4 % - Replaced a defined benefit plan
4 % - Terminated a defined benefit plan
87 % - None of the above
12
PAGENO="0441"
435
$. Didthe October 19 crash adversely affect your uoiflpany pension~
fund?
3 % - Significantly
7 % Moderately
15%- Notatall
75 % - Not applicable/company does not have a pension plan
6. If your company's liability insurance premiums increased during
the past year, how large was the inOrease?
10%- lto5per~ent
9 % - 6 to 10 percent
4%- 11 to ispercent
9%- l6to2Opercent
7%- 2lto3opercent 4
11 % - Over 30 percent
50 % - No response
7. Do you carry personal disability instfrance?
49%- Yes
51%-No
8. Which qf the following incentives do you use wiThen~$o$es?
(CHECK ALL THAT APPLY)
70 % - Pay raises
25 % - Benefit increases
15 % - Profit sharing
10 % - Potential for or actual ownership~of the business
21 % - Promotions
35 % - Training opportunities
59%-Bonuses
12 % :Nôñeot tb~~above
6%- Other
COMPANY FINANCING
1. Are you going to borrow money in 1988 for use i~ your bUsidess?
43%- Yes
57%-No
2. If you plan to borrow money,how Will you use the funds?
34 % - Machinery and equipment
17 % - seal estate
53 % - Working capital
7 % - product developméflt~
23 % - Inventory and receivables
24 % - Matket expSnsion
13
PAGENO="0442"
436
3. What interestrate does your bank charge your company for short-
term loans?
3 % - Less than prime
10%- Prime
5 % - 0.5 percent over prime
24 % - 1 percent over prime
14 % - 1.5 percent over prime
32 % - 2 percent over prime
12 % - More than 2 percent over prime
4. If you own your company, please indicate the source(s) of your
start-up financing. (CHECK ALL THATAPPLY)
83 % - Personal savings
27 % - Financial institutions
1 % - Seed capitalists
12 % - Private investors
1 % - Government loans
1 % - Venture capitalists
3 % - Suppliers
9 % - Not applicable
5. If you own your own company, please indicate approximately how
mucb~ Start-up capital you bad available.
46 % - Less than $10,000
36 % - $10,000 to $50,000
7 % - $50,001 to $100,000
4 % - $100,001 to $250,000
* - Over $250,000
7 % - Not applicable
6. If you obtained a start-up loan, what type of collateral was used
to secure this financing? (CHECK ALL THAT APPLY)
22 % - Business owned plant and equipment
13 % - Business owned receivables
7 % - Other business assets
34 % - Your house or car
21 % - Other personal assets
18%- Other
18 % - Not applicable/don't own a business
7. Do you currently have a business loan?
46%- Yes
54 % - No
14
PAGENO="0443"
487
GENERAL STATISTICAL INFORMATION
1. What were your company's annual sales for each of the past two
years? (CHECK APPROP~IATECOLUMN)
1986 1987
* Less than $100,000 36 % 31 %
* $lOO,Q00 to $250,000 21 % 23 %
* $250,001 to $500,000 17 % 19 %
* $500,001 to $1 million 13 % 11 %
* Between $1 million 9 % 11 %
and $3 million
* Between $3 million *2% 2%
and $5 million
* Between $5 and $10 milliOn 2 % 2 %
* Between $10 and $20 million 1% 1
* Between $20 and $50 million 0 % 0 %
* Over$50 million 0% 0%
2. What is the approximate number of all (full and part-time)
employees in your company?
69%- FewerthanlO
22%- 10to25
5%- 26 to 50
2%- 51 to 100
1%- 101 tol50
* - More than 150
3. Approximately ~how long has your confpany been in business~
8 % - Less than 3 years
19 % - 3 to 5 years'
32%- Stoloyears
26%- i0to2Oyears
15 % - More than 20 years
4. Where is the principal office of the business located?
9 % - Detroit
37 % - Suburban Detroit
3% - Ann Arborarea
12 % - Lansing area ` `
1 % - Grand Rapids area :`
`6%- Flintarea
6 % - Bay City/Midland/Saginaw area
24 % - Elsewhere in Michigan
* - Outside the state of Michigan
15
PAGENO="0444"
438
5. Which business classification be~t describes your company?
7 % - Construction
3 % Manufacturing (auto-related)
5 % - Manufacturing (non-auto-related)
1 % - High Technology Manufacturing
0 % - High Technology Research
1 % - Computer Hardware Sales
2 % - Computer Software Sales
19 % - Retail
3 % - Finance
6 % - Health Care
1 % - Insurance
4 % - Real Estate
31 % - Service (including restaurants)
4 % - Wholesale, Distribution
1 % - Transportation
20 % - Other
6. Is the business a:
71 % - Corporation
25 % - Sole proprietorship
4 % - Partnership
7. Is the business a franchise?
3 % - Yes
97 % - No
8. How many hours, on average, do you work in your business
per week?
11%- Under30
9%- 30-39
33%- 40-49
25%- 50-59
22 % - 60 and over
9. What is your title?
6 % - Chairperson
62 % - President
8 % - Chief Executive Officer
3 % - Chief Financial Officer
1 % - Chief Operating Officer
1 % - Chief Information Officer
30 % - Other
10. Is a woman a majority-owner (51 percent or more) of this
business?
95%- Yes
5 % - No
16
PAGENO="0445"
43~
11. Is this a minority-owned (excluding female-owned) business?
13%- Yes
87%- No
PERSONAL INFORMATION
1. If you own your own business, which of the following best
describes why you started it?
23 % - Economic reasons
22 ~l6 - Experienced creative frustration in o~tber jobS
33 % - Liked being my own boss
12 ~6 Needed to have more contrOl over my timë~
7 % - ~eached a deád-ënd on the corporateladder elsewhere
20 % - Found a market niche
14%- Other
8 % - Not applicable
2. Generally speaking,~do you thiflk of yóurseltas:
35 % - Re~ublicait
21 % - Democrat
28% - Ind~eüdent
15 % - No preference
1%-Other
3. What is your approximate age?
* - 18-24 *
9%- 25-34
36%- 35-44
33%- 45-54
15%- 55-64
6%- 65andover
4. What is your main. racial or ethnic heritage?
87. % - Caucasian
- Black
* - Hispanic/?uerto Rican
~ % Native American
2%. Asian
5. What is the last grade of school yoá Oompleted?
12 % - High school or less
2 % - Vocational/technical school
38 % - Some college
23 % - Graduated college
25 % - Post-graduate work
17
PAGENO="0446"
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6. What is your marital status?
8 % - Single, no dependents
69 % - Married
14 % - Divorced/separated
6 % Widowed , S
2 % Head of household (single with dependents)
7 What is your gender?
1 % - Male
99 % - Female
8. Which statement best reflects your attitude toward your
professional and personal/family `life?
22 % My work prevents me from spending adequate time
with my family
74 % - I devote a satisfactory amount of time to both my
professional and personal life
4 % My personal life' consumes time I would like to be
able to devote to my professional life
9. How do you rank the following in Importance in your life: (rank
`from 1 to 3 with 1 being the highest)
Respondents Rankings
i Running the business 2
i Community involvement 3
(church, civic groups,
professional organizations)
. Personal/family life `S `
10. How has your work affected you in the followingcategories?
(CHECK APPROPRIATE COLUMN)
~ettèr Same Worse
a Personal health 26 % `55 % 20 %
a Stress , 12% 33% 55%
a Personal relationships 55 % 43% ~ %
with business associates S
* Personal relationships 30 % 53 % 17 %
with family and friends
18
PAGENO="0447"
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11. Which of the following income groups includes your total family
income in 1987 before taxes?
3%~ Under$15,000
6 % ~` $15,000 $25,000~
~7 % - $25,001 $50,000
28 % $50,001 - $75,000
27 % $75,001 $150,000
6 % - $150,000 $250,000
3 % - Over $250,000
12. What percentage. of. your family income came from~ your,own
business?
27 % Less than 25 percent
20 % 25 percent to 49 percent
20 % 50 percent to 74 percent
32 % - 75 percent to 100 percent
1 % Not applicable/don't oWn a business
13. What is your personal `net worth?
4 % Less than $25,000
25 % $25,000 $100,000
48 % - $100,001 - $s00,000
16 % - $500,001 - $1000,000
8 % - Over $1,000,000
14. Which statement below rifflects bow you feel about your personal
finanbial management?
11 9~ - I lack knowledge about managing my personal finances.
I would like to learn more.
40 % I am somewhat informed on matters affecting my personal
finances. I have drawn up so~e general ~1ans.
40 % I am very k~ow1edgeabIe about managing my personal
finances. I have set spe~ific long..term goals.
10 % I do not manage my personal finances I prefer to
delegate that responsibility to a financial
planning professional.'
For further information contaØ: ` `~ `
John C. Fovenesi
Partner . `
The Enterg~rlSe Group'' ,; , . ,
Touche Ross & Co. ,
200' RenaisSance Center'"'''"
16th Floor
Detroit, MI 48243-1274
(313) 446-1500
19
PAGENO="0448"
442
Si?~ U.S. Smell ~ustness Administration Washington. DC 20416
TESTIMONY OF
CAROL M. `CROCKETT
DIRECTOR
OFFICE OF WOMEN'S BUSINESS OWNERSHIP
HOUSE COMMITTEE ON SMALL BUSINESS
MAY 11, 1988
MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:'
I AM PLEASED TO HAVE THE OPPORTUNITY TO APPEAR BEFORE THE SMALL
BUSINESS COMMITTEE TO DISCUSS THE SMALL BUSINESS
ADMINISTRATION'S PROGRAM FOR WOMEN BUSINESS OWNERS. MY
TESTIMONY TODAY WILL FOCUS ON THE ECONOMIC PROGRES.S OF WOMEN'S
BUSINESS OWNERSHIP AND SBA PROGRAMS THAT ARE SO SUCCESS'F~L IN,
ASSISTING THIS PROGRESS.
IN 1980 THEAE WERE 2.5 MILLION NON-FARM SOLE PROPRIETORSHIPS'
OWNED BY WOMEN WHICH EARNED $36 BILLION IN ANNUAL RECEIPTS. IN
1985 (OUR LATEST FIGURES) THERE WERE 3.7 MILLION WITH RECEIPTS
IN EXCESS OF $65 BILLION. THIS ACCOUNTED FOR 12% OF TOTAL SOLE
PROPRIETORSHIP RECEIPTS COMPARED WITH 8.9% IN 1980 AND
REPRESENTS AN INCREASE IN RECEIPTS OF 80%.
SBA DATA SHOW THAT WOMEN ARE STARTING BUSINESSES AT ALMOST'
TWICE THE RATE OF THEIR MALE COUNTERPARTS AND TI1AT ALMOST 3 OU,T
PAGENO="0449"
443~'
OF 10 BUSINESSES~ ARE 0WNEI~ BY WOMEN.. RECENT FIGUffS `INDICATE
THAT 25% OF ALL WOMEN BUSINESSES ARE 1~2 YEARS OLD. WE EXPECT
THIS SOLID GROWTH TREND TO CONTINUE.
BUT WHERE ARE WO~N HEADING" IN 1980 737 OF WOMEN BUSINESSES
WERE IN `THE SERVICE AND RETAIL ~AREAS. IN 1985, `T~IiS PERCENTAGE
INCREASED TO 81%. HOWEVEL'. WE ARE SEE1N& REMARKA8LE GROWTH IN
THE LESS TRADITIONAL INDUSTRIES OF CONSTRUC'TrON AND `
MANUFACTURING.' BETWEEN `1980~1985, RECEIPTS FOR WOMEN BU'SINE~
OWNERS IN SERVICE ROSE 140%, IN THAT SAME PERIOD, RCEIPTS FOR
WOMEN BUSINESS OWNERS IN CONSTRUCTION AND MANUFACTURING ROSE
200%. 5 5 5
WOMEN HAVE ALSO MADE CONSIDERABLE STRIDES IN THE AREA OF
PPOCURE~E~tT IN 1980 ONLY 377 OF GOVEPNMENT CO~(TRACT AWARDS
WERE MA~E TO WOMEN, tO~AY'iT IS ~T A LEVEL'OF1Z. IN 1987, WE
EXCEEDED OUR GOAL BY $235 ~TLLION,' WHILE~ OVERALL 6&~ERNMENT
PROCUREMENT DECLINED BY $1.8 BILLIONS `~ S 5
WITI+ THE INCREA$E OF WO11EN~OWNEb BUSINESSE8 IN P~A~UfACTUR1N6
AND CONSTRUCTION WE EStIP1AI'E THAT FIGURE TO IP1CREASE~
DRAMATICALLY IN TH~ NEXT FEW YEARS SO `tHE OUTLOOK 18 PbS1TIVE
THE SBA'S OFFICE OF WOMEN'S BUSINESS OWNERSHIP HAS MANY AND
VARIED PRO6RAMATIC RESPONSIBILITIES WHICH INCLUDE:
88-499 0 88 - 1
PAGENO="0450"
444
1) TO DEVELOP AND ENCOURAGE EDUCATION AND MARKETING
OPPORTUNITIES FOR WOMEN BUSINESS OWNERS THROUGH QUALITY
CONFERENCES AND WORKSHOPS, TRADE MISSIONS, AND UTILIZING THE
RESOURCES OF PUBLIC AND PRIVATE SECTOR CO-SPONSORS AND
MANAGEMENT EXPERTS, 2) TO NEGOTIATE FEDERAL PRIME CONTRACTING
GOALS. FOR WOMEN-OWNED BUSINESSES, 3) TO PROVIDE SUPPORT FOR
THE FEDERAL INTERAGENCY COMMITTEE ON WOMEN'S BUSINESS
ENTERPRISE, L~) TO ACT AS AN ADVOCATE FOR WOMEN BUSINESS
OWNERS, AND 5) TO EFFECTIVELY DISSEMINATE ALL APPROPRIATE
INFORMATION. THE.DEUVERY OF THE PROGRAM IS CARRIED OUT AT THE
75 DISTRICT AND BRANCH OFFICES BY A WOMEN'S BUSINESS OWNERSHIP
REPRESENTATIVE AND IN EACH REGIONAL OFFICE BY A.WOMEN'S ., ..
BUS INESS COORDINATOR.
THIS OFFICE NOW. SERVES A. CONSTITUENCY, OF NEARLY 1/3 ~F THE
SMALL BUSINESS COMrUNITY AND PROVIDES AN OUTREAcH PROGRAM WHICH
ASSISTS, STRENGTHENS AND PROMOTES WOMEN-OWNED BUSINESS
THROUGHOUT THE COUNTRY. . .
MISUNDERSTANDH&GS CONCERNING THE: STATUS~OF WOMEN BUSINESS
OWNERS STEM FRO~ THE LACK OF A COMPR~HENS.IVE STATISTICAL
INFORMATION SYSTEM. B~CAUSE OF THIS, THE OFFICE OF WOMEN'S
BUSINESS OWNERSHIP HAS TAKEN THE INITIATIVE TO SPONSOR RESEARCH
PAGENO="0451"
445
BY THE :INTERNAI. REVENUESERVICE, THE BuREAu CF CENSUS, AND
SBA'S OFF ICE~OF ADVOCACY.. EACH~ YEAR, SINCE 19SO, HAS SHOWN A
STATISTICAL DATA IMPROVEMENT. THE OFFICE HAS ALSO:
O ASSISTED. IN EXPLORATORY RESEARCH AIMED AT DETERMINING
FACTORS WHICH ENCOURAGE OR DISCOURAGE WOMENRELAflYES FROM
INVOLVEMENT IN FAMILY~OWNEV BUSINESS~S.
O SUPPORTED THE NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS
COMPREI3ENSIVE DATA BASEPRCJECT,STIJDYING THE
CHARACTERISTICS OF ITS MEMBER FIRMS.
O SECURED BUREAU OF THE CENSUS APPROVAL FOR A SURVEY OF THE
CHARACTERISTICS OF WOMEN BUSINESS OWNERS AND PROVIDED
$450,000 FOR THATSURVEY.
O SEARCHED THE AVAILABLE LITERATURE ON LEGALAND~ECONOMIC
ISSUES AFFECTING WOMEN BUSINESS OWNERS IN~PREPARATIONFOR
PUBLICATION OF THE FIRST COMPREHENSIVE BIELIOGRAPHY ON
WOMEN'S BUSINESS OWNERSHIR~ ; ~ ~:
O FINANCIALLY SUPPORTED THE~OFFICE OF.ADVO~AOY'S JACA STUDY
WHICH SHOWED E~TABLISHED BUSINESSES OWNED RY;~WOMtN HAD~
LITTLE DIFFICULTY IN `OBTAININ6 BANK LOANS,
PAGENO="0452"
446
O FINANCED IRS RESEARCH ON THE BREAKOUT OF WOMEN-OWNED
BUSINESS AND. FIRM RECEIPTS BY STATE THROUGH 1983 WHEN IT
WAS NO LONGER MADE AVAILABLE.
SINCE 60% OF WOMEN WHO START A BUSINESSES TODAY HAVE N~'
PREVIOUS PAID MANAGERIAL EXPERIENCE, THE OFFICE OF WOMEN'S
BUSINESS OWNERSHIP HAS IMPROVED THEI'R SKILLS IN TNt AR~A'S OF
MARKETING, FINANCE, INVENTORY CONTROL AND PRODUCTION BY:
O DEVELOPINGAND IMPLEMENTING SEMINARS UTILIZING' EXPERT
SPEAKERS AND AUDIO-VISUAL PRESENTATIONS TO HELP WOMEN
RESPOND TO BUSINESS CRISES.
O DEVELOPING AND IMPLEMENTING' "MEET THE LENDERS" PROGRAMS
WHICH BRING TOGETHER LOAN OFFICERS FROM COMMUNITYBANKS
WITH WOMEN BUSINESS OWNERS AND OFFERING EDUCATIONAL
PRESENTATIONS AS~WELL AS A MARKETPLACE FOR THE WOMEN
SEEKING CAPITAL.
0 DEVELOPING AND DISTRIBUTING INFORMATION IMPORTANT TO
HOME-BASED BUSINESS VENTURES. THIS MATERIAL INCLUDED
UPDATES ON FEDERAL LEGISLATION, REGULATION, DATA AND
WRITTEN MA1~ERIAL SPECIFIC TO THIS INDUSTRY. WE DEVELOPED
PAGENO="0453"
447
AND ASSISTED IN IMPLEMENTiNG A CONFERENCE .SEM~ES ON
HOMEBASED BV~DtE$S.
O PROVIDING FUNDS FOR THE NATIONAL ASSOCIATION OF BANK WOMEN
TO DEVELOP VIDEOTAP~S AND INSTRUCTIONAL MATER1ALS FOR
OUTREACH.
O DEVELOPING AN IMPORTANT NATIONAL CONFERENCE SERIES
SPONSORED BY THE ~58A CALLED THE PRESiUENJIAL~NATIONAL
INITIATiVE PROGRAM, CONDUCTED IN TWENTY-ONE NAJCR
METROPOLITAN AREAS, THE DAY~LONG CONFERENCES FOCUSED ON
DIFFERENT, SKILLSi TRAINING, PROCUREMENT, MANAGEMENT AND
FINANCIAL PLANNING.. APPR.OXIMA1~ELY TWENTY-EIGHT `THOUSAND
~WOMEN~ATTENDCD THE CCNFERENCES~ AND~ AS A RESULT,
TWENTY-ONE NON-PROFIT 501(C)(3) ORGANIZATIONS WERE FORMED
IN THEHOST CITIES AS A LEGACY TO CONTINUE TRAiNING AND
ASSISTANCE TO WOMEN BUSINESS OWNERS IN THOSE COMMUNITIES,
THESE NON-PROFIT WOMEN'S ORGANIZATIONS TODAY SPONSOR
STATEWIDE WOMEN'S.BUSINESS CONFERENCES IN CONJUNCTION WITH
THESBA., AND HAVE FOLLOWED UP WiTH TRAINING IN ISSUE AREAS
RAISED DURING THE INITIAL NATIONAL INITIATIVE CONFERENCES,
MANY GROUPS ALSO PRODUCE DIRECTORIES OF WOMEN BUSINESS
OWNERS INTHEIR AREAS, HOLD MONTHLY NEETINGS.AND PROVIDE
PAGENO="0454"
448
COUNSELLING~ .10 MEMBERS. SOME ~GROUPS HAVE DEVELOPED
PROGRAMS TO FAMILIARIZE WOMEN WITH COMMERCIAL LENDING. AND
ANSWERED OTHER NEEDS SPECIFIC TO THEIR COMMUNITIES.
O SUPPORT~NG THE AMERICAN WOMEN'S ECON~MIC DEVELOPMENT
CORPORATION IN DEVELOPING A LONG-TERM TRAINING AND
COUNSELLING PROGRAM.
O CONDUCTING IN ADDITION TO ON-GOING SBA WORKSHOPS, MAJOR
CO-SPONSORED CONFERENCES WHrCH ATTRACTED NEARLY 29,000
ATTENDEES IN `THE PAST 18 MONTHS `ALONE.
THE OFFICE O~ WOMEN'S' BUSINESS OWNERSHIP HAS BEEN ACTIVELY
INVOLVED IN A MYRIAD OF ACTIVITIES WHICH ENCOURAGE THE FULL AND
EQUAL PARTICIPATION OF WOMEN BUSINESS OWNERS IN SELLING THEIR
GOODS AND SERVICES TO THE FEBERAL GOVERNMENT. THESE ACTIVITIES
INCLUDE:
O NEGOTIATION OF FEDERAL PRIME CONTRACT GOALS. `EACH YEAR
SINCE 1980, WE I3AVE NOT ONLY METS BUT WE HAVE EXCEEDED
THOSE GOALS.
O DEVELOPMENT OF "uP FRONT" WORKSHOPS FOR WOMEN BUSINESS
OWNERS TO ACQUAINT THEM WITH FEDERAL PROCUREMENT
PRACTICES. THESE WORKSHOPS ARE DESIGNED TO BE HELD PRIOR
PAGENO="0455"
449
TO LARGER CONGRESSIONAL PROCUREMENT CGNEERENCES.
0 CoNTINUED CUTREACK TO ADD WOMEN BUSINESS OWNERS TO THE
PROCUREMENT AUTOMATED SOURCE SYSTEM (PASS)1 THE PASS ~NOW
CONTAINS MORE THAN 27,400 WOMEN~OWNED BUSINESSES, UP FROM
8)188 IN 1981, FOR AN INCREASE OF 234 PERCENt
AS DIRECTOR, I FEEL THAT BUSINESS OWNERSHIP EDUCATION AND
PLANNING ARE THE MOST IMPORTANT ASPECTS OF STARTING A
SUCCESSFUL BUSINESS. I ALSO FEEL THAT THE GOVERNMENT SH~ULD
WORK WITH THE PRIVATE SECT~OR TO DEVELOtPROGRAMS~!TO~ASSLST
WOMEN BUSINESS OWNERS. WE~HAVE DONE THIS. EACH CONFERENCE
SERIES AND WORKSHOP HAS BEEN IMPLEMENTED WITH THE ASSISTANCE OF
COMPANIES THROUGHOUT THE COUNTRY. NOT ONLY DID THE WOMEN
BENEFIT FROM EXPERTS IN THEIRFIELDi THE PRIVATE SECTOR HAS
BECOME AWARE OF THE VALUE OF WOMEN IN THE WORKPLACE AND IN
THEIR OWN BUSINESSES, ITHAS TRULY BEEN A PARTNERSHIP AND I
WILL WORK TO SEE THAT CONTINUE. V
THE OFFICE OF WOMEN'S BUSINESS~,WNERSHI DISSEMINATES V
INFORMATION TO WOMEN NTERNSTED IN STARTING A BUSINESS. ~ V
APPROXIMATELY 3,000 JNPCRMATIONRE.QUESTS' ARE RESPONDED TO
ANNUAllY, WE E DEVELOPED AD SLICKS FOR~PUBLIC SERVICE
ADVERTIStMENTS WHICH WERE INSERTED IN NUMEROUS PUBLICATION~,
WE HAVE JUST INITIATED~A ~ROGNAM~TO fli~5SENj;NATE INFORMATION ON
PAGENO="0456"
450
STARTING A BUSINESS TO: WOMEN VETERANS, WHO~ WILL PASS THROUGH
OVER 8,000 MILITARY SEPARATION CENTERS. THE WOMAN VETERAN HAS
BEEN SAN UNTAPPED POTENTIAL CONSTITUENT, UNTIL NOW. WE KNOW
THROUGH OUR CONTACT WITH WOMEN THROUGJIOU-T TH'E COUNTRY THAT
`THERE IS A GREAT NEED FOR INFORMATION. WE RAVE: PROVIDED THE
ASSISTANCE NECESSARY fOR~:WOMEN NOT ONLY TO CONSIDER STARTING A
BUSINESS BUT TO ACTUALLY MAKE THAT DREAM A REALITY THROUGH
REALISTIC A~VI'CE' AND INFORMATION.
IN A~P1TfON'TO~NY RESPCNSIBIL'TIIES AT THE'SMALL BUSINESS
ADMINISTRATION,! ALSO SERVE AS EXECUTIVE,,DIRECT.O~ OF THE
INTERAGENCY COMMITTEE ON WOMEN'S BUSINESS:ENTERPRISE ~IACWBE).
THIS COMMITTEE iS"RESPONSI?LE FOR CARRYING OUT A PRE~ID'ENTIAL
NANPATE TO~PROMOTES MONITOR AND COORDINATE FEDERAL EFFORTS'MN
BEHALF~OF'WOMEN~BUSINESS"OWNERS,"THE OFFICE OF WOMEN'S
BUSINESS' OWNERSHIP IS RESPONSIBLE MCI ONLY FOR AS IST!N6,TH~
COMMITTEE IN IMPROVING OPPORTUNITIES FOR WOMEN BUSINESS OWNERS
`IN THE PUBLIC SECTOR, BUT ALSO FOR MOBILIZING PRIVATE SECTOR
RESOURCES,'DEVELOP'ING TRAINING MATERIALS AND SERVING AS AN
ADVOCATE FOR WOMEN' BUSINESS OWNERS. MEP1BERSHIP'I.N THE
COMMITTEE IIDRAWN~~fR0M"MAJOR fEDERAL `DEPARTMENTS AND AGENCIES.
ANDREFLICTS THE' WIDE SCOPE': OF GOVERNMENTAt: POLICY AREA'S~ IN
ADDITION1 `CO'NMITTEE'MEMBERS `HAVE INPUT ON: FEDERAL `PRIME' *
CONTRACT GOALS FOR" WOMEN BUS~'NESS OWNERS.
PAGENO="0457"
45i
THE COMMITTEE HAS~
O CREATED AND IMPLEMENTED 17 WORKSHOPS ON FEDERAL PROCUREMENT
FOR,~WOMEN:BUSINESSOWNERS, RECE:IVEDBRIEFIMGS ON THE PROMPT
PAYMENT ACT, MAJOR PROCUREMENT CONEERENCESAND TRADE
MISSIONS, AND MADE AVAILABLE RESEARCH ON WOMEN BUSINESS
OWNERS. ~
O DEVELOPED AN IMPORTANT GUIDE "WOMEN BUSINESS. OWNERS:
SELL IN6~ TO TH~FE~ERAL 6OVE~N~ENT" WH~I~CH HAS~ AN ANNUAL~'
DISTRIBUTION OF 15,000,
O ~uBtisHED~ 1987 ~NfHJALREP~RT WHICH HAS, BEEN~:WIDELY
DISTR~IBUTED WIN Afr ADDIT1O~AL 4,000 COPIES REQ~JESTED, BY.
MtMBERS OF CONGRESS, TRADE ASSOCIATIONS, FEDERAL
DEPAkTMENTS AND `AGENCItS~, AND SOi(CY(3) ASSOCIATIONS.
O ~X~PLOR~D THE EFFECTIVEESS OF INCREASIN6PRIME: C~'NTRACT~
GOALS TO WOMEN OWNEDBUS}NESS BY INCORPOR~ATING~1HEM iNTO~
THE PERFORMANCE RATINGS OF CONTRACTING OFFICIALS.
O PROVIDEDBRIEFIPrGS ~fEDER~L AND NoN~PROFIT GROUPS TO
~BR~EE THEM ONIACWBE ACT! VIT~IES AND~ TO HEAR THEIR eONCE~NS.
PAGENO="0458"
452
O ADDRESSED THE ROLE OF THE FEDERAL GOVERNMENT WITH RESPECT
TO THE ISSUE OF CERTIFICATION IN COMMUNITY PROPERTY STATES.
0 BDUGHT PRIVATE SECTOR UNDERWRITING OF A CASE~STUDY APPROACH
TO THE COST OF BIDDING.
O FOCUSED ON INTERNATIONAL TRADE AND PROMOTED THE
PARTICIPATION OF WOMEN IN ALL FEDERAL TRADE MISSIONS.
THE COMMITTEEWILL CONT~INUETO PROViDEAS$IStANCE TO WOMEN
BUSINESS OWNERS ON A NATIONAL LEVEL.
MR. CHAIRMAN~ BASED ON THE AVAILABLE INFORMATION FROM. OUR DATA
BASE IT IS CLEAR THAT WOMEN AS A GROUP ARE A VIABLE AND RAPIDLY
GROWING CONTRIBUTOR TO THE NATION'S ECONOMY. THE GROWTH IN
JUST THE LAST EIGHT YEARS IS PROBABLY THE MOST EXPANSIVE
INCREASE OF ANY ONE GROUP IN THIS CENTURY. BY ALL ACCOUNTS IT
WILL CONTINUE. TO GROW. BY tHE YEAR 2000 IT IS EXPECTED IHAT
1/2 OF ALL' SELF-EMPLOYED INDIVIOUALS WILL BE WOMEN.;
WE HAVE GREATER ACCESS TO INFORMATION THAN WE HAD EiGHT YEARS
AGO. WE NOW CAN ANALYZE THE TRENDS AND DEIERMINE WHERE'WE NEED
TO GO FROM HERE.. HOWEVER, I FEEL THAT MORE UPDATED~ INFORMATION
is NEEDED.
PAGENO="0459"
453.
FROM THt1~Th WE H~YE~iODAY. WE:KNOWTHArTHE NEEDS~OF WOMEN:
TODA~ARE DIFFERtNIT14At4 A DEtA~E AGO AND WE MUST CONSTANTLY
MONITOR AND PROVIDE FOR THESE NEEDS.
0 IT IS MY PERSONAL BELIEF THAT LONG-TERM BUSINESS SPECIFIC
TRAINING AND COUNSELLING CAN' BE OF GREAT BENEFITS SBA u~r~
ACCOMPLISH THIS CURRENTLY THROUGH SCORE AND SBDC'S. A
NON-GOVERNMENTAL ORGANIZATION WHICH HAS BUILT ITS
REPUTATION ON QUALITY LONG-TERM COUNSELLING IS THE AMERICAN
WOMEN'S ECONOMIC DEVELOPMENT CORPORATION (AWED). I WOULD
ENCOURAGE AWED TO EXPAND THE NATIONAL BASE IT HAS ALREADY
STARTED FOR THIS VERY PURPOSE.
C INSTEAD OF FOCUSING ONLY ON OBTAINING DATA ON INDIRECT
FEDERAL PRIME DCLLARS AWARDED TO WOMEN THROUGH
SUBCONTRACTING WITH THE MAJOR PRIME CONTRACTORS1 THERE IS A
* GREATER NEED, AND THAT IS TO ASSIST WOMEN~OWNED FIRMS TO BE
CLEAREDAS ?IDDERS WITH THE MAJOR PRIME CONTRACTORSBY.
MAKING CERTAIN THEY ARE PREPARED THROUGH SBA'S EDUCATIONAL
PROGRAMS.
O I. WOULD SUPPORT A NATIONAL NEWSLETTER FOR WOMEN BUSINESS
OWNERS WHICH WILL BENEFIT ALL ASSOCIATIONS AND ALL WOMEN
BUSINESS OWNERS AND I BELIEVE THAT THE. PRIVATE $ECTOR~ IS
CAPABLE OF AtCOMPLISHING THIS.
PAGENO="0460"
454
WOMEN ARE ENTERING ~THE MAINSTREAM OF COMMERCE AT A ~APID RATE
AND CERTAINLY BY THE END OF THE~t4EXT DECADEITHIS WILL HAVE
BEEN ACCOMPLISHED,
THANK YOU, AND NOW I AM HAPPY TO TRY TO~ ANSWER ANY QUESTIONS
YOU MAY HAVE.
PAGENO="0461"
455
TESTIMONy OF
SUSAN HAGER
PRES WENT ~O? BAGEk, SHARP & ~B~AMSON, INC.
HOUSE COMMITTEE ON SMAt~L BUSINESS
MAY II, 1988
Mr. Chairman and members of the Subcommittee:
I appreciate the opportunity to appear this morning to°
discuss issue~ of great importance to the small busines~ ~om~
ntun.Lty.~ My nam.~ ii ~us~ hager and I am co-founder and President
o~ Hager, Sharp & Abramson, one of the largest, independently
owned communications firms in the Washington Metropolitan area.
I have been asked.to comment on the effectiveness of the
federal government programs instituted to Sup~ort women business
owners and on what makes then Successful.
Over the past de~oade, federal action to support women's:
bi~isinëss enterpris~i~as been on the rise. T~re à~-e programs
or incentives in many federal aqencies and we applaud those
b~.tt they are not achieving the results we aJi hoped'fbr. They
are not making a bOttoim~-line difference,
p~ exanu~1e, the )~edersl Reset~te Bóa~d ~in i~s role as the
goveriu~ient `S prii~ar~ f{r~án~ial tr&~ito~, is~ ~ *n ~n~re-
pr~neursiiip. Mar~ha S~ger has a commitnie~t to wo~itert. But ~1~e
PAGENO="0462"
456
/ 2
bottom line is that women still do not have the aç~cess to com-
mercial credit that we should have.
The Interagency Committee on Women's Business Enterprise
has produced a booklet on "Women Business Owners Selling to the
Federal Government.' The General Services Administration, the
Labor Department and the Agriculture Department, the Agency for
International Development each have programs or seminars to
train women on contracting -and procurement. The Department of
Commerce sponsors "Negaxnarketplace." But the bottom line is that
while we now have many more wopten trained and knowledgeable about
government contracting, the contracting and procurement awards
going to women still amount to less than 1% of the government's
prime contract dofl~ars.
We have heard about the great things happening at SBA. But
the bottom line is that in SBA',s report on The State of Small
Business, ~BA did not point to any gains malçe by women business
owners, nQ: gains in procurement, no gains in loan dollars, o~r
in any other area~.
Why are the federal programs not achieving the i~esults we
all hoped for~? I t1~nk part of the answer is that government pro-
grams are based on assumptions that are no loflger valid. For
example, most governn~e~t initiatives directed at women entrepreneurs
and matters of procurement are based on the premise that limited
resources are best spent in training women business owners.
PAGENO="0463"
457
3
we agreed with that premise. through the Ford, Carter, and
Reagan administrations. But looking at results,we can no longer
say, "If only the women were better trained - given more information,
they would have real access to government procuremei~t systems.
Many other government programs such as loan programs, manage-
ment programs, and~ so on, are based on the premise that there should
not be separate programs for women -- that we, as women business
owners, should become part of the mainstream.
Again, we agree in principle withmainstreauting. We imter~-
preted mainstreaming to mean getting women included in existing
programs. Unfortunately, mainstreaming seems~to have been inter-
preted in the many agencies to mean a. return, to "the good old days"
when agencies did not have to deal with women as a constituency.
WHAT WE HAVE . LEARNED . S
We have ~ea~rned that training programs~' in and of themselves
do not get'results. S S
we have learned that mainstreaming has not bro~ght women
into the system.~ .~ S
We have also learned that program ir~&tiatives directed
to women entreprenei~t~s are simply ~t enough of a priority
in any agency to brjng about bottom line results,.
We have learned'~ that the staffers' who ~un the p~ograxns are
PAGENO="0464"
458
4
not part of the Senior Management Team and are not in
a position to. make women's business enterprise a priority
within the agency.
~.nd, after 13 years, wehave come to the conclusion that
we need Congressional mandates and oversight in order to
move women business owners into the economic mainstream.
WNAT CONGRESS CAN DO
1. In order to make real progress, we need an amendment to
the Equal Credit Opportunity~ Act of 1974 (ECOA).
2. We~need a Women Business Owner's policy Council that
reaches ~cross the federal government and has the com-
mitment of highest level officials, The COuncil should
develop plans which include targets, goals, and measurable
bottom line results for each agency,
3. We need Congress to mandate each department at~d agency to
implement those plans and to develo.p means ;to' include
~ott1en~ in' contracting, prc~curement, policy-making, inter-
national trade, outreach, advisory committees and corn-
mission appointn~ents, and to use' every opportunity to
open their system to Women Business Owners.
4.' And we need'Congress to overseeimplementation and results.
PAGENO="0465"
459
Tizi~ PA1~wINDER(~ORPOflAl?1ON
rOR INTERNATIONAL TRADE
~ 162S~ K STR EtI, N~ W~
~WASHING~rON,Q.C.2OOO6
zo~ ~~eo~ñeo
Tt1.CX ea~*4O7
~STATEMBHT OF
SUSAN ~L.. SNYDER
PRESIDENT, PATHFINDER CORPORATION
T BEFORE THE
COMMITTEE ~ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
P1*1 11, 1988
PAGENO="0466"
460
STATEMENT SUMMARY
I. Women Entrepreneurs: Serving the Public Interest
A. The vigor and success-of women entrepreneurs is
explained in part by their intense desire to depart from
ordinary or staff fun~tions and to compete in business,
incurring all the challenges and risks that
entrepreneurship entails.
B. It is Important to. recognize the enormous resilience,
tenacity~ and purposefulness of a labor pool avaliable to
the United States whose energies and talents are
underutilized at a time when America--n economic
competitiveness is being severely tested.
C. The broad public interest would be served by
supporting women entrepreneurs.
II. The Value of Women Efltrepreneurs in Strategic Business:
Focus on Trade -
A. Aggressive, lean, vital, new companies need to
- provide dynamism i~i maintaining and improving American
trade performance. -
- B. Four of five new American businesses are women-owned,
it is a matter of simple deduction to observe that such a
group -presents a wellspring of talent and drive f or trade-
related business activity.
III. Support Needed for Women in Small Business
A. Women entrepreneurs need-- to -build significant -
business mass.
B. The primary means for increasing women
entrepreneurship is through open access.
C. Consistant, predictable access In federal procurement
and administrative processes would be a substantial gain.
D. Women entrepreneurs simply ask for the ability to be
permitted laisser faire with the assurance that barrier-s
are dissolved.
PAGENO="0467"
461
STATEMENT ON POZ.IC!
REGARDING WOMEN ENTREPRENEURS
Mr.~ Chairman and Members of the Committee:
M~' name .is SuSan Snyder. X am President ~of the Páthfir~der
Corporation f~r International Prade, a firm in its tenth ~ear
specializing in export trade and overseas business development.
Pathfinder functi~ons Iridiverse business sectorS from waste
managemen to consumer ~dOds atid profesàional s~rv1~es. Our
clients include companies Of all sizes; ~he majority come ftom
Eur~pe and the Utiited States.
Béforè founding Pathfinder, I wOrked overSàáS for eight
years for a major foreigti-~Wtiéd ñ~uttinetFona~l c~rpor~n,
first as market strategist for developüient~and diverstfiàation
and thenashead of a subsidiary ~ompany's wOrld-wide ~export
&ganization. Our o~je~tive was ~màrketi~ng~sophistlcated
electroncc instrumentation and integrated systems. M~ primary
focus i~tSs in~Europeat~ at~d E~ast-WeSt tradC.
I Women Entrepreneurs serving the Public Interest
My comments to you today are made in the context of thiS
experience aS a woman ir~ business
PAGENO="0468"
462
Unlike my colleagues here this morning, I have not
participated in formulating or implementing policy or programs
supporting women entrepreneurs. Neverthelpss, an understanding
of the impulse driving women entrepreneurship is useful if
policy is to be truly effective~ and I am honored to have been
called to provide a view from this perspective.
It is appropriate to note also that my perspective
excludes having conducted business,w,i~h the beneficial aid of
any support programs for women business owners. Descended from
American settlers whose women worked by necessity alongside
their men, I was, however, fortunate to have been raised in a
family that believed in encouraging its daughters to attempt
excellence in whatever' field of chosen endeavor and to do so at
the limits of the boundary of what is practicable. My
education was obtained' at a liberal arts college in New
England, a seven sister school, which is the ~oldest continuing
institution for women's, higher education. This strong
tradition, quiet yet persistent, has equipped me with the
internal resources necessary to venture into modern business in
a man's world. That ~it is a man's worl4 has never been a
subject of doubt for me.
Wh;en I was a sophomore hi cal lege, I ,~ was hired for. summer
employment by a Fortune 50 American corporation, My friends
fromthe still male ivy league were enrolled in the company's
summer management training program, positioned as future
executives on the fast track. I was employed in the
duplicating department operating a' photocopy machine.
Recognizing this uncomfortable fact, the company enrolled me in
a program learning to operate state-of~tbe.-art typesetting
equipment.
PAGENO="0469"
463
3
The anecdote is not presented with i~ony or animus. A
summer episode, it appears to be of li-ttle lasting harm~ It
ranks among the mildest of the difficulties I have encountered
in business. The spontaneous. effort at justice during-an era
when women's issues were almost nonexistent-was even
surprising. But the tale serves asa case, in point
illustrating why women of various baokgrounds have found it
stráteglcaUy,~wise~t,~o. st~ort çlr~cui,~ the corporate mainstream
*and develop business activity as entrepreneurs. -
While in the c~rpora-te context', I- ne~e~ occupied an
existing job. During my employ-~ith'-la~ge' corporations,
American or foreign, my jobs ~ere of my~ own design and earfled
through-my own powers of persuasion. These `1dCalS" Wete -made
on the basis of my receiving a'lowered pa~ scale in exchange
`for the enviable right to er~te.r the ~ontrol--r-c'oui, par~ici'pate'
in the game with an appropriate title, a-nd obtain the
opportunity to succeed'-or f~i-l on the'basisT~of performan~é.
-The vigQr and juccess of womeS eritr~epréiteurs is `è*piained
in part by their intense des-ire-to depat~ ~-ro~ oi'~1~ary-~or
staff functions and `to co-m~te `in b~Si~esi'~ `i~curr1~gál1 the -`
challenges and risks that entrepreneurship'entails. ~ese
conditions provide'the rationale for my decision to -leave the
protected environment of blue~chip corporate enter~riSe and
become an entrepreneur.
Fortunately, `I~ait~stiLl too yo~ng'to,i~ndui~e mT this -
biographical mIedtary fOt' the-~-pü-rPosës ~`Ot `rèmi-nis~éttoe. - My -
aim-has been to~use expetience ~as-a-launohi~g'poiOt for
characterizing the eno~rnous resiliencei ~en~ài'ty, `and -` -
purposefulness'of a'labor pool-available to th~'Un~téd StateS -
whose energies and tallOts ate underutilized at'a time when'
American economic competitiveness is being severely tested.
PAGENO="0470"
464
Aside from ~the issues of fairt~ess and equal access which
have been raised ~elsewhere in these proceedings, It is my
opinion that the broad public interest would be served by
supporting women entrépreneürs. To ignore this resource or to
permit it to be handicapped through indiffe~rence would be a
breach of leadership when the public interest should be served.
II. The Value of WOmen Entrep~enàurs `iO ~S'~rategic Busineès:
Focus on Trade
It is my exper~enoe tha~man*y women entrepreneurs,. rather
than being a !group requiring remediai.helpf represent a valued,
dynamic resourc.e in pursuing vital American economic interests.
I beli~ve this fact exists in the area of trade where our
negative balance of payments is a source o.f grave concern to
thoughtful Americans and internationalists as well.
The trade situation can be summarized briefly: in 1960,
the U.S. occupied 25% of world trade In manufactured goods; in
1970., 4mer.ica'sshare declined to 21%; in 1980, not only had
this share d.ixni.nished to 18%, but the U.S. lost its position of
world leadership in manufactured exports. If the United States
had maintained its market position, it would have entered an
ad~itiona1$60~991billion in export sales, reducing our annual
trade deficitby about half.
In overview, this trend is understandable: as our
multinationals, matured, their extensive operations became
Increasingly integrated in local, economies, and production
sources were diversified., This trepd reflects the normal cycle
of multinational activity. Unfortunately, our leading trading
partners were poised to take up the competitive, slack with
smaller. and less cumbersome, more aggressive companies.
PAGENO="0471"
465
`5
Small- and me4lum-sized Arn,rican companies can provide
similar trade impetus. A recent survey by Touche~Ros~ has
found that 4 out of 5 new businesses nationwide are women-,.
owned. It is a matter of simple deduction to observe that such
a group presents.a wellspring of talent and drtve for `trade-.
related business activity.
Qua~tlf~ed Information on women entrepreneurs in ~trade is
rare. Relying on empirical fact, I can speak of ne case first
hand. Pathfinder survived an arduous, start up period.. We
chose not to operate within programs because we felt that
finding, access was too problematic and the pr~obability .o~
obtaining assistance too unpredictable to count on.
~unctloning'in an elite arena of international finance~and
negotiation, we have leveraged our assets to the max,. taking
less In order to compete succëssfu~ly. Without significant
financial reserves, we called upon borrowed power to legitimize
our efforts. The process has been laborious but worthwhile.
In the fragmented cons~lti.ng.arena, the challenge we now face
Is how to acquire critical mass and assume leadership in a
field w~ich.has enormous potential as the world becomes a
global, market. ,We feel this sense acuteLy as major
developments occur In Europe with 1992 approaching and as East--
West trade'emerges i~' Soviet Europe with the trend towards
glasnost. ,
At this stage in our corporate existence, we take pride In
having helped American businesses to export, succeed at joint
ventures ~wit,h international, partners, or .ex~pand, through
subsidiaries. Our res~4ts are accruing~,seem'ingly too
gradually. tam persuad~d that~theoveraU't~rade result can be
multiplied ~y the. efforts of, many. small and medium busthess
participants to yzeld a measurable benefit to America's trade
performance and Its contInued position in world economic
PAGENO="0472"
466
6
leadership. To maintain our economic vitality, we need
successive cycles of vibrant S~gressive ~ompanies. With 4 out
of 5 new companies Started ~y~women'entrepreneurs, this
valuable resource holds potential.
III. Support Needed `for Women in Small BusiCess `
Survival aside, my interest as a small business owner has
been to develop the capital tèserves necessary tb build our
organization into a recognized, forceful, SignIficant, albeit
small player in the area of international trade.
Looking at the essence rather than the letter of policy,
the primary means, `in my judgment, for increasing wo*ien
entrepreneurship is through open access. `From our standpoint,
we do not need aid ~ se. We are entrepreneurs willing to
take risk positions in our business activity. However,' we do
require equal access, `as would any firm, if we are to succeed.
Such access is needed in two critical areas:
- For business oredibility and operational stxccess,
access is needed to persons `hol'd1~ng decision-iiaklng
power, who will lend an egalitarian ear to one's
business premise.
- For financial success, access to government
procurement Is a' vital necessity.
In order for women to be' enabled to make the contribution they
wish to make, these el'ements a~re critical: equality on
economic and operational playing fields. Other specific Issues
have been rais'ed during these hearings. In sum, women
entrepreneurs need the assurance that they wi]1 be included i'n
PAGENO="0473"
467
7
the nation's business p~oeess.,. Co~slstent,pred1ctab1e acceSs
In thefederal arena~wo~ld be~a substantial gain.,
In theexchange Of ideas' about government's appropriate
role ranging from interventionism to total passivity, it has
become evident that basic leadershIp in policy matters ~is our
government's responsibility ~Vbe difference between ~ls~ori
faire and ~aiss~r aller .s also becoming distinct Lai~~
aller, allowing p~li~,y to f~.oat in any direction, iS natve
t4a~iSSer ~ letting business procee&, requires 5: freedom
that only gov~rnment can ina~ire. I thInk that woineW
entrepreneurs simply ask for the ability to be permitted
laisser faire in business with the assurance that barriers are
dissolved.
PAGENO="0474"
468
Additional Information from Kay Bulow
I would not say that there is anything I
have asked for which I have not gottet~ from my
superiors. The Secretary of Commerce has been most
generous each time I have requested funds, personnel,
policy changes, and all initiatives for women business
owners.
At Commerce we are now drafting policy that will insure
that our Small Business Liaison Off icers and Small
Business Specialists are trained on an on-going basis to
seek women~owned firms and other socioeconomic
categories of businesses for contracting ptirposès. We
will train these employees in how to view women~owned
firms ir~ a positive manner, and how employees' attitudes
influence the acceptance of women-owned federal
contractors.
In my testimony I spoke about the need for better data
on women-owned businesses. In addition to data on
federal procurement, we also need to know the total of
subcontracts awarded to women held businesses. I would
like to add my name to the list of those who are
requesting the addition of lines for women-owned on the
Standard Forms 294 and 295, the Federal Subcontracting
Report for. Individual Contracts and the Federal
Quarterly Individual Subcontracting Report that are
filed by prime contractors.
PAGENO="0475"
469
ADDIflO~AL I]~1FORMATION SUP1~LIED BY cAROL M. CROCKETT
U.S. SMALL BUSINESS ADMIt~tISTF~ATION
WASHINGrON. D.C. 20416
EXECUTIVE MANAGEMENT REPORT ON PROCUREMENT FOR
WOt4EN~~OWNED SMA]~i~ ~USINE$SE$ FOR Ff1985
March 1986
PAGENO="0476"
470
I. EXECUTIVE HIGHLIGHTS
There has been a dramatic qrowth in procurement
achievements for women-owned small businesses over the
last six years. From Fl 1979 to Fl l98S~, there has been
a 608% dollar increase in Federal prime contract award
achievements to women-owned small businesses. The
percentag~e of prime contract award achievements to
women-owned small businesses to total procurement went
from .22 in Fl 1979 to .74 in Fl 1985.
In FY 1985, the total prime contract award achievements
for women-owned small businesses was $1.3 billion, an
all-time hioh. The Department of Defense represented
70% of otjrprime contract award achievements to
women-owned small businesses for Fl 1985.
From Fl 1984 to Fl 1985, there was an overall increase
of 12% in Federal prime contract award dollar
achievements to women-owned small businesses. For Fl
1985, the majority of Anencies showed an increase in
this contract award activity for women-owned small
bt~isinesses.
From Fl 1985, the total Federal Prime Contract award
goal achievement for women-owned small businesses in.
dollars was 120%. In each year from Fl 1980, the total
Federal Prime Contract award dollar achievement to
women'owned small businesses has been Over 100% of the
goal established.
PAGENO="0477"
PROCUREMENT ACTIVITY ~FO~ WOMB owwE~psrNEssEs IN DETAIL
o Thble 1 - Federal Prime Contract ~ward
Achievein~ént~ for Women4O~n~d 8~l]~. Businesses for
FY 1985.
o Table 2 Increase (Change) in Feaeral Prime
Contract Award A~hie~ement for Women-Owned Small
Businesses from FY 1984 to FY 1985 for Major
Aoencies.
o Table 3 - Federal Prime Contract Awards to
Wornen-0v'ned Small Businesses: Goals and
Achievements
o Table 4 - Trends in Federal. Prime. Contract A~ward
* Activity to Women-Owned Small Businesses.
PAGENO="0478"
472
TABLE I
FEDERAL PRIME CONTRACT AWARD ACHIEVEMENTS
FOR wOMEN-OWNED SMALL BUS~NESSE
FOR FY 1985
(Ranked by dollar, ampunts of achievements~in mils.)
Aczency
Defense
GSA
VA
Aq r i Cu 1 t u r e
NASA
BBS
Interior
Transportation
Treasury
Enerciy
EPA
State
AID
Commerce
TVA
Justice
Labor
Education
BUD
NSF
SBA
OPt-I
FERC
NRC
USIA
FEMA
Other
Achievements
s 898.Q0
58.76
52. 12
45.78
38.90
35.10
27. 80
26.94
18. 19
11.28
9.20
8.79
8.25
7.09
6.80
6.08
~. 00.
3.20
3.17
2.39
1.91
1.74
1.37
1.31
1.10
.44
1.60
$1,283.31
PAGENO="0479"
473
TABLE 2
INCREASE (CHANGE) IN FEDERAt. PRXME CONTRACT AWARD
ACHIEVEMENTS FOR WOMEN-OWNED SMALL BUSINESS~
FROM FY 1984 TOFY 1985
FOR MAJOR AGE~CIS$
(fl~i1~r amount in mils)
*oepartment of. Energy's goals and a~hie~emefltS for ~`Y 1984
included NONGOCO and GOCO contracts The achievements were
reported at~ $118 8 millio,n In FY 1985, Department of EnerQy
set their goals and achievements, bas~d on only NONGOCO Th~
ach~~evernettts for I4ONGOCOS was $11 3 m~1lion Contracts for
COCOs were reported as $145.2 million.
1984
Percenta9e Change
from FY 84~ to FY,~85
1985
Defense
GSA
VA *.
Ac~ricu1ture
NASA
HHS
Interior
Transp.
Treasury
Enemy
$719.0
72.4
37.6
31.8
024.7
46.9
22.9
32.4 .
4.2
. *
25% .
-19%
39%
44% .
5.7%
-25%
21% .
17%
333%
23%
`,
~
.
.
$898.0
58.8
52.1
45.8
38.9
~
27.8
26.9
18,2
*
9.2
EPA
State
AID
Commerce
TVA
Justice
Labor
Education
HUb
NSF
$,A
OPM
NRC
USIA
FEMA
:
7.5
6.1 .
5.7
6.1
5.1
4.2
3. 1
4.1
2.7
1.2 0
2.~ 0
4.l~
1.1 0
1.9
.3
44%
46%
16%
*~33%
~
94%
-22% .
19%
.jOO%
~`2l%
~5~% 0
18% .
-42%
330%
0
8.8
8.3
7.1
6.8
6.1
. 6. 0
3.2
3.2
. 2.4
1.9
1.7
1.3
1.1
*4
PAGENO="0480"
TABLE 3
FEDERAL PRIME CONTRACT AWARDS TO WOMEN-OWNED SMALL BUSINESS
GOALS AND ACHIEVEMENTS
GOALS
(in ails.)
FISCAL YEAR 1985
ACHIEVEMENTS
%. of PrimeContract
Awards to Women-Owned
Dollai~ Small Businesses to
Amount Total Procurement
% of Prime Contract
Awards to Women-Owned
Small Businesses to
Total Procurement
Aaency
Dolia r
Amount
Defense
735.0
.5
898.0
.6
GSA
40.5
*
.9
58.8
*
1.0
VA
36.8
1.6
52.1
2.1
Agriculture
32.0
1.5
45.8
.
2.0
NASA
fiNS
35.0
24.3
.6
1.7
38.9
3~.l
.6
2.2
Interior
TRapsportation
Treasury
: E~nergy
EPA
17.7
33.1
6.3~
34.0
9.8
1.7
1.6
2.6
.3
1.6
27.8
26.9
18.2
11.3
9.2
2.6
1.1
4.4
.1
1.5
State
3.7
3.6
8.8
3.2
AID
Commei~ce
TVA
Justice
Labor
Education
HUD
NSF
SBA
OPM
FERC
NRC
USIA
FEMA
7.8
7.0
9.2
4.0
5.7
2.5
7.8
.8.
2.0
6.1
.7
.9
2.0
.2
3.2
2.1
.6
1.0
1.0
1.6
~.0
.4
8.0
13.4
10.0
1.7
2.0
.1
8.3
7.1
6.8
6.1
6.0
3.2
3.2
2.4
1.9
1.7
1.4
1.3
1.1
.4
2.3
2.2
.8
1.3
1.0
1.9
2.9
1.2
6.9
8.6
22.0
2.4
.9
.2
PAGENO="0481"
475
TRE~WS IN FED~RAL ?lUt4E CO~4TRACTAWAROACTtVI~Y
TO WOM~N-O~UED SMALL BUSXN~~E$
Fl Goals Rate of Chanqe Achievements Rate of Chanqe
(mils.) (mils.)
1979
1980
1981
1982
1983
1984
1985
1986
$ 211.3
407.9
480.4
640.0
865.7
1,066.3
1,330.2
93%
1R%~
33%
35%
23%
25%
3~8.4
631.5
683.3
863.4
1,146.6
1,283.3
* 114%
6 ~%
8%
26%
33%
12%
Percenta9e of Prime Contract Award Achievements
to Women-owned Small Businesses to Total Procurement
Fl
1979 .22
1980 .37
1981 .56
1982 .52
1983 .57
1984 * .71
1985 .74
88-499 0 - 88 1.6.
PAGENO="0482"
476
* U.S. SMALL BUSINESS ADMINISTRATION
WASH1NG~TON, D.C. 20416
* EXECUTIVE MANAGEMENTREPORTON PROCUREMENT FOR
WOMEN OWNED SMALL BUSINESSES FOR FY].986
March 1
PAGENO="0483"
477
EXECUTIVE HIGHLIGHTS
There has been a dramatic growth In procurement
achievements for women owned small businesses over the
last six years. The percentage Of prime contract award
achievements to women owned small businesses to total.
procurement went from .22 In FYl~79 to .9 in FY 1986.
In FY 1986, the total prime contract award achievements
for wom~n-ôWned small busihesses wa~ $1.6 billion, an
aU-time high. The Oepartnient of Defense represent~
10% of tota1~prime contra~t award a~hievement~ to women
pwned small businesses for FY 1986.
From FY l98~ to F? 1986, there was an overall increase
of $330 million in Federal prime contract award dollar
achievements to women owned small businesses. For F?
1986, the majority of Agencies showed an increase in
this contract award activity for women owned small
businesses.
PAGENO="0484"
478
II. PROCUREMENT ACTIVITY FOR WOMEN OWNED BUSINESSES IN DETAIL
o Table 1 Federal Prime Contract Award -
Achieyements for Women Owned Small Businesses
for FY 1986.
o Table 2 Increase in Federal Prime Contract
Award Achievement for Women Owned Small
Businesses from FY 1985 to F? 1986 for Major
AgenCies.
TableS 3 - Trends in Federal Prime Contract
Award Activity to Women Owned SmailBusinesses.
PAGENO="0485"
479
TABLE I
~FEDERAL PRIME CONTRACT AWAEP~ACHI~VEMEN!~
FOR WOMEN OWNED SMALL BUSINESSES
FOR F~( 1986
(Ranked by dollar amounts of achievements in mils.)
- Agency Achieveme!
Defense $ 1,100.0
~SA 61.3
VA 39.0
Agriculture 38.0
NASA 49.8
HHS .~ 36.8
Interior ~ 8
Transportation 25..1 ~,
Treasury 20.6
Energy 150.8
EPA 7.0
State 8.2
AID 8.3
Commerce 13.1
IVA 5.0
Justice 5.6
Labor 6.7
Education 3.0
MUD 2,3
N~Si~ 2.3
SBA 1.6.
OPM .3
NRC~ 1.0
USIA 2.4
FEMA *. 3
TOTAL ~16l3~Y
PAGENO="0486"
480
TABLE 2
AC
*
.
INCREASE
HIEVEM~F1t
IN FEDERAL PRIME CONTRACT AWARD
S FdR~ WOMEWOWNED SMJ~LL ~1J~INESSES
FROM FY 1985 TO FY 1986
~~OR MAJOR~AGENCIES~
(Dollar amount in mils)
Defense
GSA
VA
Agriculture
NASA
HHS
Interior
Transportation
Treasury
Energy
EPA
State
AID
Commerce
TVA
Justice
Labor
Educatj~on
HUD
NSF
SBA
OPM
NRC
USIA
FEMA
1985
898.0
58.8
52.].
45.8
38.9
35.1
27.8
26.9
18.2
9.2
8.8
8.3
7.1
6.8
6.1
6.0
3.2
3.2
2.4
1.9
1.7
1.3
1.1
.4
1986
$ 1,100.0
61.3
39.0
38.0
49.8
36.8
24.8
25.1
20.6
150.8
7~O
8 .2~
~8.3
13.1
5.0
5.6
6
3.0
1.0~
2.4
PAGENO="0487"
481
TABLE 3
TRENDS IN FE~~RAL PRIME CONTRACT AWARD AtTIVITY
TO W~N~ 0~ED ~
FY
1979
1980
1981
1982
1983
1984
l985~
1986
Achievements
(mils. ~
$ 1813
388.4
631.5
683.3
863.4
i,146.~
1,283 .3
1,613.7
.22
.37
.56
.52
.57
.71
.74
.9
1979
1980
1981
1982
1983
1984
1985
1986
Goals
Imi1s.~
$ 211.3
407.9
480.4
640.0
865.7
1,066.3
1,330.2
* Percentage of Prime Contract Award Achievements
to Women-owned Small Businesses to Total Procurement
PAGENO="0488"
482
EXECUTIVE MANAGEMENT REPORT ON PROCUREMENT FOR
WOMEN OWNED SMALL BUSINESSES FOR FY 1987
March 1988
PAGENO="0489"
488
I. EXECUTIVE.HIGHLL~HTS
There has been a dramatic growth in procurement
achievements for women owned small businesses over the
last eight y~ars. The percentage o~ prime contract award
achievements to women owned small businesses to total
procurement went from .22 in FY 1979 t~ l.Q in F? 1987.
In F? l~87, the total prime contract award achievements
for women-~owned small businesses was *1.7 billion, an
all-time high. The Department, of Defense i?epresented
~64~ of total prime contract award achievements to women
owned small businesses for FY 1987.
From FY 1986 to F? 1987, there was an overall increase
of *118.0 million in ~ederal prime contract award dollar
achievements to women owned small businesses, also
achievements exceeded goals by *235 million. For F?
1987, the majority of Agencies showed an increase in
this contract award activity for women owned small
businesses.
PAGENO="0490"
484
II. PROCUREMENT ACTEVITY FOR WOMEN OWNED BUSINESSES IN DETAIl
o Table 1 - Federal Prime Contract Award
Achievements for Women Owned Small Businesses
for FY 1987.
o Table 2 - Federal grime Contract
Award Achievement for Women Owned Small
Businesses from FY 1986 to FT 1987 for Major
Agencies.
o Table .3 - Trends in Federal Prime Contract
Award Activity to Women Owned Small Businesses.
PAGENO="0491"
TA~X~E I
FEDERAL PRIM~C~NTRAC~ AWARD ACHIEVEMENTS
~F0R.~OME~ ~ L~ BU~INE~E~
EOREY1987
(Rank by do11a~± amounts of achievements in mils.)
Agency Achievements
Defense ~1,100.O
Energy 199.5
HHS 59.8
NASA 52.2
GSA 51.1
Agriculture 46.7
VA 43.0
Treasury 31.7
Transportation 27.5
Commerce .~ . 20.0
Interior 19.3
EPA 14.8
Labor 10.8
State . 9,, 9
Justice 9.3
AID .6.5
TVA 6.0
MUD 5.2
OPM 4.1
NSF .2.8
SBA . 2.4
DOED 2.1
USIA 1.5
NRC 1.4
FEMA .4
All Others . , ..
TOTAL ~tl,73l.7
PAGENO="0492"
486
TABLE 2
FEDERAL PRIME CONTRACT AWARD
ACHIEVEMENTS FOR WOMEN ~WNEb SMALL~USINESSES
FROM FT 1986 TO F? 1987
FOR MAJOR AGENCIES
Defense
Energy
HHS
NASA
GSA
Agriculture
VA
Treasury
Transportation
Commerce
Interior
EPA
Labor
State
Just ice
AID
TVA
HUD
OPM
NSF
SBA
DOED
USIA
NRC
FENA
(Dollar amoui~t in injl~.)
1986
~1,l0O.O
150.8
36.8
49.8
61.3
38.0
39.0
20.6
25.1
13.1
24.8
7.0
6.7
8.2
5.6
8.3
5.0
2.5
.3
2.3
1.6
3.0
2.4
1.0
.5
1987
~l,lOQ.O
199.5
59.8
52 .2
51.1
46.7
43.0
3l..7
27.5
20.0
19.3
14.8
10.8
9.9
9.3
6.5
6.0
5.2
4.1
2.8
2.4
2.1
1.5
1.4
.4
PAGENO="0493"
Pe~entage of Prime Coiit~act Awa.r4 ~Achievements
to Wome~-~owned Small Busj.uesses to Total Prbcuremei~t
FY
1979 .22
1980 .37
1981 .56
1982 .52
1983 .57
1984 .71
1985 .74
1986. .9
1987 1.0
FT
487
TABLE 3
TRENDS 1X1 rEDERkL PRIME CO~TR~CT AWA1~.D ACTIVITY
TO WOMEN OWNED SMALL MU$~NESS~S
Goals Ac~iievemeut~
fmils.) (m~1s.)
1979
1980
1g81
1982
1983
1984
1985
1986
1987
~2l1,3
407.9
480.4
640.0
865.7
1,066.3
1,~3O.2
1,496.4
.
~
~
~
*
*
~
~
388.4
631.5
68~3.3
863.4
1,146.6
1,283.3
~1,61~.7
1,731.?
PAGENO="0494"
N
::~::
:::~::~.::::
L:~±:.
:±.t:
T~
::r
:~:~t:.:
:::-.`::.;
~:::::.:.
.:~:r
~: ~: ~ q~ ~ :
4i -~T~ ;2~~ ~ -~T'~ ~ - - - - -
1~t~t ~ L:~:±i:
~-~-~L ~ ~
488
~N ~
it~ __ __ __
____ ____ ____ ~J~ ____ ____
J ____ ____
I
I;j~ ±4
L±~L~ I
i~:- ~~*;~-\
± ~=c
L4oJL
PAGENO="0495"
0
11
1%
C.,
m
C- 0
o..n
~
Z
g~ !
~
~o obu~. ~U) ~
-`P.31%) ~ O%-~~ ~ C) 3 3 U)
O~O~C~U)U)a6O1%) %PaOO-'~-4~O t U)
U)~~~'QC.3OUCU)l%)O1~CP.OOO !.~*=
zn~
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U3fl~
* >~gI03 ~j
(0 ~-4~.3 ~
-4)3)3-' C.) O~4O(D(D~%R ~
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P.30- ~ U-'(000 II!
* *~$ .~%3~-'.-); -n
F
PAGENO="0496"
1979
1980
1981
1982
1983
1984
1985
1986
1987
490
TRENDS IN FEDERAL PRIME CONTRACT AWARD ACTIVITY
TO WOMEN OWNED SMALL BUSINESSES
Coals
~miji.)
Ac hi e verne n t s
(ails.) -~
*211.3
407.9
480.4
640.0
865.7
1,066.3
1,330.2
l,4~6.4
*181.3
388.4
631.5
683.3
86 3.4
1,146.6
1,283.3
1,613.7
1,731.7
Percentage o~ Prime Contract Award Achievements
to Women~owne4 Small Bu~i~egses tc Total Procurement
FY
~~1979
1980
1981.
~1982
1983
,1984
Y~l985
1986
1987
.22
.37
.56
.52
.57
* 71
* 74
.9
1.0
PAGENO="0497"
491
U.S. SMALL BUStNESS ADMIMSTRATION
WASHINSTON, D.C. 2Q416
August 24, 1988
Ms. LaVon E~ French
Courthel
Committee on Small Business
House of Representatives
Washington,, DC 20515
Dear Ms. French: ~
The attached infoprnat±on is in response to your request.
As you can see, over 1.4 million women have been counseled.
We do not however have ~ break out, on those who attended
the Meet the Lenders conference.
If I can be of further ass~~stance, pleaSe do not hesitate
to calL
Sincerely,
Clifford Downen
Assistant Adinint~trator for
Congressional & Legislative Affairs
Attachment
PAGENO="0498"
492
SEA NANkGEMENT INP0RM~TI0N SYSTp~ ~XELD DATA
YEAR ~
1980 144,042
1~81 165, 340
1982 161,874
1983 168,601
1984 93,871
1985 239,316
1986 212,585
1987 227,212
1988 No longer counted by MIS
TOTAL 1,412,841
Management Information System (r4]g) does not include the number of conferences held.
PAGENO="0499"
493
Remarks of the Honorable Sil~io 0. Conte
Rearing on Women's Business Issues
May 17, 1988
Thank you. Mr. Chairman, today's hearing is the fifth in a
series of fascinating hearings on women's business issues I
have learned much from these hearings and have been very
impressed with the quality of our witnesses.
Today's hearing will ~oous on the changing nature of the work
force Before we begin, I would like everyone to be aware of
the fine work done in thi~s area by the Congressional
Clearinghouse of the Future,
Mr. Chairman, while our work,:force is chan~inq~ one critical
barrier still remains lack of access to capital. I would like
to congratulate my' colleagues' on the :mark' tip of H.R. 4174, which
contains a section for a new guaranteed small loan program I
would also urge my colleagues to cosponsor H~R l8~7, the Eqtial
Access to Commercial Credit Act introduced by our distinguished
colleagues, John LaFalce and Lindy Bogge This legislation
closes a loophole in the Equal Credit Opportunity Act of 1974
that prevents equal access to commercial cI'edit b~ ~bmen and
minorities and requires lenders to establish sound business
practices and to apply ob~eotive oriteria when evaluating loan
applications i feel so strongly about this issue that I have
written a dear ~ollea~ue léttér ur~ir~g eve~one to Si~h on,
Mr. Chairman, you are to be commended for convening this set of
hearings and for introducing H R 1897 Let us all work
together to translate the concerns of America's fastest growing
segment of business owners, American women, into reSponsible and
responsive legislation.
I welcome our distinguished panelists today and look forward to
their testimony. Thank ~bu.' ~ , `
PAGENO="0500"
494
Statement of 3
Bickley Townsend
Director of Research and Education
American Demographics, Inc.
before the
Committee on Small Business
U.S. Mouse ~of Representatives
May 17, 1988
Mr. Chairman and Members of the Committee:
It is a.pleasure to, be here this morning to `discuss the
rapid and important changes taking place in the American
workforcë. The very fact that these hearings focus on issues
aff~ç~ing wpmen business owners illustrates the subject I
have been asked to address. Only a few years ago, women in
business merited little notice from policy makers. In 1S60
women started only one in ten new businesses. That figure has
risen to one in three, and by 1995, it will be one in two.
Today women represent 24% of all business owners.
~ho are America's new workers? What kin4. of changes can
we anticipate in the nation's labor force for the rest of the
20th century, and what will those changes mean to our
society?
To summarize the changes ahead, America's workforce is
becoming' steadily
* older;
* better educated (but with an important caveat);
* more racially and ethnically diverse; and of course,
* more female.
PAGENO="0501"
495
These trez~ds spell profound challeng~es ~0r employers, far the
economy, and for federal policy. in the years ahead. I would
like to sketch out the dimensions of each trend, and. some ~f
the econoniic and policy implications they suggest.
An.A~ing W~rk~orce S
We have heard a lot about the aging of .the~merican S
populatiQn, pa~rticulariy since the first baby boorner turned
40 and made headlines across the news media. After all, the
baby boomers were synonymous with the youth culture. They
were the flower children, the repsi generation, the ones who
never trusted anyone over 30. No'wonder their pas~age into
j~iddle age sent a shock wave through American society. What
it told us was not just that they were no longer young, but
that we, as a society, are no longer young.
The median age of the U.S. population has risen four
years since 1970-from 28 to 32-and it will. continue rising to
36 by the year 2000. America's l~bor force is also aging. The
average worker today is aged 35.3, By the year 2000, the
average worker wi~.l be a distinctly rniddie'-aged 39 years old.
The- aging of our labør force is happening partly because
the baby boom- is rnovi~g into middle age. But a second
irnporta~t reason ~is that younq workers are becomir~g a~Scarce -
commodity, as the small "baby bust" generation born in the ..
late 1960s and early 1970s reaches adulthood. In 1980 America
counted 30 million 18 to 24 year olds; by 1995, that number
will drop to 23.7 million, a decline of oAe-fi~th.
2 - -
PAGENO="0502"
496
1 would like to emphasize that our workforce'is fl.Q~
aging because older workers are remaining on the job for more
years. In fact, just the opposite is happening. At the same
time as young workers are shrinking as a share of the labor
force, those in their SOs and 60s are taking early retirement
in unprecedented numbers. Just a decade ago, only 17% of men
aged 55 to 64 had retired. Today that number has doubled-to
fully one-third who are no longer in the labor force-and the
upward trend continues.
The rising age of the workforce is a double-edged sword.
On the plus side of the ledger, the prospect of a somewhat
older, more experIenced labor force could herald an enormous
productivity bonus on the horizon, one that could give our
economy a welcome boost. After all, ii~ the 1970s labor
productivity stagnated, and largely to blame was the surge of
young baby boomers and women into entry-level jobs. NOw that
these new workers have been abCorbed, trained, and seasoned,
we may see rising productivity per worker.
On the minus side, between now and the year 2000,
America's workforce is expected to grow more slowly' than at
any time in our history except during the Great IDepression.
Of course there will be a great deal of regional variation in
this decline, but overall, it signals a period of tighter
labor, less flexibility for employers, and a real threat of
wage inflation as scarce entry-level workers are able to bid
up their priae. ``
3
PAGENO="0503"
497
This shrinking labor pool will be a particularly.
critical problem for retailers, food marketers, and other
businesses that rely o~ entry-level workers. ~a~ger employers
are already easing the crunch by substitutix~g technology for
labor; for example, many fast food chains now have installed
beverage bars, which shifts the job of pouring the Cokes from
the counter worker to the customer. Small businesses, of
course, can't take advantage of high-tech solutions as easily
as can large corporations,~ How to help them do so is
something your Committee might ~onsider.
Other issues for federal policy include how to ease the
school-to-work transition*foryou~g people; retraining for
older workers; and. incentives, t4~attract ,~etirees back into
the workforce, if only to fill part-time jobs where employers
now find themselves short-~handed.
Turning to education, the overall trend i,s that. America
is becoming a steadily better educated society. Since 1970
alone, the proportion of adults who are high school graduates
has risen from just over half (52%) to fully three-quarters.
The rise in the coliege~educated ~opu~J.ation has been equally
dramatic. The baby j~oorn,. as usual, gets !ncst of the credit
for this trend, as the.~os~educated ~e~e~ation in ~mer~can
history.
The baby boOsters will also be. remembered as the
generation that closed the. educational gender gap. Women have
4
PAGENO="0504"
498
made tremendous strides in education in recent yea~
younger baby boom wonten, those now 25 to 34, one in
a college degree, compared with fewer than one-tent1~
over the age of 55. What's more, as many young women
now are college-educated. This is happening both bec
women are continuing to go to college in record numb
because, for the first time in memory, the share of ~.
who complete college is declining. Nonetheless, the
proportion of high school graduates who go on to coI
almost 60% last year, a record high.
The overall trend toward a more educated workfc~
good sign. Many of the fastest~growing occupations rc
least some college-jobs like páMle~als, medical ac:.
and data processing analysts and repair people. In f~
new study by the Hudson Institute, Work force 2000,
that "between now and the year 2000, for the first
history, a majority of all new jobs will reqt~ire
postsecondary education."
But there is a dark side to the education stor;'.
Statistical averages mask the fact that too many yot~..
are failing, or being failed by, the educational sy...
have a persistently high rate of high school dropou'
particularly among children from low-income and mm:
fami 1 ies-those who already have the fewest advantag
life. We need to do all we can to help convince you
to stay in school, and ideally, to gO onto higher
5
PAGENO="0505"
499~
Besides incpea~4~ng t~equant~~y of eqii~cation oi~r young
people receive, Wé~lso ~ ~irnpxove ~he, quality of t1~at
education. Wecannotpredict with p~ecis~on the jobs of, the
future, but what we do know is that they will require much
greater literacy and much be~ter quantitative skills. than
many of our childi~en now receive in the public sch9ols,
Educational reform has begi~n,, but we have a 1o~ way to . go ~
rebuild t~e ~educatjona], standar4s and basiosJcills that fell
by the wayside ip th~l~0s and `70s. The N~tional Commission.
on Zxcelle~ce in Educat~pn brought to public attention ,~uch,
statistics as the fa~t',that 40% of recent high school
graduates were unable ~o r~ad at the 9th grade level. We are
not doing any service to our young people by allowing them to
graduate without basic skills.
An incident that happened last summe~ illustrates the
consequences of this slide, in school standards, As pa~tof a
model public~-priv'ate partner~hip with, a Brooklyn. neighborhood
coalition, a~ group of New, york City banks ~ro~ni~ed to hire
250 graduates of~ve troubled c&ty, high schools,. ~Zfl~agi4~e
everyo~e"s cha~rin~hen tI~e baçs w~re abl~ to rind ox4y 100
graduates who cou'~4 pass the equiyalerit of an .8th gra4e math.
test. As the New York Dimes riØted in an editorial, "That
small faj.lure signals a larg~ problem. The poor education, of
public,school students now threatens not j~,st their
indivj~ual futures, but the future of th~ ~ty' $ economy."
?r~ductivity losses ~aus~d by, pqorly e~duc~te~ .~rkers,
togethe with the co~t ~ re~edia1 train~r~, ~ A~tterican
6.
PAGENO="0506"
500
businesses an estimated $25 billion each year. That is a Cost
that small business owners can ill af~ord to pay, and money
that could be invested instead in greater productivity and
economic growth.
I could not sum up the policy implications of this trend
any better than. Sam Ehrenhalt, the New York Regional
Commissioner of Labor Statistics, who said recently,
"Ultimately, the quality of the labor force may bebome the
limiting factor on the New York City economy. That is why in
my opinion improving educational outàomes now ranks as the
city's number one economic development effort." I believe the
conclusion holds true not just for New York, but for the
country as a whole.
More Rac~ially Diverse
Workforce 2000, the Hudson Institute study I mentioned
earlier, made a number of interesting projections, but one in
particular stood out. For the rest of the century, the
authors concluded, ~native~bOrr~ white men will make up only
15% of new workers. Since white males have traditiànally been
the backbone of our economy, this trend signals a. whole new
world ahead.
Clearly, the trend is already well advanced. When the
First Interstate Building in Los Angeles was on fire
recently, two janitors were trapped in an elevator. They were
unable to woik together to devis~ an escape strategy, because
they could not communicate in the same language. Instead,
7
PAGENO="0507"
501
they resorted to pray~kig, one in Spanish, the other in
Croatian.
One in five Americans today is black, Hispanic, Asian,
or other minority. Andagro~ting proportion of America's
workers will be black, Hi~pani&c~, arid Asian in thefuture~The
~impact Q~ this~ new ~i~ersity will be moref~l't more
dramatically in some qeographic regions than others. FOr
example, it is only a matter of a year or two before New York
City has a "majority n~inority" labor force. ~Today just 50.5%
of New Yn~k wo~ke~ are `~4hite, r%on-ffispanic, an~ their ~sha~re
has been steadily de~lirzing., A~ number o~ other ~iti~s are
also ato~ ap~oa~hing the ~~Int ~tt~h iti& n~o I'b~~ `~
appropriate to re~er t~: i~a~ian e~t1Thic ~eups ~ ~
"minorities." These include Los Angeles, Detroit,~ Chida~, ;
?hiladelphia,~Mj~h~j, a mliei&~of a~«=t~ies in Texas, àndbf~
Course, Washington~ ~Cv
The qtow~a~g ra~~r~ahd4~ethnic di~e~it~ bt~our 4zOrkforce
will pu~ g~eater *~rf~s c~ pr~byes here 11 à~re~ ~
trai~t~ ~ ~ e49~bi~ ~
ass istancè~jt3i ~Z~thii rafl~P & ~
and greater resp~n~ibi~1~.ty on empi.Oyer~ to avoid o~atin~
provisions of the immigration refb*r laws. At the ~i~et~iaie~
many new immigrants have already pro~eb that they are~at
least as~ hard~o*i~n~ a~ ante~ris~ng~ as thair redes~o~s
in earlier ~en aUótiS, Sb ~e ca~ exp~e~t that tWe~ gr~wth ~
imrn~4rant mino~itie~ Th the ~work~orce: ~4ii.l hava a `positt~e
impact on the ecônomy~.
8
PAGENO="0508"
502
The increase of blacks and other native-born minorities 7
will mean continued issues of affirmative action and equal
access to employment. Where these minorities are concentrated
in disadvantaged areas, it will take special efforts in
education, vocational training, and economic opportunity to
bring more and more minority workers into th~ mainstream of
the economy.
~gmen an~ the Wo~kforca
I have reserved for last the trend of .g~ea~est interest
to these hearings, and very probably the single m~s~
importa~t~ trend that h~s~ ever takert place in the American
labor market.. That is the growing impo~ta.nce of women in the
paid labor force.
Already women account for nearly twp~th~ds. of all new
workers and represent 45% of all workers, up from 39% in
1972. Seventy-one percent of women.4.n the, prime working ages
(ages 25 to 54) are in the labor force, art&~e Bureau,, of
Labor Statistics ~projects that rate~ will rise tp 8~y 2.000.
According to the BLS, women's labor f~rce participation will
grow a1 an annual rate of 0.8%.-half the 1972 to 1986 rate,
but double the rate projected for the. labor force as a whole
for the rest of the century.
Women's work patterps across the life cycle have changed
dramatically. Until the mid-1970s, women ten4ed to drop out
of the labor force in their childbearing years, so that fewer
women worked in their 20s and 30s than at younger and older
9
PAGENO="0509"
503
ages. This patteri~as complet~ely ~char~ged. Md~e wothen today
work in th~ir childbeari~ year~thar~ at any~othCr 4ges.~hen
you oha~t~ lab*br force~ participation rates by age, wo~tten's
patterns now look very si~rti1iàr to tr~e~i'~.
women'S ~óecupational thoices are also becoming more
similar to men's~. Some accupations-like teachIng, nursing,
and sëcretarial~work-are still overt~ihermi~gly female, while
others-like engineers, pilots, and me~hani~s-are still -
ciominated by men. ~ut consider the inroads women have mCde
into most once-male preserves. Táday women represent 2~% of
all ritedical doctore -(up from 10% a~ re~rttly ~S 1972); 20% of
all lawyers (compared to just 4% in 1972); 7% of all
engineers, up from less than 1% in 1972. Women are almost
half of bus ch~ivers,' and they are a majority of editors and
reporters, corr~putët operators, bill collectors, ar~d shoe
salespersons. Meanwhile, men represent a growing share of.
telephohe operatore, nurSes, and t~iStsy~
So, male and female work patterns are )fe&EniiWniore
unisex. Combining.work and family has become the norm for
most womefl-as well aè for most men-today. ThS ~tLajotit~ ~f
mothers are nOw. in the paidlabor force: 72% of- wethen with
school-aged c~ildten-and 57%. of th&~e with `pre~~schoolers.
More than halt of all new mothers are now-back at work before
their baby's first birthday1 Most married oouples today ha~e
two earners, and the majorit~i of America's children are
growing up with working mothers
10
PAGENO="0510"
504
Is it any wonder that "family" issues related to
employment, ~such as parental leave, child care,, and flextime,
have moved front.and center on t.he~policy.agenda? I think we
can expect them to remain there for the foreseeable future.
Even so staunch a traditionalist as ,Senato~ Orrin `Hatch is.
sponsoring child care legislation; he defended his bill
recently by saying that no matter how much some people might
long to go. backward, America is not returning to an Ozzie and
Harriet worl4..
America was founded on innovation. Our system of
government was even called "the American experiment." Today.
we are embarked on a social and economic experiment almost as
fundamental as that undertaken by the first settlers to our
shores. The premise of this experiment is that men and women
can co-exist as truly equal partners in the famtly and in the
factory, in the boardroom as well as in the bedroom. There is
no precedent for the new work and family~ forms we. are forging
today. We ar~navigating waters as uncharted as were the
shoals off New England to the early settlers. Today, as then,
a great deal rests on the outcome of this experiment. At.'
stake is the we1l~being of o~r nation's children, the human
capital of ,the next generation. The value of women's
investment in human capital hangs in the balance. Even
America's competitiveness could depend on whether this
experiment . works. .
I urge you to d~ all you can to enst~re its success.
11
PAGENO="0511"
PAGENO="0512"
THEWORKERS
Between 1986 sOd 2000 çhe numberof workers aged 45 to 54 as welt as Biinority
woekers will increa0e rapidly
(sicilian labor foece and lbbor'fnron
parnlnipation ratenb~aex,*,raa%bod
litapaninorigin, i906;andmodoratngrowih paeltoipallon number
prnjeclinnnla200% 161 (mn~5~0~
1986 2606 1986 2000 1698-2098
ToO~l,16 and older. 65.3% 67.8% 117,837 138,775 17.8%
Men, 16 and older 76.3% 74.7% 65,423 73,136 11.8%
l6tn 19 36.4 60.2 4,102 4,501 9.7
20 to24 85.8 87.5 8,149 7(105 -14.0
25 to 34 94.6 93.6 19,383 16,559 -14.6
35to 44 94.8 93.9 15,029 20,133 34.0
451054 , `91.0 90.1 9,994 16,332 `. (13.4.
55to64 67.3 63.2 ` 6,954 7,238 ` 4.1.
65 and older 16,0 9.9 `1,012 1,368 . `, -24.5
Women, 16 and older 55,3% 61.5% 53,414 65,639 25.2%,
l6to 19 32.9 59.2 3,824, 4.379 14.5
20 to 24 72.4 78A 7,295 6,746 -1.5
251034 - 71.6 82.3 15,209 15,096 .,
351044 73.1 84.2 .,12,204 18,438 ` 51.1
45to54 65.9 75,4 7,746 14,220 83,6
55to64 42.3 45.8 4~940 5,733 16.0
7.4 5.4 1.198 1,026 -14.4
14.6%
8.8
22.1,
28.8%
24.4
33.2
71.2%
61.3
83.5
74,4%
67.8
84.9
cciii, down froth' 20' percent. Older
workerO will also decline as a share of
the labor force: workers aged 55 and
over will account for 11 percent of all
workers in 2000, down from 13 percent
In 1986. `
`The Ilureaa'of Lalwr Statistics proj-
ects slow growth in the older `work
force because it assumes that men aged
55 and oldet wilt he less likely to work
in 2000 than they are today. Bat "when
the. baby-boom woolen will i~etire is a
big epsknown~' sdys Ro~sald Kutscher,
ELS `associate conimi9sioner for eco-
nomic growth and enipl(1yment projec-
tions. Without'paat'experience logo on,
it is hatd to preditt the retirenient
choices tsf Women who have spent moot
of their lives a~ work.' Moreover, work-
ers' retirement decisions may be af-
fected by other trends. Employers may
`qse incentives to keep older people on
thejob, or older people'may decide,they
~`flse.d to keep working if their retirement
income is inadequate.
A NEW LOOK
506
One thing is certain: in the next decade,
Whiten, t6and'older 65,5% 68.2% 101,80L u56.70l the labor force is going to be older. The
W m 550 61 5 44585 54449 maturing of the baby boom will raise
nlaeks, 16 and older 63.5% 66,0% 12,684 16,334 the median age of the labor force from
Men. 71.2 70,7 6.373 7,926 35.3 years in 1986 to 38.9 years in
Women 57.2 62.1 6,311 8,408 2000. This is still below the.post-Worid
Anion and olher,' 16 and older . . .. 649% 658% 3,352 5,740'~ War II peak of 40.6 years in 1962, but
Men ..........................._ 74.9 72.4 1,834 2,958 substantially above the record low of
Women , 559 651 1.518 2.782 34.6 years in 1980. An aging work
Hlnpanles,'t6 and older 65.4% 68.7% 8,076 14,086 force worries many economists con-
Men. 81.0 80.4 4,948 8,303 cerned aboot productivity growth, since
Women 50.1 56.9 3,128 5,783 older workers traditionally have been
`Thu "Aaiaeaodooha" groapierludeSAmurio/e010dieee,AIea1eeOati/ee.ASiOto. less willing to retrain or to move to a
`Pceane.~ofH1epeeh~erigieaayheofaoyceer different part of the. country for a new
Soso,e,Oe,sooofLe5o'So//8i0. /087 job.
The. work force is alas going to be
age work force (aged 25 to 54) will year. As a result of these different more female. The BLS projects an an-
grow by 1.7 percent a year. At the same growth rates, prime-age workers, will n~al increase in women's labof force
time, the youth work force will decline account for73 percent of the worlç force participation of 45.8 percent-h~lf the
by 0.2 percent a year, while the older in 2000, up from 67 percent in 1986. 1972to l986rate5 but double the rate
work force will,grow by 0.2 peccent a Youths will account for only 16 per- projected for the labor forge as a whole
ancnlcsonnn0055eolct / mtnuonvtana
PAGENO="0513"
507
~`~i~i1~ ~
for the rest of the cestlury. By 2000. 81
percent of women in the prime working
ages should be in the labor force, up
from 71 percent in 1980. Wonten wilt
continue to account for nearly two-
thirds of all new workers and represestt Technical and service jobs wilt increase the fastest between 1986 and 2000,
fully 47 percent of alt workers by 2000, white private household work and jobs in farming, forestry, and fishing
up from 45 percent in 1986 and 39 per-
1972 (emptuymentby bruaduscupattunsitgraup,
5986usd proiented In 2000: nunsbnrsinthnnsussds) percent
The third sigitificanit shift in the tabor ___.._188L____ 2000 chenge
force is the increase in minority work- number percent number percent 1900-2000
cr0. Hispanics will account for 29 per- Tout ttt.623 000% 33030 000% 19.2%
ccitt of all new workers as the number Eneca6ve. administrative and manageriat 0583 9.5 t3,6t6 0.2 26.7
of Flispanic workers grows by 4.1 per- Peofessionat workers 3.538 12.t t7,t92 t2.9 27.0
cent a year for the rest of tlte century. Technicians and related suppon workers 1.726 3.3 5.t5t 3.9 38.2
Overall, the number of Hispanic work- Satesworkers 2,606 It 3 6,334 t2.3 29.6
em will be up by 74 percent, represent- Mmimsiratioe suppon including clc'ocal) t9,85t 7.8 22,t59 t6.6 lt.4
ing 10 percent of aLl workers by 2000. Peivuic tiousehold workers 90t 09 955 0.7 -2.7
In 1986, Hispanics were 7 percent of alt Service workers (e.nieptpthaie lvionchi'ldl 6.555 40 2t.962 t6.5 32.7
workers.The growth of the Hispastic a- Precision production, craft, & repair workers ... 3,924 t2 5 5,590 lt.7 . 2.0
bor force could vary dramatically, hosv Operasors. fabricators, and taborrrs .. 6,350 4.6 16.724 126 2.6
even, according to BLS demographer Farming. foresiry. and fishing woekers 156 3.2 3,393 2.6 -4.6
Howard Fullerton. The current projec- S.,awe 0 e acfLoho' Sic,i,~ an
lions assume a contittued high level of
immigration, and most immigrants are workers during the resl of the century, lion that nearly all new jobs created in
of working age. The BLS projections with their share of the labor force rising the U,S, between now and 2000 will be
include eslitnalos of illegal workers for from 11 to 12 percent. This growth is in the service-producing industries. On
the first hole, If legal or illegal immi driven by the increase in the black the face of it, this seems dramatic but
grahion to the U.S. slows, then the His- population, though the BLS assunues in reality almost all industries outside of
panic labor force will grow more slowly that black men will be less likely to join manufacturing and agriculture, which
than she BLS projections assume. the work force in 2000 than they ate ho- produce goods, are service industries.
Asians and "other" racial groups will day, If that assumption is correct, there These include low paying retail trade,
account for 11 percent of all new work- will be more black women than black but also ed~cahion, health cane, govern-
ers, growing by 3.9 percent a year for a men in the labor force by 2000. There ment, and finance, all of which offer
total growth of 71 percestl frottt 1906 to also wilt be more Hispanic men than large numbers of high-paying jobs.
2000. If immigration rates continue to black men in the labor force by then. Although some tnanufacturing in-
be high, Asians will become an impor- These changes point to a new breed dustries will offer more jobs, others wtIl
tunt source of new workers. As it is, of worker, one who is more likely to be cut back, resulting in no cltange in
immigrants svitl represent the largest black, Hispanic, or Asian. But it wilt manufacturing etnployment between
share of new workers than at any lime take yams before the labor force as a now and 2000. Though the value of
since World War I. whole takes on this new look because manufacturing will grow, increasing
Since most Hispanics are white, the tlte predontinantly white baby boom productivity will cap the size of the
growth in tlseir numbers is driving the will domistute the work force for mutiufacturing work force.
increase in the white labor force, pro- decades. This industrial evolution has led to
jeched ho rise by 1.0 percent a year. The HOT PATIONt fears that the nation wilt lose its middle
black labor force is expected to grow at class. If "middle clans" means a high-
an annual rate of 1.8 percent. Blacks The new projections offer some stun- paid factory worker without much of an
will account for 18 percent of all new fling perspectives, such as the predic- education able to maintain a family,
rhsRlaRVl511 I ousnics'aneetnsseoicn
88-199 0 - 88~'17
PAGENO="0514"
508
of all new jobs will require posreecon-
dary education," notes Workforce 2000,
a new report from the Hudson Insti-
THE BIG ES tate.5 The new BLS projections divide
occupations into three groups: those in
Many sfthejobs projected to have the most openings between 1986 and 2000 are in which at least two-thirds of the workers
service work andreqaire tittleeducation and offer few opportunities for advancement, in 1986 had some college education,
(annupattasswtthtbetargestjobgenWth, 1986-2000, those in which the median amount of
m9dsratesttnruattee;sumherstn thousands) cbengeloempllprtent schooling was greater than 12 years and
employment 1906-2000 in which the proportion of workert with
1986 2900 sumter ~ less than a high school diploma was
low, and those in which the proportion
Salespe9sons, entOil 3,579, 4,789 1,201 ~ of workers without a high school di-
Waiters and waitresses 1,702 2,454 752 44.2 ploma exceeded 30 percent. The em-
Registneed nones 1,406 2,018 612 43.6 ployment share of the first group will
Janitors and cleaners, including maids and increase, rising frOm 25 percentof all
housekeeping cleaners 2,676 3,200 604 22.6 jobs in 1986 to 27 percent in 2000. The
General managers and top esecusives , 2,383 2,965 582 24.4 employment share of the second group
Cash,oe0 2,165 2,740 575 26.5 will drop by less than 1 percentage
Trackdrivers, tight and heavy 2,211 2,736 525 23.8 point to 40 percent, while the employ-
Genetal office clerks , 2,361 2,024 462 19.6 ment shafe of the third group will drop
Fnndcsanter, fountain, and relnied workers 1,500 1,949 449 29.9 from 34 percent to under 33 percent.
Nursing aldrs:nederlies, and anesdan 1,224 1,658 433 ~ The reason that the sham of jobs that
Oecretaeies . 3,234 . 3.658 424 13.1 requife the leant education will not suf-
Guards 794 1,177 383 48.3 fer a greater drop is that aerviceworkers
Accaustasls and auditors 943 1,322 376 39.8 (waiters, cashierS, and so on): are in-
Cdslspater pragrammers 479 813 335 69.9 creasing as s proportion of all workers.
Padd prrparutisn *nrke,s 949 1,273 324 34.2 Many of the jobs that will Isave the
Teachers, kindergarten and elementary 1,327 1,026 299 19.6 most openinga in the decade ahead are
Receptisnisla and infonsatian clerks 682 964 202 41.4 service jobs that require little education
Campus er sysse mu analysta, electroniC and offer little hope for advancement.
datapracesssng 531 582 251 75.6 At the same time, the number of manu-
Casks, restaurant 520 739 240 46,2 facturlng and agricultural jobs that re-
Licensedpmcsical sarsçs 631 069 238 ~ quire little education will decline. In
Ssava:Ba.saacfLsOarSalla'ka. 007 Contrast, among the jobs that require the
most education, all but one occupa-
these feam are well-founded. The cOr- a greater variation in pay. While service tional group (teuchSrs, librarians, and
rent trends in industrial and occupa- jobs create work opportunities for counselors) will increase as a share of
tiondl growth mean that people's educa- women, they also niOgnif)) isicome me- total employment. The biggest increases
tionSl levels and their family status will quality because people tend to marry will be in managers, technicians, and
inCreasingly determine their income their socioeconomic equals. Households, health diagnosis and treatment workers.
levels-and that signals more income with two earnerl now account for the Overall, the number of jobs is cx-
inequality among households. largest share of American households. pected to increase by nearly 20 percent
Factory jobs are inCome levelers. In If both eamers are profeasionals, their between 1986 and 2000. Thss is only
a factory, a majority of workers contrib- household income will be much gredter about half the rate of increase of the
ute almost equally to production, and than if both camera are clerks. ° Warkforce 2005-Waek and workers far the
their earnings reflect this equality. The "Between now and the year 2000, 21st Century, byWiltiam B. Johnston. Hudson
greater variety of service jobs results in for the first time in history, a majority InaSrase, Indianapolis. Indiana. 1987.
AMERICANDEM060APHICS / 65050551505
PAGENO="0515"
previous 14 yçars. Slower job growth
means that the coming occupational
shifts, though dramatic~, will not change
the face of employment much in Ihis
century.,
But there will be problems in match-
ing new workers 9vUll jobs. hlacks and
Hispanics, in part because of their rela-
tively low edui2atioual levels, are more
likely to work in the occupations that
are projected to grow slowly or decline
than to work in the rapidly, growing oc-
cupations. Minority workers will need
more training if they are to sake advan-
tage of job growth in the 1990s.
Women are underreprese~ted in only
two of the fact-growing `occupational
groups: natural scientists and computer
specialists; and engi3seers~_,architefts,
and surveyors. Women are heavily rep.
resented in only one occupational clus-
ter that is projected toslecline: machine
setters and operators. Because there will
be few' white men .pntefing thç labor
force, employers who have depended
on white men will be forced to open
their doors to others. This means more
opportunities for qualified women and
minorities.
BUSINESS OPPORTUNITIES
Slower labor force growth could hurt
the economy unles~ productivity im-
proves is the rapidly growing service
industries. But labor shortages of
skilled and unskilled workers may.spur
productivity improvements. Businesses
that produce labor-saving, equipment.,
and processes are likely to See dhmand
growing for their products. The Hudson
Institute suggests self-diagnostic health
clinics and automated supermarket
checkout counters among other solu-
tions to the coming labor ahorsages.
Industries that depend on.populotion
growth to drive their markets-such as
the food, automobile, and housing in-
dustries-will face slower growth be.
509
SLOWER LABOR FORCE GROWTH COULD HIJRT THE ECONOMY
UNLESS PRODUCTIVITY IMPROVES IN SERVICE INDUSTRIES.
RISINGFAST "
M,a0~! oIthe jobs that will be iscreasing the fastest betwees 1966 at~&2OOG *
reqisre as least a college degree.
(faelestgrnwhigscoUpatlnns, 1916.2000, .
msderatehlternntloe; uautbniStnthnasands) ` ` employment percent gain
loot 2009 1986-2000
Paritlegal personnel 61 125 103.7%
Medical assistants ,...,.. . 132. 251 90.4
Physical therapists 61 115 87.5
Physical dsd'correctivetherapy assistants and aides ` 36 .65 81.6
Datapronessing ec~stpmnstroparers .69 125 80.4
Home heotth aides 138 249 80.1
Podiatrists ~.. - , 3 23 77.2
Computer systems analysis, oloctrcinlc data processing 331 582 ~3.6
Medicalrecisrds'teOlsfliciaos ..........~.,.... 40 70 75.0
Etaployloelsi intervieisel's, f6votsorpablic
employment serotce /....... 73 129 71.2
SccceOa,ecacfLibc,th2iaorc,1007
THE LOSERS ` `
Changing technology as well as global competition t~seans thatfewor workers
will be needed 10 fill thesejobs.
(tastesldenlialngonnupatlaun, 1006-2006, ` ,
msdeeateaflernatloel nnmtsee'slnihataauds) onapioyiseat ~
.1998 21199 1986-20118
Electricid lAd electronic assemblers 249 116 -03:7%
Eleiteonic solsttcondiictor pricessors 29 ` 14 .51.1
l9ailroad conductors and yardmastors 29 `17 -40.9
R4llr0adbrdt~e, signal, asdowitch opeiators ...... . . .42 25 -39.9
(Ins and pettoleum plastlsnd nystem occojsatlons'.. 31 20 `-34,3
Indaslrial truck and tractor operators 426 283 -33.6
Shoe sewing machinr.operalon and teoders 27 18 -32.1.
SiatioC installers and repairern, tolephone 00 40 -31.8
Chemifal eqaipmonl controllers, operators
and tenders 73 52 -29.7
Chemical olant and system onerators.. 33 23 -29.6
178 128 -28.2
1.102 850 -28.1
71 52 -26.4
Souye:iaraoufLabe'2teocki,!i87
ltOAUA#Yluss / iMnatcorsDn0080uPoics
PAGENO="0516"
cause there will be fewer young people
demanding these products. But the ma-
turing of the population means more
demand for products and services
linked to higher incomes, like restaurant
meals, travel, personal-care products,
and luxury goods.
A maturing work force is a mixed
blessing. On the one hand, productivity
should increase as the work force be-
comes more seasoned. On the other
hand, older workersare lean flexible
about thanging jobs, changing loca-
tions, and changing occupations. At the
same time, increasing global competi-
tion combined with the rapid pace of
technological change puts a premium
on flexibility for businesses.
This creates opportunities for busi-
nesses that specialize in helping work-
ers become more flexible Firms that
train other firms' workers will be in a
strong position because training and re-
training will be increasingly important.
Firms that aid in job search andplace-
ment, including spouse relocation, will
proliferate.
The changing labor force is a mixed
blessing geographically as well. Areas
that are growing will have more flexi-
bility. Regionally, this means that the
South and West will benefit because
they have growing industries and popu-
lations. Since migrants tend to be
young, the areas thatiseve been gaining
population throughtti~atioii ftavd also
been gsising the youth of tomorrow. In
contrast, the Midwest and Northeast
have a stow-growing, older population.
Thg migration losses of the last decade
have cost these regions both their pres-
ent and future young workers. If immi-
gration to the U.S. continues at its cur-
rent pace, the SoOth and the West will
receive the lion's share of these workers
too. This means that it will be progres-
sively easier to start or to expand busi-
nesses there than in the Northeast or
Midwest.
D hite the adult population
in the U.S. grew by one-
third between l96~ and
lb84, the isuniber of
people takitsg ad~slt education
courses grew by 19 percent. The
number of courses peopl~ took
more than doubled, from 20 rail-
lien to over 40 million. During
lho~e 14 )iears, a period of slowing
population growth, the adult educa-
Ifon market more than doubled.
In 1969, only one-quarter (23
percent) of the courses peopletook
were job-related. But in 1984,
nearly half (43 percent) were job-
related. Adult education is becom-
ing more closely tied to the needs
of businesses. The fastest growing
consumem of adult education are
people aged 35 to 54: 11 percent of
this age group were Inking adult
education courses in 1969, but 17
percent were enrolled in 1984, ac-
cording to the Center for Education
Statistics.5 So among the most
uSge Trends in Adult EducatIon 969-1984
by Susan T,'flll, available free of charge
from the CESaI 1-806-424-Jalo,
Within regiona, there are geographic
imbalances between jobs and workers.
Just as developments in communica-
tions and transportation reshaped
American cities in the early part of this
century, shiftsin the location of work
caused by the rise of the service econ-
affluent age group-people in the
midst of their careers--the market
penetration has gone from one is
ten to one in six.
There are three reasons for this
glowing performance. The first is
the growing mechanization ~f
offices and the increased need for
training that goes along with it.
The second reason is that between
1969 and 1984, the baby boom
flooded the labor force and swelled
the renks of peoplewho needed job
training. Third, women entered the
labor force in the millions. Many
of these women were going back to
work after raising children. They
needed traissitig as they began their
second careers.
The Pext 15 years are. likely to
be even better~tir adult education
than the last 15 years. Here's why:
70 percent of the adult education
tharket are aged 25 to 54. Thest
are the career-building years, when
people are striving to get ahead.
Sixty percent of the market are
baby boonlers, though baby boom-
ers are just 42 percent of the total
omy will restructurC the urban land-
scape Strough the rest of the century.
Blacks and 1-lispanics are concentrated
in central cities. Yet many service jobs
are located in the suburbs, where most
Americans now live. Service businesses.
almost by definition must locate close
510
WA~ ADULT
AMERICONDEMO5RAPHICO/ rtusuaavrset
PAGENO="0517"
511
TRAINING AND RETRAINING WILL RE INCREASINTLY IMPORTANT~
EDUCATION IS, HOT
adult population. It'u likely that baby
boomecs w~ill continue to be the best
customers of adult education for
yearn to come because the better
educated people are, the more will-
ing they are to sign up for even more
schooling.
ThE STRATEGY
To succeed in the years ahead, adult
education programs should ally
themselves more closely with em-
ployers Large for-profit corpora-
lions now spend an estimated$2 bil-
lion educating their executives every
year. Moat of these executives are
enrolled in programs that will leadto
an MBA. But according to the Bat-
tulle Memol-ial Institute of liolum-
bus, Ohio, the most rapidly growing
types of executive programs are
short seminars. Of the 4ntillion par-
ticipaists in executive educatiod pro-
grams in 1986, 3 million received
company-specific training from a
company employee ol' a consultant,
says Battelle researcher Steve
Me Laughlin. Businessschsols at
Michigan Duke, and other univerSi-
ties now send professors to corpora-
tiOns to teach courses at company
headquarters.
But executive education~ is just
the tip of the iceberg. The real
growth in the next decade will lie in
teaching far more basic `skills. In a
recent report, the National Alliance
of Business predicts that the number
of high school dropouts will in-
crease to over 1 million a year. The
result will be more youth unemploy-
ment in an age of labor shortages.
Some employers complain that
although they have efloughappli-
canto for their openings5 many' are
functionally illiterate and lack the
interpersonal skills necessary for
thpir jobs. Productivity losses
caused by poorly educated workers,
together with the cost of remedial
training, drain American businesses
of an estimated $25 billion each
year, according to Anthony Carn~-
vale, thief economist for the Ameri-
can Society for Training and Devel-
opment in Alexandria, Virginia.
If public education has not ~sro-
vided young people with basic
skills, then their employers will
have to trdin them to do their jobs.
In Saginaw, Michigan, the Dow
Chemical Company contracts with
the local school system to provide
special training in English, math,
and.science to local people. About
50 people signed up for this pro-
gram last year, and 11 are now Dow
employees. Other corporations that
have made multinsillion dollar
commitments. to basic training in-
cludePrudential, Xerox, Metropoli-
tan Life, Pizza Hut, and Coca-Cola.
Public education is where the
U.S. Postal Service was ten years
ago. Is the mid-19111s, a smalirom'
pany in Memphis fAIled Federal
Express began offering overflight
delivery for a price businesses that
were frustrated by slow posial deliv-
eries flocked to it. Now Federal Ex-
press, Airborne, Purolator, and Em-
ery are tapped into a large and rap-
idly growing market,
In the neSt decade, education
msy be thfl business service that pri-
vate companies take from the gov-
ernineet by default.
-A rad Edmondson
to the consumer. Centraj. city residents
who want to wor~c will face lengthy
commutes to the suburbs.
Flexibility is the key to making the
most of the cspportusnlties thai the
changing work forcebrlsigs. If tI*woek
force of tomorrow is going to be older,
more female, and more black, HtspunlE, ~tlti~ cefltüAy~i gka~u~ to be
and Asian, then employers cannot, rely born in or to LOnmigrate to ihe~Jnlted
on an annual crop of freshly educated States will make less dlfferelhc than the
young white then to fill jobs. Employee luck or initiatlye to he well-educated
training andretraining willbe the key to and well-trained." Perhaps ads~lt educa'
flexibility. The Hudson Institute'S re- lion will be the real growth industry of
port concludes that during the rest of the future.
Fttsussyines I aMtsscssstMtusss'alct
PAGENO="0518"
512
The Facts About Working
Women
Strategic Working
Marketing Women
Sampler
repri nted from
American Demographics
S magazjne
J~rapbiCS
13ox68
Ithaca New York 14851
(607~ 273-6343
PAGENO="0519"
PAGENO="0520"
514
little financial support fdfchildien. employed in, 19A2 included fully 71 descriptyon used, by Rena Bartos to
In 1982, 12 percent of women pexcenr,pf unmarried womeff under classIf~ s~iotpen~In her book otinlar-
believed the ideal lifestyle wae to be a~e 35, 54 percent of all toarried kerifig, ~Ph~ Moving Target). How.
mainly ajobholder or career woman, women with children at home, 43 ever, her job isthe source of hersocial
up from 5 percent in 1915. One in percent of all women between the life. She likes to iOteract with. other
five would choose to be mainly a ages of 55 snd64, and even 9 percent adultwgnd fiiscle isolation ip~the home
homemaker, down just 2 percentage of women aged 65 or older. The too lonely.
points from 1975. Twenty-two per. working mothers include those who Cane Outlook
cent would combine a job or career take jobabecause ofeconomicneces.
with homemaking, using daycare if sity, but woqld rather be home full. Women's outlooks on careers are
they had children. In 1975, 24 per. time, as well as those who take a changing. The differences by age are
cent gave this answer. These figures maternity leave and return to the job striking, and they appear principally
are based on representative samples quickly. in the characteristics of those who
ofwomenaged 18 orolderfrom across The kind of women who express choose being `mainly a homemaket"
the coqnrry. the strongest preferences for staying Of the 20 percent who prefer lives
A preference forstaying home wjth home.y~hilerheir children arwyoung mainly as hoitsewwes, only 5 percent
preschool children cuts across all lAejq4e thcss4 W~io make hçshselpak- are unirlayrlad women under 35,
subgroups. On this point there is no inge l~$ativesctivity. They find life compated.~o neatlyone~thirdof those
difference of opinion between hprne- at hdltie more internltirsg.aisd more who are ersiji~y-neaters or widowa.%
makers and those who are employed. ysried than the jqbs ~he)~ leave in The latter groups either lo~k back
The 46 percent who choose staying o~del~'~ats4 t~tall Itotes, These etc on their choicei o~lifestyle arlçh ppn-
gt home with young children as the the women sd,so enjoy exlierimerst- terinpent, or ju~ti~y the lith they
ideal lifestyle includes fully 49 per- ing with a new recipe, putting sip have led, because they perceive as
cent of those who are currently their own jam, sewing clothts for ideal thechoices they made year~ago
employed-an even higher share theirchil4re6,aaking çhe children to When they were young, of co~fue, a
than the 41 percent of the npn- a patk,leadfrsg a scout troo~, and narrowerrangy of careers were opes~,
employed who express this prefer. having time tcigetinvplvedwith their to women,
ence. children's activities yrad s~bools. For While the ~ap in mediafl incdme
While women's attitudes in this somy In this group a pariatime job is between women and .men has nar-
area appear to have changed little the compromise between wh~t they towed by three percentage points
since 1975, the proportion of women want to do and what they must do to betwee~i 1979 and 1982-reflecting
who in fact stay at home-regardless affprd the middlt~clasi living they in~large measisre the career-oriented
of what they may perceive as the ideal expect for their familiti. oistlookpfyoutsger women-it is not
lifestyle-has been dropping stead- The tnothers'who prefer to work discrinslijation alone that keeps the
ily. The propOrtion employed outside and ,use baby-sittgrs and';child-care income gap ~cs large, as some people
the home has risen from only 47 per- centeri are of two v,gekties. Th'e charge. It )s also women's lifestyle.
cent in 1975 to 54 percent in 1982. obvious group are the career-och preftrences. Whatevet the benefits
Ohhe total, 37 percent in 1982 were ented professionals cii the fast track. pf an at-home soother for mother or
employed full-time versus 31percent A lengthy absence from their careers child, women who make this choice
in 1975. Seventeen percent worked would slow their upward mobilily. must assess realistically the txadehff
part-time in 1982, and 11 percent in However1 there is another type of t,hey arC making betisreen 4heirlife-
1975. wothan, who is less careCrksriented, style desires and opportus4wiea for
And the 54 percent who were Her !0~1 may be `5just ~ job" (a career advasicentent.
S S American Demographics
PAGENO="0521"
515~
Unless a woman finds a way to to 100, where lOOwas the mostdesir- women made up 2Z percent of those
return to the work force better pre- able. They rated high school physics employed in the ll~e ahd physical cci-
pared than when she left, she will be teacher at 69, although physics ences, a jump frcsln 8 percent in 1971.
at a disadvantage compared to men teachers are in greater demand and Whtle the ptoportions of women are
and to other women who kept work- usually command better salaries than increasing in the occupations that
ing She will have less experience, elementary school teachers. command higher salaries but require
less seniority, and a shoiter salaryhis- Women ranked a career as an dcc- math proficiency, women still have
tory. Some women who return to trical engineer significantly less a long way to go to achieve parity
work after raising a childhave updat- desirable than one as asocial worker. with men. For the income gap' to
ed their skills and re-enter the work Corporate employment offices today close, it is essential that girls take all
force even better able to cope with send recruiters to campuses to recruit the math they can in high school.
new technologies and management enginetrs, while social wOrkers can't Women at the To
approaches thari men who have fiesd jobs anywhere. Salaries depend and at the Botton~'
worked continuously, on supply and demand as well as
The vaatmajority, howevtr, return training. ` Only a fraction of women today earn
to be forever frustrated by earnit~g ~ ~ thehigh salaries of top business man-
less than the men their age. Is job * g agers. The upper ranks of corpora-
discrimination the cause'oItheirfrus- WOmen pay a high pr~ce for having tins, universities, the tuedia, arid
tration, or is ita conaequence of social been socialized to believe that "girls other large organizations include few
roles and their own lifestyle chOices? aren't good in math." In most high woitien. One reàsoci it that women
Cal, r schools, mathematics enrollment over age 45, who might otherwise
ee OiC drops by half after Algebra I, limit- qualily, were not encouraged, or even
Women's career choices alsocontrib- ing high.technology career options allowed, to enter the schools that
ute to the income gap. In part, they `forboth males and females. The drop would have prepared them for such'
choose professions that allow then is much sharper for female than for posts. A generation ago, the Class of
to move in and out of the workforce, male students, however, according to 1957 at two top busirieasschools, the
and these gtrofessions are not highly the Project on Equal Education Amos Tuck School at Dartmouth and
paid. When a statewide sample of Rights, funded by the National the Harvard Business School, had no
900 women in Michigan was asked Organization for Women. women graduates.
to rate 48 occupations from least to In Ann Arbor-one of the top Today that has changed. IDiscrirn-
most desirable fOr a woman, the school districts in Michigan, where matSon has given way to a surge of
highest overall ratings went to nurse students rake more math than in most' young women.in higher professional
and medicaltechnician. $utylng.msy school systerns-85 percent of the edutatiori The class of 1982 at the
be an outstanding profession, but Its boys and 77 percent of the girls take 1-tarvard Business School included
pay is low-nor isit the klndofccccu- math in eleventh grade. By twelfth 168' women, and the Amos Tuck
pation a sample of men would choose grade, hQwever, the figure drops to School graduated 36. In 1957 only 2
as the most desirable. ` only 55 percent of the boys ~nd:~ust percent of the students at the
The 48. occupations were selecteçl 37 percent of the girls. This decline Oeorgetowrs University Law Center
by the Michigan Department of Labor means that only a little over one- were women; today the'proportion is
and the Michigan Women's Com- third of the female students from this 40 percent. The'baby-boom genera-
mission to represent most occupa- college-preparatory-oriented school non's young women, emerging from
rional categories-including both district have the background nCeded such schools, have already become a
female- and male-dominated occu- to enter a scientific field in college. force ire middle utanagement. Even-
pations. Included were pairs of aim- Only 4 percent of engineers in the tually women should appear at the
ilar professions with different sex `U.S. in 1981 were women, accord- top as well. Accoratng to the Bureau
profiles. The choices were revealing. ing to the Bureau of Labor ~tatisrics. ofLsbor Sraristice, `14 percent of law-
Women rated being an ekesentary However, this proportion was upfrom y'ers atid judges Wdse women its 1981,
school teacher at 7fl on a scale of 0 1' percent a decade earlier. In 1981 up~from 9 percent a decade earlier.
PAGENO="0522"
516
"Nearly half of American women say they want to move ip and out of the labor force, finding it ideal to
stay at home with their small children, and combining work with family life later on."
Be maisly hemake,
If yoas ham hildee,,, stay hoss,e sissy they
am yaseg, soesbise job
esish homee~aklesg at o,hee time i~s life
The management pipeline~ are
filling with women, and as they move
through they will pull women's mcdi'
an salaries upward. Oss the other
hand, poverty has become dispro.
portionately female, and this trend
pulls the median down. One-third of
families hesded by a woman with no
husband present in 1980 Were below
the poverty level, according to ten-
sus figures. The median household
income in 1979 for a dual-income
family was over $26,000. For a female
householder without a husband pres-
ent, the median was less than
$10,000-38 percent of that of the
two-income couple.
America's underclass includes girls
who get pregnant while still in their
teens; young women who marry
before completing school and drop
out; and women who marry expect-
ing to be supported by their husbands
but then divorce, to find themselves
with young children and inadequate
support from the ex-husband. The
low incomes of these women are
another reason why women's salaries will rise as more women select high-
in general average so much less er'paying occupations-telephone
than men's. lineman instead of telephone opera-
The 1980 U.S. birthrate-was up 3 tor, engineer rather than elementary
peryent from the year before among school teacher.
all women, according to the Nation. But girls who have their firstchild
al Center for Health Statistics, but as a teenager outside marriage, who
among unmarried women it was up drop out of school, or who divorce
11 percent. Nrths to those still without job skills or sufficient sup-
counted as children themselves-girls port for their children will find it
under age 15-rose 8 percent. For impossible to compete for jobs.
teenage girls, early sexual activity Finally, there is the matter of
and failure to practice birth control choice. Women who drop out of the
can have a lifetime of economic labor force while their children are
consequences. - youngcannot expect to return to jobs
- that command wages competitive
Opposing Vorces - with men's unless they invest in
Opposing forces tug at women's 59. upgraditsg their akills. Even then, it
cent dollar. The gap between men's is hsrd to make up for lost experi-
and women's wages will shrink fur- ence. Nearly half of American worn-
ther, but i~ is not likely to disappear. en say they want to move in and out
Some trends work to close the gap, of the labor force, finding it ideal to
others widen it. Upwardly mobile stay at home with their small chil-
young women, with a - college edu- dren, and combining work with fam-
cation and career ambitions, could ily life later on. Men have not been
become a powerful force pushing up able to make this choice. But that
women's median wages. And wages may be changing too.
Perceived Ideal Lifestyle
by Age ~isig,issa~
and Life Stage (1982)
Isbol Lif,,r.io:
So maisly a job holde,
Comhioe job o~ ca~ees oith homemakiog,
sting childea,e if yoy h~sei~hilde,n
53
51
49
55
58
44
46
47
42
47
41
I
PAGENO="0523"
Demographic Opportunities / Fabian Lfnden
517
Working-Women Households
For marketers, the working wotYv
an-and particularly the woricifag
wife-is somebody special. Well over
half of all wives are now `employed1
compared to only one out of four 40
years ago. The dimefxsion of this shift
and its abruptness have meant pro-
found differences not `only in the
buying power of the average house-
hold but in the goods that go into
the typical market basket.
Today's working women are an
entirely different breed from yester-
day's modestly educated, single,
female workers from poor families.
The working women of the l980s cut
across the social spectrum and, in
fact, tendto be a notch above aver-
age. The more schoolingahe has, the
more likely it is that a womarr will
be in the labor force.
Since the majority of today's
employed. women are married, the
sharp increase in their number baa
contributed appreciably to rapid
growth in household earnings. In the
past decade, for example, the slum-
ber of households with earnings of
$35,000 or more (in constant 1980
dolltirs) grew twice as fast as the
nation's total households.
In the years ahead, the proportion
of women working will continue to
increase, but more slowly than in the
past, simply because so many women
are al~eady in the tabør force. Still,
the eednotnic lmpdrtance of women
will contitsue to grow as they move
into more responsible and rewarding
work.
Marketers need data not only about
the characteristics of women work-
ers-stbtistics that are generalty
available-but also about the char-
acteristics of households that include
a working wife. Such information has
been extremely hard to find.
The data tape of the Census
Bureau's Current Population Survey,
conducted in March 1982, contains
detailed information on the charac-
teristics of households irs which the
wife works. The accompanying table
shows the prevalence of working
wives and ~he proportion of income
which accrues to their households,
according to the age of the household
head. The table is the tesult of cro$s-
tabulations by the Consumer
Research Center.
Last year some 26.5 million, or
53.5 percent, of all husband-wife
households included a working wife.
The Incomes of such households
totaled an estimated $850 billion-
more than 60 percent of the total
income of huaband-wife families. The
incidence of working wives runs well
above average in households headed
by persons under age 55. The inci-
dence of such families drops abruptly
over age 55.
Husband-wife families in the broad
age class 40-to-60 represent the moat
promising segment of the market.
While this group accounts for some
36 percent of all husband-wife fami-
lies, they have at their disposal 44
percent of the total income.
Nate: Every other month American Dems-
graphics presents current demographic statistics
about consussers which are not found is tradi'
sional publications. The Consumer Research
Center heic additional suds data available on
request. For J~arther. isforsssdtlos alsite Fabian
L.indes, Executive Director Consumer Research
Center. `the Conference Eoard, 845 Third Ave.,
New York, NY'10922.
Working Wife Households by Age of Household Read, 19~2 _____________________
W9sWosiisg9s `ens,,,
Hutband.%l5fs W5s ~ #tabosd.V1'lfs
`hsus5,5l ask Ponibss Wotiing Paoais,
HookS, In, Husilds I se Flouoiolds I HoutiSs I~ 51,akkls I vs
Tosal*, 83.5 $1,892 49.6 $1,394 26.5 8847 sl.4~:9 44,8% 53.6% 60.896
Under29...... , 7.7,% 4.7% 5.1% 3.2% 6.7% 4.1% 29.4%' 39.0% 69.8% 77.9%
25-29....... 11,4 1.0,2 10.7 8.9 19.3 fl,3 42.1 49.9 75.5 , .779
30-34 . 1,1.7.. . 1.2.3 12.6 12.3 14.3 ,14 38.3 `87.0 59.9 7j:9
.35-39 ........ 10.1 11,8 11.4 12.3 14.4 14.0 43.0 $3.1 97.0 69.2
40-44 . 8.3 10.7 9.5 11,6 11.9 13.9 45.3 58.3 66.2 13t
45-49 ....,.... 7.3 . 9.7 5.5 10.5 11.0 12.4 47.5 573 95.3 . 71.4
50-54 ., 7.6 100 9.1 11.2 10,3 11.9 41.4 53.0 55.8 64.6
55-59 8.0" 8.8 9.1 10.8 8.5 9.9 33.6 44.9 49.8 55.4
60-64 .,....,.. 7,6 ` 7$ 8.0 8.0 4.9 5.4 29.5 .51.6 32.7 40.4
65-69 6.7, 5.1 6.4 , 5.0 . 1.9 1.8 8.8 16,0 15.4 22.3
70Sndovse.... 14.1 7.9 9.6 6.0 0.9 0.7 2.0 4.0 5.1 7.1
100.0% 100.0% 100.0% 190.0% 100.0% too.o96 - - -
PAGENO="0524"
518
Wives Who Earn
MoreThan
Theft
Husbands
The American marketplace is chang-
ing because the American family is
changing Today, 6 million wives earn
more than their husbands. And the
number has grown rapidly.
Are these women the high-earning
female superstars the media likes to
describe, or are there other forces at
work? While about one-third of wives
who outearn their husbands have
more education than their husbands,
and one-third work as managers or
professionals, nearly two-thirds do
not have college degrees.
In dual-earner couples in which
the wife earned more than the
husband in 1981, over half of the
husbands worked less than full-time.
While some of these husbands were
today~s mothers of children sunder age
six are in the labor force, compared
with 12 percent in 1950*
Not only are women more likely
to be in the labor force, but they are
also increasingly likely to be year-
round, full-time workers. In 1981, a
little over one-quarter of wives
worked year-round, full-time, up
from 15 percent in 1961. But while
retired, ill, disabled, or temporarily
laid off, a significant proportion
worked part-time simply because they
wanted to.
Such trends reflect the changing
status of women. In the past 35 years
the participation of married women
in the labor foke has been growing
steadily, from 20 percent in 1947 to
51 percent in 1981. Especially rapid
has been the increase among younger
women, even those with home and
childrearing responsibilities. Half of
* See "i-los' Women HaveChanged," hy Daphne
Spain and Sctanne M. Bianchi, Americas
Demographics, May 1983, pp. 18.25.
participation rates for wives have
been rising since the end of World
War II, husbands' rates have de-
creased, from 93 to 81 percent. Early
retirement accounts for at least part
of the decline.
Wives, on average, earn only 40
percent as much as their husbands;
but 59 percent as much when they
are full-time, year-round workers. It
is still atypical when the wife is the
major contributor to family income.
But the number of families relying
solely on the husband's earnings has
declined dramatically.
As wives have increased their labor
force participation, the amount of
income they contribute to thehfam-
lies has grown in importance. Among
white families, the earnings of wives
increased from 12 to 18 percent of
family earnings between 1959 and
1978. Among black families, the in-
crease was from 17 to 28 percent.
Theearnings of a wife who would
not usually work outside the home
Suzanne M. Bianchi is a demographer
with `the Census Bureau's Center for
Demographic Studies. This article is
based on her study of the same title pub-
lished earlier this year by the Census
Bureau.
July 1984
PAGENO="0525"
PAGENO="0526"
520
"As more women complete college and graduate training, more view labor fQrce
participatioti in the same way that men do-as a lifelong commitment."
couples fit the traditional pattern in
which the wife, concentrates on
housework and childcarç~ and the
busbandon,market work. Seven years
earlier, 39 percent or 17.9 million
couple~ had fit this pattern.
Only during the last 15 years has
the traditional husband-wife family
become less commqn than the
multiple-earner family: In 1967, for
the first time, husbsnds were the sole
family earner in less.than 50 percent
of all couples.
* Among the Eldefly
In 1981, 6.8 million, couples, or 14
percent Qf all couples, had no earn-
ings. Most of these couples wete eld-
erly. The huaband was retired in 75
percentoftheca~es, and ill or disabled
in an additional 21 percent.
A high proportion of couples in
which only the wife had earnings
were also elderly. Husbands in these
couples had a median age of 62, and
their wives a median of 56 years.
*Altho~ugh45 percent of the husbands
were retired, and 42 percent were not
working because of illness tsr dis-
ability, their wives were still in the
paid labor force.
This is a fairly common phase for
dual-earner, couples. The economic
role the wife pla%s during the hus-
band's early r6tirement years greatly
enhances their financial well-being.
As she brings home additional in-
come, the couple can make decisions
about how they will spend their re-
tirement years; whether they will
relocate, etc. In Social Security and
pension benefits, these added years
of employment will also be crucial to
the economic future of the wife-who
will most often survive her husband
and spend several years living alone
following her husband's death.
Dual-earning couplea, like couples
in which the husband is the sole
earnCr, are much younger on average,
than the nonearning couples or the
couples supported by only the wife.
Dual-earner couples are also some-
what younger than traditional couples
in which only the husband works for
pay. This trend reflects the more rapid
increase in labor force participation
among younger women in recent
years. Median ages are quite similar
for the two types of dual-earner
couples: Wives' median age was 36
years, while for primary earning
husbands it was 39 and for secondary
earners it was 40.
Given the relatively old ages of
couples who are nonearners or of
couples in which only the wife is in
the paid labor force, it is not surpris-
ing that few have children present. In
1981, 55 percent of wives who were
the primary earner had no children
in the household, compared with 40
EducatIon of Wives
Well ed,aaoted camera,, more likely co he eke plimbey
rarsee of a ooople thor Ira. edosatrd cam's.
Hoalo,5 baol Eoect,,
Sot, so,.,,
H,..bo,.l p,~,a.,,
Dm6 t,e,s,
~ Pe5sey
,
Yrar, of Sohool Co.ople,,d,
L,ss thor 12
27.5%
15.5%
14.1%
~.
12 ` 47.3 49.6
13-15
14.6 17.9
44..9
17.5
16 7.9 ` 10.8
13.3
17 or me,, 2.7 6.3
10.2
Relator, Edhootio.o , ,
Hoaboad moo 40.9% 363%
Hoaboed / Wtfe eqool 35.4 38.9
Wale more `23.7 24.6
,
2~.O%
~
38.1
Occupation of Wives
Wymes .sho ore prie,oey rorsees ore mere likely `ho, seoosdary
eotseeoto be p,ofr,,ioo,ls osd tt.aogers.
Smmdoee
Eem~g Wif,
Pie.e~
&amo.g Wilt
Frofes6onol 17.5%
Mosogeriot 7.1
Sole,
7.6
25.0%
* 11.0
4.8
Cler.c,l, 35.3
31.7
.
Croft
. 5,9 *
2.2
Opero~iee° 10.9
,
12.6.
Lobor,r ............` 1.0
1.0
Sersiye°° 17.7
10.9
Form 1.2
0.?
`Imladosotpmq.a,e,.m. "tstloylm,h..oh.,lOamke,
`
July 1984
PAGENO="0527"
percent of wives who were secondary
earnersand 43 percenç of wives who
were not in the paid labor force. Only
20 percentof wives who were primary
earners had preschoolers, however,
aa compared to 26 percent of wivea
who were secondary earners and 31
percent of wives who were not work-
ing for pay.
Superstars
Some of the 4 million wives who
earned more than their husbands in
1981 will eatfl more than. their
spouses th~oughout their workitig
lives, but it is difficult to say how
Many. Given the relatively high levels
of unemployment in 1981, data gath-
ered in that year may not represent
normal labor force participation and
earnings. To the extent that wiveS are
able to increase theirlabor force par-
ticipation to compensate for a hus-
band's unemployment, wives' earnings
contribution to the family may have
been higher than normal in 1981.
Estimates of the number of couples
in which a wife's earnings exceed her
husband's may also be higher during
a recession than during an upturn in
the economy.
Nevertheless, a reasonable estimate
of the number of wives who consist-
ently outearn their husbands can be
obtained from the number of wives
who earned more than their husbands
whowere employedfull'time through-
out 1981. About 1.95 million wives
earned more than their husbands who
were full-time, year-round workers.
This statistic suggests that as many as
half of the wives who outperformed
their husbands in 1981 might do so
on a sustained basis.
Because most women earn l~~s
than Men, and fewer teomen than
men obtain graduate or professional
degrees or secure a high-paying job,
wives whose lifetime earnings exceed
those of their husbands are truly
exceptional.
Primary wage earnersare the most
highly educated group of married
women. Of wives who earned more
than their husbands in 1981,38 per-
cent had also completed more years
of schooling. Only one-quarter of
wives without earnings or wives
whost earnings are secondary to their
husband's bad more education than
their husbands.
Wives who do not work for pay
are theleasteducated married women,
in part reflecting the fact that they
are older, and grew up before it was
so common for women to attend
college. Fully 75 percent of noir-
working wivc~ in 1981 had not gone
beyond high school, compared with
64 percent of secondary earners and
59 percent of primary earners in
dual-earner couples While 13 perce8t
of wives who outearned their hus-
bands had completed four years of
college, only 8 percent of nonearning
wives, and 11 percent of secondar~y
earners had college degrees. Ten per-
cent of wives who earned more than
theIr husbands had some graduate or
professional training, compared with
only 3 percent of nonearners and 6
percent of secondary earners.
Of wives who were primary earn-
ers, 36 percent were professionals or
managers. But if the husband of a
primary earning wife was a full-time,
year-round worker in 1981, she was
even morS likely to hold such a high-
powered position: 44 percent of these
wives were professionals or managers,
compared with only one-quarter of
wives who were secondary eatnery.
Wives who earn less than their
hbsbands moreoften are employed in
sales, clerical, or service jobs: 61
percentworkCd in those occupations,
as opposed to 47 percent of wives
who tatned more than their husbands.
Wives who are primary earners
have a much stronger attachment to
the labor force than wives who are
secondary earners. Whde only 40
percent of wives whose earnings were
secondary worked full~time in 1981,
74 percent of wives whose earnings
exceeded those of their husbands
worked fqll-time, year-round. More
than twice as many secondary earners
spent some weeks out of the labor
force or unemployed than aid
primary earners-5~ percent versus
22 percent.
Of wives who held part-time jobs
during 1981,64 percent of secondary
earners were working part time be-
cause they wanted to while only 40
percer~tofprimary earners voluntarily
wprlcad part time The same propor.
tion ~Lbç~h groups (55 percent) re-
ported that they were working
part-time because that was all the
work they could find.
Wives who brought home the
larger paycheck in a dual~earner
marriage worked a median of 2,080
houys in 19~1 for a median income
of $13,000. Wives whose earnings
were secondary to their husbands,
however, earned less than half that-a
median ~f $~,300 for 1,560 hours of
work. Because primary-earning wives
are more firmly attached ~o the labor
force and have higher educational
attachment and occupational status,
it is not surprising that thtir earnings
are more than twice those of secon-
dary-earning wives.
The implicit wage rate, ~calcu1ated
by dividing mean anrttial earnings
by mean hours worked per year,
w~s $7.55 per hour for primary
earners, versus lust $550 for secon-
dary earners in 1981. If secondary
earners had worked as many hours
521
American Demographics
PAGENO="0528"
522
5tWives whose lifetime earnings exceed those of their
husbands are truly exceptional."
per year as primary earners in 1981,
about $3,000 Of the $7,000 earnings
gap between the two groups would
have been closed.
Man's Work
Over'half of the husbands who were
secondary family earners in 1981
worked either part-time or only part
of the year. This was true of only
about one-fourth of husbands whose
wives*ere not in the paid laborforce.
Less than one-fifth of husbands who
were primary earners in dual-earner
couples worked less than full-time
throughout 1981.
Secondary-earner husbands were
more likely than either the primary
or sole male earners to have spent
some weeks unemployed or out of
the labor force entirely: 49 percent
of secondary earners were'out of work
for some tim6 in 1981, compared to
17 percent of primary earners and
24 pen2eitt of sole earn6rs.
The labor force characteristics of
husbands who are secondary earners
are similar to those of wives who are
secondary earners. One important
exceptiott is that husbands who are
secondary earners in 1981 were much
more likely to have sought work and
to h~ve been involuntarily under-
employed than secondary-earner
wiVes. Among secondary-cattier
husbands who worked only during
part of 1981, 62 percent looked for
employment or were on layoff. By
contrast, only 30 percent of secondary-
earner wives who worked part year
looked for work or were on layoff
during the year.
Did these husbands who were sec-
ondary earners work less than other
husbands during 1981 because they
were constrained by poor economic
conditions, or because they were
under less economic pressure given
the earnings of their wivest This Is
key question because its answer may
suggest howfamily roles are changing.
The answer is mixed: Around ~Q
percent `of husbands who were sec-
ondary earners worked part-time in
1981 because they wanted to. This
figure is more than twice that for
husbands who were primary earners
in dual-earner couples. Fully 70 per-
centof secondary earners worked part
time for involuntary or partially in-
voluntary reasons, however, suggest-
ing that in some families wives are
the primary means ofsupportbecause
the husbands cannot be.
In 1981, husbands who were
primary earners in dual-earner
couples worked a median of 2,080
hours ft~t~ a ptedlan annual wage of
$20,000. Hn~sbands whose wives did
not work outside the home earned a
median of $19,000 for the same
number of hours. Secondary earner
husbands, on the other hand, received
only a median of $7,000 for 1,920
hours of work.
Husbands' implicit wage rate
ranged from $10.76 per Isour for
sole earners to $5.09 for secondary
earners. Male primary earners in
Couples' Characterla~ics
(Mnd, 982)
The sassing ttenes ,efehe rife aries by age, ieeeeme, sane tsd she presence elf ehildees.
* Beth Wif,Sthr Haektsd Dan) teen,, Os) fear,,
Nnee,e,ee, Ecaee Sebtce,e, HiOcelPeeeey Wife Peiec,y
Race
White 13.9%
Blank 14.0%
bhep,sin 9.0%
3.7 30.3 44.4 7.7
6.9 22.2 44.4 12.6
2.q 38.3 42.8 8.0
Medlen Age
Hesbasd 70
Wife 67
Children
Ne nkild,r,e ~ heeeceheeld 92.3%
Peetekoelert pretest 2.7
Teretgret persee, ... 4.8
62 45 39 40
56 42 36 36
79.7% 43.2% 40.2% 55.0%
4.5 30.6 25.7 20.2
14.5 . 23.9 28.9 19.5
?eecen9 nith Fustily lucerne rfe
Less that $5,000 9.2%
$5,000-$9,999 28.9
$lo,000-$14,999 .` 24.4
515,000419,999 14.6
$ZQ.000-$24,999 8.1
525,000-374,999 7.6
$39,000-$49,999 4.5
$50,000 ted ness 2.8
Medh.n Fa.nily Income $11,861
Percent in Pceeeey 15.6%
3.7%
15.2
21.0
21.3
14.1
16.5
6.7
1.7
$17,122
9.9%
3.3%
8.0
13.8
13.7
14.8
21.6
13.7
11.1
$22,800
8.9%
1.1%
2.6
6.5
9.7
13.2
28.2
24.6
.14.0
$30,112
2.7%
2.2%
7,3
11,6
15.3
15.6
24.0
16.6
7.6
$23,547
5.8%
71.2%
Peeerne Homeesunera 84.9% 81.2% 80.8% 79.4%
July 1984
PAGENO="0529"
~523
of black couples, compared with 1.1 are better educated, In higher atszus
percent of white couples and 10 per- jobs, and more firmly attached to the
cent ofRispaniccouples, the wife waa labor force than are wIves who earn
the primary earner, the sante~aS or tesa than their hue?
dual-earner families received an Black couples have also had the bandi. Bait cpz~rest~3~tb ~st pqpplar
average of $10.24 per hour. Corn- ~argestincrease in theproportion with image theyate &st ~1hhIgh-esstsing,
paring these rates with women's a wife in the primary earner role from professionally rralne~ si~perstats
men who are primary camera make 14 to 20 percent for blacks between If to be a auperatdf,~jtlfe means to
much more than primary-earner 1974 and 1981. The six-percentage- have a mata5~èria1 or professional
women, but women who are secopd- point increase for blacks comparea occupation and to earn more than a
ary earners earn more than secondary- with a 3 percentage point gain for husband who is employed full-time,
earner husbands. whites apd no change for Hispanics. year-roundthen only about860,000
Primary and soje-e?rner husbands Historically, black wives have had wives qualifed as superstars in
were much anoreIik~ly to befult-tirne, higher ratçs of labor force participa- 19S1-er~ough to malceheadlines and
year-round workers in ).~8l than tionthan white wivya, although these capture thd attention ofsdvertisers,
were secondary earner huaban4s. differçrses have narrowed in recent but pot nea4yenough tochsnge the
When analysis is restricted to years as white wives have joined the economy. Supe;stars comprise only
fuIl~time, year-round workers, the labor force atgrestrr rates than black 15 percept of;the 6 millloti wives who
mçdlan earnings of husbands who wives. Black men have faced serious earned more than their husbas4s, and
were sçcondary earners ($10,600) employment barriers an4 low earn- i mere 1.8 percent of all couples.
Were still only äbo'?t half as much at ir~gs, soblack couples are least likely Mere cbinidan (and thus teas alluring
forprimsry($21,000)andsoleëarner to fit the traditional j~attern lnwhtch to the public eye) are thE wivea who
husbands ($22,000). th~ husbsnd works fasrpa~ whilc the Wcsjk at a nonptdfebsionsl ~job to
Husbands insecotadary-earner roles wife Is not employed. pr~tide, primary ~O~brt ci' thCir
may be less pressured to earn high Hispanic cou~sles are most ii~ely families because their husbands have
incomes and may be able to spend to fit the traditionalpattern, reflecting ~tnploynseiatproblems.
more time looking for work when their higher fertility and the greater ~`~~`~sel St
they are unemployed than husbands concentration of Hispanic wives in ra its
who are primary earners. If husbands childresrisig roles. AmonE blacks and bcr the superior earnings of a wife
trade market wotk for leisure or Hispanic? as among whites hoa~eyyr, pcc~, ~ attain on the marital telation-
nonnsárket work as tt~eir wives'labor the most common atrangemdttt ship? Findings have been mixed. If
force participation End earnings lça- today-accounting for over 40 per- the husband remains unemployed or
crease, one wo*~ldi~pect husbands ce6t of altcouplea-is thedual-earner underemployed for longer than the
whose wives' ~Eve rtlarh~ely. high couple in which the husband ls:thE couple expects, and the wife's earnings
earnings to bel~ts attached to the primary earner. are inadequate to support the family,
lEbor force than t~aose whose wives bust-earner couples Ip which the or if both expect the husband to be
do not work out~id~tbe home, work husband is the prpssaxy ea~er have the primary breadwinner but he does
only part ti~néot wbtk full~ttme but the highest incomes. tn l9~i, ~uch not fill that role, problems may well
havelpw earnipgs. , families had a median Income of occur, On the other hands if husbands
But this Is noitise case. Husbands' $30,112 and oply ~ peccant were and wives have chosen similar occu-
annual hours of labor market work below the poverty level.: Next to patlons, rec~ived the same amount
do not drop off as wives' Earnings couples without any earnings, those of education, and have po strong
increase, nor do the percEntage of that rely on onjy the wife's esrninga preferences about which one should
husbands working part-year or part- ate the worstoff. The median incothe earn more, there Is no particular tea-
time increase. In fact, husbands for such famill~s Ip l~8l was son to~ believe those marriages in
whose wives have relatjvely lqw $17,122, and 10 percent lived in whjch the wife earns more will be
earnings are the most likely tp work poverty, less stable.
only part of the year, and those Median family income pf dust- Many couples are successful in
whose wives are not~employed are earnisjg coupl~s with the wife Ca pri- adjusting to the wife as primary
least likely to took for work if they mary earner ($23,547) was slightly earner, although there are as yet iso
too are ~nemploye4 higher, than for coup,jes who taIled ststist4eatbat measure this relatively
Dean a hlc Diffetessees sol,ely on the isusbantt's earnings new type'ofsrrangemeisr. As women
($2~,800). But 9 perâEnt of couples continue to gain in education and
In 1981, black couples were more in whichónly the husbind worked employment, and their wages catch
likely than were eithei white Or l'tfs- 1~or pay were below the poverty level, csp~o men's wives may someday be
panic couples to have the wife in a ss compared with 6 percent of pearly, as 1ik~ty as husbands to earn
pr,4ta~ry earning role-ejther as sote~ fsmilits In which the (stife was the the higheselpeome of the two: That
Earner oc the bigher~earplng'~posIe' primary ~arnet. will surely change h~w we think of
In adusj-earner couple. ln2O percent Wisre~si)~&thitearn theirhuEbands the Ais~etle"ais fsrn1ls~.
American Demographics
PAGENO="0530"
MARKEPS / Brckley Townsend
WORKING
WOMEN
Marriage and motherhood no longer
hold center stage in the daily lives of
working women. A single statistic
tells why: these women spend a
median of 8.7 hours a day at work
or commuting to work, according to
a 1984 study of working women by
Newsweek magazine,* Thirty-six
million American women work full-
time outside the home, half of all
women 18 to 64 years old. Nowthat
* The study way commissioned by Newsweek
makazine and conducted by Mathematica Policy
Resea~s.lnwwie,cswerecondsctodwsthanation.
allyeepreoentative sample of 713 women between
the ages sf21 and 65 who have regular employ-
ment outside the home at least 25 hours weekly.
most women, like most men, have a
workday that engulfs more than half
their waking hours, family life and
consumer behavior have irrevocably
changed. Those eight-plus hours
spent ev6ry day at the workplace are
hours that women `no longer have
for waiting In doctors' offices or
serving as den mothers, not to
mentlon going after the dustballs
under the sofa and the grout around
the bathroom tiles.
Yhile they put in long hours at
wcyrk, WOmen alsocontinue to handle
mo'st of the family responsibilities.
Only one-third have hired domestic
help, according to the Newsweek
survey. Even for this fOrtunate
gioup, the share of household work
performed by outside helpers aver-
ages only 40 percent.
Nor do huaba~ds help much. In
Newsweek's survey 71 percent of
married wOmen reported doing at
least three-quarters of the house-
work. Only 14 percent of husbands
in two-earner families perfprm as
much aS half the housework, and 60
percent do less than one-quarter.
It'u no wonder that working
women have fewer children than
women who are not in the labor
force, or that two-earner couples
dine out more often than single-
earner couples. If Kinder and Kuche
have not disappeared entirely, it is
only because of child-care cehtrrs,
Chinese carry-out and Cuisinarta.
Working women are fueling the
boom in catalog shopping, micro-
wave ovens, automatic teller ma-
chines, and other goods and services
that will conserve their most precious
teuource-free time,
It's not surprising, either, that
working women have problems bal-
ancing work and home responsibil-
ities. Nearly half of those polled by
Newsweek reported difficulty in keep-
ing up with housework, and more
than one-third felt guilty about work
left tindone. Half felt they had too
little time for themselves.
For many working women, con-
sumer products help them juggle
their work and family roles. Three-
quarters of Newsweek's respondents
owns frost-free refrigerator, 54 per-
cent have a dishwasher, and 40 per-
cent use microwaves and self-cleaning
ovens. Close behind are food
processors and home exercise equip-
ment, each owned by about one-
third (31 percent), according to the
Newsweek survey.
Working women want even more
in the way of convenience. On their
wish list are home computers (want-
ed by 42 percent), VCRs (33 per-
cent), and microwave ovens (32
percent)~
TIlE RENDER TRAP
Although most high-income women
are piofessionals and managers,
according to the: Newsweek study
most professional women do not
earn even $25,000 a year. And while
63 percent of high-Income women
are college graduates, 81 percent of
the college gradutstes,i.n the study as~e
not in the high-throme category.
The reason for t~setsC low incoenes
may be that fully half of women
professionals are concentrated in
two poorly paying professions:
teaching and nursing. The less tradi-
tional a woman's occupation, the
mOre likely: she is to Cam a high
income.
Even though women's earnings
are low, their mossey is becoming set
increasingly important component
of total household income. Even for
married Women whose earnings are
likely to fall w~ll below their hus-
bands', it is often the Woman's in-
come that makes the difference
between middle'income status and
poverty-or that catapults the family
Into affluence.
dn average, working wives con-
tribute a little over a quarter of total
family earnings, according to Fsbiah
Linden, director of the Conference
Board's Consumer Research Center.
524
A PROFILE OF UPSCALE :
WORKING WOMEN*. ~
21-24 ~l%
2y-34 ze 32
35-44 32 26
45-54 ,, 15, 15
55+ 16 11
M,dIun sgS 35 yes. 3GySi.
Edssaslssv
No cytlsg~ 22% 49%
Some colleg, 17 21
Colltgvgrtdoao et 30
Ossspstioss,
P,cfsss,onsl/nsnsge,isI 73% 42%
O,hts ,. 27 50
i.sssgsh of n-sets d~y;
Lms,hsn8hcu,t, 13 10
0-9 hems 27 40
Mo,,lhsn9hou,s ei 41
M,dlsn 9.3 h,s. 0.7 h,s.
* W,~,mm6520,OOO+pmeel
January 1985
PAGENO="0531"
But one out of three contributes
between 30 and 50 percent, and one
in eight earns at least half of her
family's total income.
The incidence of working wives
rises with family incomC.~Lesa than
one-third of wives are employed in
married-couples with annual incomes
of $10,000 to $15,000. But in the
$30,QQO to $35,000 bracket, the
proportiOu is ovet 60 percent, and
in the $40,000 to $50;000 range it
exceeds 70 perceht In The Working
Womaer A Progress Report, Linden
comments, "An impressive thteè-
fifths of total family income is
presently accounted for by homer
holds where the wife is employed.
There households have become the
single most important segrtien1~ c~f
the nation's market"
THE TEN PERCENT SOLUTION
Accckding to Newsweek's survey, the
m~sjority of workitig women-56
perceOt-earn less than $15,000.
One third earn between $15,000
and $24,999, and a mere ten percent
make $25,000 or more.
Women who earn $25,000 or
more are an elite group and an
important consumer market because
they have tOOre money to spend.
Compared to all working women,
thi~ upscale grdtsp is'twice as likely
to have a cOllege educatipn and
almost rl.vice as liksly to beirt
professional or managerial occuper
tions. ~heir median age is 38-the
age of the leading edge of the baby
booEn.-su~estlngthstupscalewomen
will be a rapidly growing i~tsrket for
the next decade.
High-Income women spendlticsnsy
more freely than women who esrn
less. More than half hold personal
checking and savings accounts. Corn-
ysared to workingwomen in general,
Sipscale women~are twice as likely to
have their owp IRA or Keogh funds
(45 percent versus 23 percent),
money market accounts (31 versus
13 percent) and stacks or bonds in
their own name (t19 percent versus
16 percent).
Married high-income women, in
particular, enjoy far mote discretion-
sty income than their lower-paid
counterparts. Eighty percent of the
upscale women would spend $iO0
on something they really wartied
wjthout askisig their liusbandt. lh
contrast, only half~of married WOthen
earning lessthsn $15,000 would do
so. Almost 60 percent of high-
income Women would spend $150
without consulnrig theit Spopse,
compared with fewer thsrt One-third
of lower-Income women.
Upscale women workera spend an
average of $1,000 per year on
fashion-double the average for all
working women. High income wo-
men atemore likely to west business
suitsand dresses to work than those
with lower incomes-while slacks are
worn more frequently to work by
women with lower incomes.
PASSINO THE TORCH
The trend toward later marriage and
the incrtasing prevelence of divorce
make it necesssry for women today
to be able to earn thClr own living.
The Newsweek survey found that
~hs younger the i~Oman the mote
likely she is to prefer work in which
she can adsrsnce rather than opting
for a low-pressure job. Younger
womephave higher csreer~esrpecra-
tions ittpartbecause theTt ~re better
educated than their older counter-
parts. Thirty-eight percent of work-
ing women sged 21 to 24 are college
graduates, compared with only 19
percenrofwonienaged55 and older.
Youtigworking women may have
low incomes right now, but they
have high expectations, and they
went to advance in their work. As
the torch is passed to this new
gçneratioTns, marketers should be
ready to help it achieve its goals.
525
1) M () it NI I)
Amo0~ wREkues u9ed 45 a~ older,
38~rRE* HI oiwsi 16 percm* of
wRwfth~roKreM
employer for mere Ihee 20 gRits.
5se4*e,5~* W~*S. r.~.ass
I5esç2OYea.5'
lw~ms 0/labS Sw**e 1954
American Demographics
PAGENO="0532"
526
Matters of note about demographics
Q'PE.N E R S
CLOSING THE
GAP
Working women earned 64 percent
of the wages of working men in 1983,
up from 60 percent in 1980. That is
the largest wage gain women have
made relative to men in this century.
According to a Rand Corporation
study, women's wages relative to
men'swillcontlnue toclimb, reaching
at least 74 percent by the year 2000,
as the female work force becomes
better educated and gains in job
experience,
Between 1940 snd 1970, most of
the women entering the labor force
did not have even a high school
diploma. Though large numbers of
women went to work during those
years, their average wages relative to
men's remainedatóil percentbecauae
they were so poorly educated. Since
1970, most of the women entering
the work force have been high school
graduates. As a result, the wage gap
hagars to narrow.
Wage gains have been moat dra-
matic for younger women-the lead-
ingedge of the baby~boomgeneration.
Women aged 25 to 34 averaged 65
percent of men's hourly wages in
1972 and 69 percent in 19fl0. By
1983, average hourly wages for
women in this age group were 73
percent of men's.
Though some of the relative gains
in women's wages have been due to
the falling real wage of men since
1980, theRandresearchera foundthat
most of the declining wage gap was
due to the increased labor force
participation of college.'educatçd
women. And the moat important
factor drawing college-educated
women into thelabor markethasbeen
increasing wages. As real wages rise
in the future, the number of women
seeking work at the higher wages will
increase.
One reason that the wagegap baa
not narrowed even more is that
women's years of work experience
have remained stable since 1950.
Working women aged 40 in 1950
had workesl an average of 14 years.
Their counterparts in 1980 had also
worked an average of 14 years. The
Rand researchers project. however,
thatwomen'a average.workexperience
will increase in the coming years,
contributing to a further closing of
the wage gap.
One factor that is working against
the narrowing of the wage gap is the
average number of hours women
work per week. Despite the increasing
proportlcrn of women in the labor
force, the average number of hours
that women work per week has
remained stable, largely because of
the increase in part-time workers.
"The average working woman still
works underhaif thenumber of hours
of the average working man," say the
reseatchers.
The study, Women's Wages and
Work in the Twentieth Century, by
James P. Smithand Michael P. Ward
is available from the Rand Corpor-
ation in Santa Monica, California.
NOT AS FAR AS
YOU THOUGHT
Women have come along way in the
past few years, but much of. their
time has been spent regainingground
they lost to men years ago. In 1947-
48, more than one in ten medical
degrees were awarded to women.
Ten years latçr, women chose to
deliver babies personally rather than
professionally, and only I in 20
medical degrees went to women. It
was not until the mid-1970s that
women's share of medical degrees
again equalled that in 1947-48. By
1982-83, women were earning 27
percent of degrees in medicine.
The statistics show the same
pattern of decline before growth in
other ptofeaaional fields. Women
carned 2.3 percent of degrees in
dentistry in 1947-48, a proportion
that fell to 0.4 percent in 1963-64
before rising to its current level of
21 percent in 1983-84. In veterinary
medicine, women's share was 5.4
percent in the latn 1940s, fell to 1.2
percent in 1953-54 and is fully 41
percent today, In pharmacy, women
earned 21 percent of degrees in
1947~48, but less than 10 percent by
the early 1950s. The 1940a' figure
was not surpassed until the early
1970s, but today womenearn fully
49 percent of degreey in phsrmacy~
This history lesson and other
statistics on the eda~cationaI levels of
women and minorities are available
for $70.00 in Professional Women
arid Minorities, a Manpower Data
Resource Sersice, by Betty M. Vetter
and Fleanor L. Babco, Scientific
ManpowerCommission, 1776 )ifaas-
achusetta Avenue, N.W., Washing-
ton, DC 20036.
* THIS IS
REVOLUTIONARY
Fifty-one percent of women with
children younger than age 3 were
working in 1986, up from 34 percent
just since 1975, according to the
Bureau of Labor Statistics. Fully 66
percent of these mothers work full-
time. No wonder the political issues
of parental leave and day care are
heating up.
PAGENO="0533"
527
"Mothers of infants and toddlers mothers with children under age 1
continued to be one of the most who work would climb from 48
rapidly growing segments of the percent to 62 percent.
labor force," saysthe bureau. Though If you doubt that more affordable
the number of children under 18 in day ç~are would put more women to
the U.S. population has fallen by 1.2 work, take a look at Sweden, which
million since 1980, the number of has perhaps the world's most ad-
children with working mothers has - vanced national system of child care.
increased by 2.5 million. Children Sweden also has the world's highest
under age 6 accounted for 90 percent female labor force participation rate,
of this increase, the authors note.
Among the nation's 33 million Juggling Jobs and Babies: America's
women with children under 18, 63 Child Care Challenge 1987, by Martin
percent work and 72 percent of these O'Connell and David E. Bloom, is
mothers work full-time. published by the Population Refer-
More information on working ence Bureau, Inc. Copies are available
mothers, their children and families from PRB, P.O. Box 96152, Wash-
is included in the Bureau of Labor ington DC 70090.
Statistics News, USDL 86-345
WELFARE
MOTHERS
Affordable day care Is the key to
getting more women off of welfare
and into the labor force.
Many young, unmarried mothers
can't afford day care. As a result,
they don't work and must depend
on welfare to support their families.
According to a report by David E.
Bloom of Harvard University and
Martin O'Connell of the Census
Bureau, "the lack of affordable child
care is probably preventing many
poorly educated and low-income
mothers from working at all, when
they are the women who need jobs
the most." Furthermore, "consider-
ably more mothers of young children
would work if they had access to
reasonably priced child care. This is
especially true for unmarried women,
black women, women who never
finished high school, and for women
from low-income families."
Today, 53 million working women
in the U.S. account for 44 percent of
the civilian labor force. Fifty-four
percent of women with children
under age 6 are working, as are 48
percent of women with children
younger than 1 year.
If affordable day care were avail-
able, the authors say, the share of
American Demographics
PAGENO="0534"
O uringthe past 30 years, women
I have dramatically changed the
American labor force. By 1986,
nearly 52 million women were
working, about 200 percent more
than at the end of World War II, In
contrast, the number of men in the
labor force increased by only 50
percent. The rise in the number of
working women is probably the
single moat important change that
has ever taken place in the American
labor market. In the next two dec-
ades, the workplace will have to
adjust.
Between 1948 and 1985, women's
share of the labor force grew from
29 to 45 percent as women's labor
force participation rate jumped from
33 toSS percent. Although the labor
force participation rate for women is
still below that for men, the rate for
men has been declining-it was 87
percent in 1948 and 77 percent in
1985-suggesting a long~term con-
vergence in the participation rates for
men and women.
The risinglabor force participation
rates for women are the result of a
complex set of factors..Firat, many
of the women who took jobs in
record numbers to esas labor short-
ages during World Warli-especially
married women wanting no more
chil4ren-remainedonthe job. These
women contributed importantly to
the increasing social acceptability of
the working woman.
A second critical factor was the
528
by Davi4 E Bloom
David Bloom is an associate professor
of economics at I1arvard University and
a contributing editor of American
Demographics.
American Demographics
PAGENO="0535"
~29
widespread use fu the~arly 1960s,of Not c~sly have the' numbers of
the contraceptlv ifl.'E~fedtiswcon-' worsen in the labqr force increased,
traception freed women frojwehfid- so ~save tht types of job's they are
bearing' and gave then~ ~t(& th~j~ dcsing Wçilnen were 33 perceht of
husbands) the oppostunity and the afl goods-producing employees its
responsibility of deciding whether 1986, up from 23 percent in 1966.
and when to have childrtin. This Because the importance of the manu-
new-found freedom led many women facturing sector of the economy is
to postpone childbearing and to declining, however, these women
continue theli educations. With comprise only 16 percent of all
marriage rates declining and divorce working women today, down from
tates Increasing, many women realized 24 percent In 19~6. The remaining
that they needed economic mdc- 84 per~ent of employed women
pendence. work in the service sector. In fact,
A third factor pushing women into women are now 51 percent of all
the workplace was the economic service-producing employees, up
problems faced by the baby boomWs from 41 percent in 1966.°
when they Went to work, including The growth of the service Sector
their relatively low wages and high has been good for working women
unemployment rates. Having two because service employment ached-
incomes, especially during a period ules are often more flexible than
of sharply rising prices, became those in goods-producing industries.
especially Important to ensure a In the early 1950s, only one-fourth
middle-class standard of living. of employed women worked fewer
Not all types of women went to than 35 hours a week, Today, one-
work in equal proportions. The'labor third work fewer than 35 hours a
force participation rates of married week Among the women who work
women with tio thildren at home niotethan 35 hours a week, however,
rose from 30 to 48 percent between ,the proportion who work 50 to 52
1950 and 1985, while married weeks a year has increased from ~8
women with children aged .6 to 17 percent in the early 1950s to 48
more than doubled their partici- percent in 1986,
pation, from 28 to 68 percent. But The occupations of working wo-
these increases pale in comparison to men have also been changing, al-
the more than quadrupling of the though there is still a lot of occupa-
labor force participation rates of tional segregation. `The occupations
married women With children young- most heavily dominated by women
er than age 6; their rates increased are schoolteachers (74 percent wo-
from 12 percent in 1950 to 54 men in 1986), retail tislesworlcera (69
percent in 1985, rising above the * The gssds.prodsicing indsstsies ate mining
rates for married women with no conssnsction, and mansfacsesisg. The service-
children. This is because those with- pnldscsng tdnssmesaretnassportatsonqndt*dlllc
Out children at home are, on aSerage, uslsstes wholesale and retssl trade Jina,tce,
older than those With children Its the ~ ~ ~ ~g
home. facilities, Isv finnS, beasst,y shops, etc)
September1986
percent),, librarians (87 percent),
t$itaes (96 percent), and secretaries
(9~' percent). In contrast, occupa-
tions with relatively low proportions
of women are fireflghters(1 percent),
construction workers (2 percent),
mechanIcs (3 percent), police officers
(6 percent), and engineers (6
percent).
Despite the persistence of occupa-
tidnal segregation, women's repre-
sentation ins number of occupations
is growing rapidly, including lawyers
(20 percent today, up from 5 percent
in 1970), doctors (18 percent, up
from 10 percent in 1970), architects
(8 percent, up from 4 percent in
1970), computer scientists (28 per-
cent, up from 14 percent in 1970),
and college and university teachers
(37 percent, up from 29 percent its
1970). In the past ten years, woihen's
shgre of full-time metisbtrs of med-
ical school faiculties itscreased from
12 ics 17 percent.
Beginning In February 1986,
wothen workers became a snajotity
of professional employees in the U.S.
To some extent this reflects the
resurgence of schoolteacher hiring as
the children of-the baby bOom go to
school. But it also reflects the growing
nunibet of women entering tradition-
a11y male-dominated occupations.
One trend these statistics don't
reveal, because they cover only sala-
ried employees, is thegrowin~number
of women entfeprencurs. In 1960,
women started only one in ten new
businesses, but by 1985, this figure
,had risen to one in three. ~y 1995, it
will be one in two. A variety of
fsctots undeslie this trend, including'
the growing number of two-paycheck
fansijiesin which capital for starting
PAGENO="0536"
\
a business is more resdily available
and the establishment of federal
equal credit laws that have made it
easier for women to borrow money.
Some women entrepreneurs report
that, they started their own business
to escape on-the-job discrimination
while many others say they started
their own business so they could
have more flexible schedules, making
child care easier.
In 1965, only 20 percent of adult
women had at least some college
education; in 1986, 42 percent do.
The subjects women are studying in
school are also changing. In 1970,
women received just 10 percent of
the degrees awarded by the ~iation's
business schools, far below the 40
percent share they receive now. The
number of women entering medical
school increased more than fivefold,
from 948 `in 1969 (9 percent of all
first-year medical students) to 5,515
in 1985 (34 percent). In general,
only 1 in 20 students enrolled in a
professional school in 1962 was a
woman; one in three is now. "Old-
girl" networks ate forming among
women today that may have a sig-
nificant impact on business decision-
making tomorrow.
One other fact about working
women that deserves attention is
their representation among execu-
tives and managers. While 45 percent
of American workers are women, 36
percent of executives, administrators,
and managers are women. Only 5 to
10 percent of top executive positions
are held by women, and only one
Fortune 500 company has a woman
chief executive officer.-Xatharine
Graham of the Washington Post
Company. Women are underrepre-
sented in management, and un-
represented at the top. But the
proportion of managers who are
women has been climbing. In 1972 it
was only 27 percent. In 1979, it was
32 percent; by March 1986, it had
reached 36 percent.
TIlE EARNINGS GAP
The ratio of the median annual
earnings of full-time female workers
to full-time male workers has been
remarkably stable over time. It was
0.61 in 1960,0.59 in 1970, and 0.60
in 1980. There is, however, some
evidence that the pattern is beginning
to change. By 1984, the tatio was
0.64° Many labor economists expect
this rise to continue, with the ratio
reaching' 0.8 by the turn of the
century.
The growing number of working
women has important implications
for family income. ln 1981, the
earnings of women working part-
time represented about 25 percent
of their families' total incomes; for
women working full-time it was
nearly 40 percent. Twenty-six per-
cent of families with two earners had
upper-class incomes in 1983, corn-
* This ,atio ,ose,ed between 0.61 and 0.64'
during most of she late 1950*, before isfellao low
ao 0.57 in 1973.
530
STARTED ONLY ONE IN TEN NEW BUSINESSES
_____ BY 1995. IT WILL BE ONE IN TWft
GOING TO WORK
.
Wom,u'slsbiofo,oepsr,ioipssionhssioorrtt,d**o***OOtlYsiuOe 1950,ps,sioolsrly'smoogwomrs
sgod 25 so34.
~IT1:~\\\\
American Demographics
PAGENO="0537"
531
pared w)th juat 8 percent of one- nently, or even formore than a few by catalog, and hiring domestic help.
earner families.* In 1969, only 14 years, to raise a family. Working women also demand goods
percent of families with two earners Because they are involved in and services that help them organize
were in the upper class, suggesting careers and mothering, many women their time, such as VCRs, 24-hour
that the number of earners in a lead exhausting lives. AbouY one- shopping, and automated banking.
family is now a more important third of working women ease their
determinant of income class than it burden by hiring domestic help. The THE POLICY RESPONSE
used to be. The growing importance problems of combining work and Many employers are beginning to
of the second earner is undoubtedly family are made worse because there experiment with policies that make
due to the increased educational are no role models to follow. Work- it easier for people to work and have
attainment and labor force commit- ing mothers today are pioneering the a satisfying family life. One option is
ment of the second earners-most of answers to new questions-they can't flexible scheduling, which includes
whom are women. In 18 percent of ask their mothers and grandmothers flextime and block scheduling. Flex-
dual-earner married couples, how- for advice, time allows an employee to begin
ever, the husband is the second In 1959, women aged 25 to 64 work within specified limits in the
earner while the wife is the primary spent, on average, 572 hours a year morning (e.g., 7 am. to 11 am.) and
breadwinner, working for pay, 1,423 hours doing to leave work within specified limits
housework, and 266 hours taking in the afternoon or evening (e.g., 2
AFTER WORK care of children. Work at home plus p.m. to 9 p m.). Block scheduling
Thirt~ years ago, the typical woman work away from home occupied allows an employee to work a regular
graduated from high school, married, 2,261 hours (or 43.5 hours per number of hours per week, but to do
had children, and stayed home with~ week). In 1983, after nearly a quarter- it in three or four days instead of
her family. Some women worked, century of rising labor force partici- five. An estimated 12 percent of all
niost out of economic necessity. The pation, the average woman aged 25 full-time workers were on flexible
career woman svas a rarity, to 64 spent 929 hours a year working work schedules in the early l980s
Today, characterizing the life of a for pay, 1,252 hours doIng house- (almost 8 million employees), up
typical woman is much more dif- work, and 76 hours taking care of from less than 5 percent in 1974.
ficult. Some women continue to children. Work at home and work The most important experimentto
follow the pattern of the 1950s. But away from home took 2,383 hours a date with flexible scheduling was
a growing number are going to year by 1983 (or 45.8 hours per conducted by the federalgovernment,
college or graduate school, delaying week). Women worked more in which established alternative work
marriage and childbearing, and em- 1983 than in 1959, at the expense of schedules for 325,000 employees for
barking on careers. Some of the their leisure time-women have 20 three years in the late 1970s. Ninety-
women who do marry and have minutes less leisure per day than they three percent of the employees said
children continue to work part-time. dvi a quarter century ago.* that the ability to determine their
Others try to raise a family while Because leisure isa scarce resource own schedules was "somewhat im-
working full-time. Most of these for working women, they stretch it portant" to "very important;" 83
women depend on child-care services with time-saving appliances such as percent of single parents said it was
and other hired help. Few women microwave ovens, frost-free refriger- "very important."
leave their jobs and careers perma- ators, food processors, and dish- Some employers offer their em-
washers, and by eating out, shopping ployees help with child care. Between
A~, ,iplic~-,.la,s family' defi,ied as one n.h,,,c 1978 and 1986, the number of
s,gmave ha,, 225 l'enens of media,, Thcsefsgtiees are taken from asamscleb, ViSor
family scone Sc'e "What ,,I-Ial,pes,ng Io she R. Fuchs, "Sex Differences is Economic Well' employers providIng child-care hene-
Middle Class?" American Demogriphics, Being," Science, April 25, 1986, Vol. 232, pp. fits increased from under 50 to about
Ja,,nan-, 1985 459-464. 2,000. Despite this large Increase,
September 1986
PAGENO="0538"
0
3
PAGENO="0539"
533
18 weeks of unpaid leave to care for that labor force growth may be less paticjn rate for women has reached
a new child. than 0.75 percent a year over the 66 percent, the highest rate among
Local governments, too, are start- next 20 years. the industrialized economies.
ing to get involved. An ordinance In many cities (such as New York Businesses owned or managed by
passed by the city of San Francisco and Boston), the labor market is women are more likely than those
in October 1985 requires downtown already tightening, as indicated by owned or operated by men to adopt
office building developers to either the increased number of. "help innovative personnel policies, espe-
include space for child-care facilities wanted" signs in store windows and cially policies important to women.
in their buildings or to contribute $1 the growing number of unskilled jobs As women increase their representa-
per square foot of office space to a that pay more than the minimum tion in higher levels of American
city fund allocated for constructing wage. This tightening will pressure business, and as old-girl networks
inner-city child-care facilities. In employers to raise wages. The passage assume greater importance in organi-
Massachusetts, an experimental pro- of comparable-worth legislation will zational power structures, the linger-
gram provides low-interest loans of further promote a rise in women's ing sexism that makes it difficult for
up to $250,000 to companies that relative earnings, parents to combine careers and fam-
establish their own child-care centers. Tight labor markets will give em- ilies will subside.
Two states. (New York ~nd Cali- ployers an incentive to adopt labor Some industrial psychologists re-
fornia) actively sponsor child-care practices that make it easier for port that women have different
programs for state workers, and four parents to combine work and family., management styles; they are more
states (Arizona, California, Connect- Sweden has already faced what the participatory, nurturant, and mater-
icut, and Florida) provide tax bene- U.S. is facing now, and U.S. em- nal-characteristics commonly associ-
fits to employers that offer child-care ployers can learn much from the ated with the Japanese style of
assistance. Swedish experience. Since the end of management. Currently, the upper
World War -Il, Sweden has hqd echelons of American companies are
SWEIIENS EXAMPLE chronic labor shortages. It has re- so heavily dominated by men that it
The demographics of labor force sponded to them by encouraging may be difficult for women to
growth will ensure that the labor women to participate in the labor express their own management styles.
market will make way for working force, embarking on a large-scale But as women enter the upper
women in the next few decades, For effort to ease women's child-care echelons, they will add diversity to
the past 20 years, the American labor responsibilities through a network American management, a diversity
forcegrew at a phenomenal pace of 2 ~f government-supported day-care that can only benefit American
percCnt a year, fueled by the. in- centers. The government has also business.
creasing numberof working women legislated a variety of other financial Overall, we can expect the in-
and the entry of the baby boom,into incentives and legal guarantees de. creased entty of women into the
the labor force. The labor force will -signed to make it easier for women labor- force to change rhe,American
grow much more slowly in the to work- and have children. These labor system forever. Some women
future. The participation ~rates of policies provide for, up' to nine - will be turned off by the stress and
women will probably continue to months of maternir~ or paternity `the routine'of work and by the dual
rise, perhaps reaching 58 `to 60 leave (at 90 percent of full pay) with demands of `work and family. But
percent by the end of the century, a guaranteed job on returning to these women will be the minority.
hut the rapid increase in the number work, aC well as a guarantee that a As jobs become more attractive
of working women has run its parent can receive full-time pay for because of rising wages and inno-
course. In addition, the small baby- working just six-hour days until a vative personnel practices, the gap
bust generation is now enterigag the, child's eighth- birthday. Although --between thelab~r force partkfipation
~brk force.Coupled with continued. marriage and birthrates -ift Sweden rates of men and women will con-
early, retirement, these. trends mean remain low, the labbr force-partlci- tltiue to shrink,
September 1986 -
PAGENO="0540"
- and Minneapolis-St Paul by 4.4
percent. Chicago lsa~lostO.3 percent
of its population since 1980, Pitts-
burgh 1.1 percent New. York 2.7
percent, and Detroit 3.3 percent.
Eight other metropolitan markets
with populations of 2 million or
more are in the South and West:
Baltimore, Washington, Atlanta,
Dallas, Houston, Los Angeles-Long
Beach, Anaheim-Santa Ana, and San
- Diego. All of these metropolitan
areas gained population between
1970 and 1980, and all continue to
grow in the 1980s. Only two of
thethare growing more slowly in the
1980s than they didin the 1970s-
Anaheim-Santa Ana and San Diego.
Between 1980 and 1984Baltlmore
grew by 2.7 percent, Washington by
4.5 percent, Atlanta 9.4 percent,
Dallas 11.5 percent, Los Angeles-
Long Beach 5.2 percent, Anaheim-
Santa Ana 5.9 percent, San Diego
8.4 percent, and Houston by fully
20 percent.
THE HOUSEHOLD MARKET
757 8O3~ 6.1% l~4atlonsl household growth has
1,113 1,23k' 10.8 slowed considerably since 1970,
720 sss im falling froma 2~7 percent annualtate
lIs 858 i~.e of Increase in the 1970s to 1.4
973 `1,187 ~o percent in the 1980s. }lousehold
2.730 2,919 6.9 growth in metropolitan areas as a
~ ~ ~ whole fell from 2.6 percent to 0.8
670 142 l0.~ percent. But households `-In the
8,361 9,271 10.9 nation's largest metropolitan areas
20690 21723 50 have been growing at a faster rats
than all metropolitan households.
Twent~,-two percent of the nation's
_______________________________________________ gain in households betwé~t1' 1980
. and 1984 has occurred in the'- 16.
The l980s may be agood decade for . markets with populations of 2 largest metropolitan areas.
the nation's largest metropolitan million or mote are in the Midsrest According to! estimates by Don-
areas, even in the North.The large and Northeast: Boston, Chicago, nelley Marketing, households In the
northeastern and midwestern metro- Detroit,Mlnsteapolis-St. Paul, Nassau- major metropolitan marketa have
politanareas, those with populations Suffolk, New York, Pittsburgh and been growing by 1.2 percents year
of 2 millitin or more; have recovered Philadelphia. Six oftheselostpopula- sln~e 1980 Among the 16 areas,
from their malaise of~the 1970s. tion duringtbe 1970s(Mlnneapolis- only Detroit and NewYorkhave lost
Though tbey'were hurt by declines . St. Paul and Nassau-Suffolk grew), households.
in manufaci~uring employment, the but in the 1980s, a~cordlng to The number of households In the
service sector has come to theiraid. Donnelley Marketing Information eight major metropolitan markets of
Because of the rise in service-sector Services's, estimates for 1984, only. the Midwest and Northeastincreased
jobs, growth patterns in the large one area-Detroit-has been losing from 12.3 million to 12.3 million
metropolitan areas of the Northeast population at a faster rate. Boston between 1980 and 1984, an annual
and Midwest are no longerso differo and Philadelphia each grew by 0.9 growth rateof 1.0 percent-equal to
tnt from those In.the~ South and percent between ic980'and' 1984, their growth In the 1970s5 Minne-
We8t~ .. --. . reversing their decline in the j970s.. apolls's hou~eholds weft u~ by 6
Eight of the 16 metropolitan NassauoSuffolkgrewby 07 percent,. pereant~, ~ndlBoston's by3 ~l6Cceht.
584
CLOSE UP / Thomas 0. Exter
MAJOR MEIROPOLflAN
MARKETS
METROPOLITAN SCORECARD . (pag tio6a.aIIa,u.uh,,kh. 6. ,howssds)
po~.. hocada1ds
-
mojo,ocSpdlicc~.~ooa~ 1980 1984' choogo 1980 8954' dsauo
NORThEAST AND MIDWEST
5o,~ou 3,972 4,009 0.9% 1,397 1,438 2,9%
No.. Yook 8,275 8,050 2.7 3,198 3,162 -1.1
Na,gau-Suffc'Ik 2,606 2,625 0.7 809 829 2.5
Philad,lphia 4,717 4,759 0.9 1,639 1.679 2.4
Pi,ubuo5h 2,219 2,194 -1.1 813 820 0.9
D,uo,, 4,488 4,342 -3.3 1,552 1,519 -2.1
Chicago , 6,060 6,043 -0.3 2,150 2,189 1.8
Minse,polh-S,. Paul 2,137 2.232 4.4 770 816 6.0
Subsoaai 34,474 34,253 -0.6 12,329 12,452 1.0
SOUTh AND WEST
5s16,aoou 2,200 2,260 2.7%
Wa,hias,on 3,232 3,378 4.5
A,lass, 2,138 2,338 9.4
Dulls, .` 1,957 2,182 11.8'
Houutos. 2,736 3,284 20.0
Lo~ Aagoles-Losg Seach 7,478 7,868 5.2
Asaho~m.San,a Ass . 1,933 2,047 5.9
San Dcego 1,862 2,018 8.4
Sub,otal 23,536 25,375 7.8
16 METRO TOTAL 58,010 59,628 2.8
`1984,Soa180SouaMoi54'gl.f."ul"Oinlo,.1o.
No.,AUc,a,o,.c.p.Baa.caOSOPMSA.o 008.. 5.,. ~,.p,u~80byth,oob8u4PM0A. of ~ SoS..., 1.onoo~
April 1985
PAGENO="0541"
In tl~e South and Wes~, the major
metropolitan markets have experi-
enced alowet houaehold growth since
1980. During the 1970s households
grew at just over 3 percent a year.
Between 1980 sn4 1984, the annual
rate of household growth dipped to
2.7 percent. Households in theae
eight areaa grew from 8.4 million in
1980to 9.3 millioniñ 1984. Houston
led the southern and western metro-
politan markets in household growth
with a 22 percent gain since 1980.
Baltimore, Los Angeles-Long Beach,
and Anaheim-Santa Ana had the
slowest rates of household growth,
barely above Minneapolis's 6 per-
cent. Only in Dallas were households
growing faster in the 1980s than in
the 1970s.
sERVICES 050W
Population trends in metropolitan
markets reflect shifts in jobs and
industries. In 1970 Chicago was the
leading metropolitan area in manu-
facturing employment with 938,000
workers, followed by New York with
856,000 and Los Angeles-Long
Beach with 803,000. By 1980, Los
Angeles-Long Beach had surpassed
Chicago As Chicago slipped to
second place, New York fell to a
more distant third.
During the 1970a, many of the
major metropolitan areas in the
South and West gained manufac-
turing jobs while those in the North
lost them. Since 1980, according to
the Bureau of Labor Stat1~tics, all 16
metropolitan areas have been losing
manufacturing jobs. Of the 610,500
manufacturing job~ lost In the 16
largest metropolitan markets since
1980, 77 percent have been lost in
the Midwest and Northeast and 23
percent have been lost in the SOuth
and West. Pittsburgh's manufacturc
Ing jobs fell by motethan 30 percent
between 1980 and 1983, the largest
sharelost byany major metropolitan
area. But Houston, despite its repu-
tation as the city of opportunity, lost
fully 17 percent of its manufacturing
jobs between 1980 and 1983.
The loss of manufacturing jobs
has been more than offset in mostof
these metropolitan areas by gains In
service-sector jobs. This growth is
,~b,.,dsssM./a..o, woos,, Las,~c..9.~8i9,s,d Ls,,IL
S,..s, 5,sa,.,s.fL 5~,lsccs, 5.ppkas,s,s.EapI0y.,a~c.8s~
providing a more even geographic
distribution of population, employ-
metst, and marketing opportunities.
The eight major metropolitan
markets in the Northeast and-Mid-
west have captured fully 53 percent
of the new service-lndust*y jobs
`created Since 1980 in the 16 major
metropolitan areas, a reversal from
the 1970s when the Northetst and
Midwest captured only 46 percent
of the service jobs. Employment in
the service industries, which include
health and medical services, data
processing and other business serv-
ices, architectural and engineering
services, education, restaurants and
hotels, and a variety of personal
services, increased at more than 3
percent per year in all 16 major
metropolitan areasduring the 1970s.
Since 1980, service employment in
13 of the metropolitan areas has
slowed. Only in Chicago and New
York is the rate of increase greater in
the 1980s, while Na~ssu-Suffolk's
rateof inOrease remained the same.
The eight metropolitan markets in
the Midwest and Northeast, as a
group, lost 469,000 manufacturing
jobs since 1980, but gained 338,000
service industry jobs Boston, New
York, Nsssau-Suffolk, and Minne-
apolis-St. Paul gained more service
jobs than the manufacturing jobs
they lost. The eight metropolitan
markets in the South and West as a
group lost 141,700 manufacturing
jobs since 1980, but gained 295,900
service-industry jobs. All but Hous-
ton and Los Angeles-Long Beach
gained gnore in sexvice-industty jobs
than they lost in manufacturing jobs.
The metropolitan area with the
greatest number of service-industry
jobs today is New York, followed by
Los Angeles-Long Beach and Chi-
cago. Boston, Philadelphia, and Wash~
ington are fourth, fifth, and sixth in
service-industry employment. In abso-
lute growth, New York has been the
leader in aerviceoindustry jobs since
1980, followed by Chicago, Dallas,
Washington, Los Angeles-Long
Beach, Philadelphia, and Boston, all
of which gained more than 50,000
service jobsbetween 1980 and 1983.
With this kind of growth in
58~
JOB GAINS'ANO LOSSES (stsplølsesslntbs,aseds)
pa's,,, . -,
a,a'ca,oaspcll6'ss'ess 1980 1983 dosage 1980 1983 d...gc
NoRTHEAsT AND S410WEST
Bassos 460.8 910.8 10.9% 380.4 369.7 -2.6%
Na,, ?crk 1,002.0 1,087.8 8.5 58&6 516.2 -l2~0
Nassss-Su(folk 204.6 238.6 16.6 167.3 167.8 0.3
Philadelphos 460.9 811.6 11.0 .440.1 387.8 -11.9
Piaasbur0h 215.1 231.8 7.8 241.6 166.9 -30.9
Detsaia 346.0 186.3 3.0 491.4 418.9 -15.4
Chisa5s . 667.5 739.8 10.8 812.2 639.8 -21.2
Misneapalis-Sa. Paul 240,1 257.3 7,2 246.2 232.9 -5.4
Subtotal 3,597.0 3,933.7 9.4 3,365.8 2,897.0 -13.9
SOUTH AND WE5T
Bal6mo,, 191.4 212.8 11.2% 159.8 139.8 -12.5%
Wsshisgtsss 429.9 485.7 13.0 58.2 64.5 10.8
Atlanta 199.3 230.2 18.5 143.9 145.7 1.3
Dallas , 256.4 314.7 22.7 320,3 307.6 -4.0
F1~osa~s 280.4 312.1 11.3 243.5 2013 -17.2
Los Asgales-Losg Beach 829.3 882.7 6.4 912.1 949.7 -6.8
Anaheim-Sasta Ans 171.1 201.3 `17.0 220.5 209.6 -4.9
Sass Diego 148.2 163.4 10.3 109.1 106.3 -1.7
Subtotal 2,507.0 2,802.9 11.8 2166.4 2,024.7 -6.5
I6METROTOTAL 6,104.0 6,736.6 10.4 5,532.2 4,921,7 -11,0
American Demographics
PAGENO="0542"
536
service-industry employment, it is and San Diego are expected to grow The rankings of the top metro-
no surprise that 13 of the 16 major between 15 and 20 percent by 1989. politan areas will shift in tbe 1980s.
metropolitan markets are projected Anaheim-Santa Ana, Los Angeles- New York has long been the largest
to grow in population through the Long Beach, Minneapolis-St. Paul, metropolitan area, but Donnelley
remainder of the 1980a, according and Washington are expected to projects that Los Angeles-Long Beach
to Donnelley Marketing estimates. increase by at least 10 percent. may rank first ii~ 1989. Houston's
Only New York, Pittsburgh, and Baltimore and Nassau-Suffolk will populationcould pass Washington's,
Detroit are projected to lose popu- grow by 5 percent. And Boston, moving Houstoninto seventh place.
lation. Chicago, and Philadelphia will grow Chicago, Philadelphia, and Boston,
Houston is projected to increase by at least 2 percent during the however, should maintain their third,
by 37 percent between 1980 and 1980s, a ainallbutsignificant reverse! fourth, and fifth place ranks, aided
1989, to 3.8 million. Atlanta, Dallas, from the 1970s. by their growing service sectors. .
April 1985
PAGENO="0543"
537
"The Changing Nature Of The American Workforce:
A ~haiiengé To C~ng*~ess'
By: Thannette Reddish Scollard
May 37, 1988
For:
House Committee On ~ma11 Business:
Hearings On Women And Sfl~a11 Business Issues
PAGENO="0544"
538
Jeannette Reddish Scollard
Page 1
"The Changing Nature Of The American Workforce:
A Challenge To Congress"
The Axnerican businessplace is undergoing dramatic changes. Women
are an important part of these transitions, which are all the more apparent
to me because of the several jobs I hold: as an entrepreneur; as an author
now researching a third book on women entrepreneurs for Macmillan Pub-
lishing; and as resident financial expert of ABC Television's "Home" show.
My work keeps me in touch with the heartland of America.
Three Major Trends Of The American Workforce
I would like today to spotlight three major trends of the American
workforce. They represent substantial changes and women are a pivotal
factor in all three of them. I will briefly call these developments to
your attention, point out some of the challenges they present and suggest
some of the ways in which Congress can provide important assistance.
A. Brain Drain
The first and most important trend is the brain drain of women from
the traditional male-dominated corporate arena. The cream of women exec-
utives are leaving the larger corporate structures and opting to start
businesses of their own.
Reasons For Brain Drain:
1. There are two reasons for the brain drain. The higher up a woman
moves in the business hierarchy the more sex discrimination she is likely
to encounter. I know, I've been there. In the late 1970's I was the first
PAGENO="0545"
539
Jeannette Reddish Scollard
Page 2
and only woman officer in the history of a 100-year-old blue chip multi-
national. I learned firsthand what it is li]èe to reach the crystal
ceiling -- the ceiling the male establishment denies exists -- the point
at which a woman will not be promoted no matter how well she performs. I
perceive no improvement today of this tacit discrimination against women.
Women refuse to be so easily dead-ended in their careers. They realize
that not one single major corporation is grooming a woman to be the CEO.
They realize that not one single woman is among the power brokers in the
financial community. They realize there still is no ladies' room at the
New York Stock Exchange.
WOmen realize they must move into another milieu away fro~n the Old Boy
Network which has so successfully excluded them. They've fig~n~ed out that
if they want to be President they're going to have to own the business
themselves. Hence, the exodus from corporate life into entrepreneurship.
Not only can women make as much or more money on their own, they can be
in control of their lives.
2. This brings me to the second factor that makes entrepreneurship so
attractive to women. We carry the lion's share of the responsibility for
our husbands and children. The regimented nine-to-five of the male corpo-
rate structure was designed for men who had wives. Well, womext don't have
wives. They are the wives.
The only way a woman can "have it all," as.men do, is to take charge
of her destiny. She has discovered that if she's the boss she gets to
write the rules. New rules. She can design her schedule around her
family's needs. She can delegate to her assistants when Johnny is sick.
88-199 p~8~i~
PAGENO="0546"
540
Jeannette Reddish Scollard
Page 3
When she likes she can take the office to the nursery or the nursery to the
office. She can do this without missing a beat or losing one iota of her
professionalism.
So what we're seeing is this extremely capable segment of our work-
force abandoning the corporate halls and creating what is now the most
exciting and vibrant part of our economy: new businesses that create new
jobs for our workforce.
We're only at the beginning of what is becoming a groundswell. You'd
be surprised how many women executives still in corporations are harboring
dreams of escape. They keep their jobs for the short term as they secretly
build the framework for their thture long term enterprises. They plan to
escape the confinements of being second class citizens in a man's world
and create brave new worlds of their own.
Effects O~ Brain Drain:
1. We should focus on two important ramifications of this change in the
marketplace. One, the exodus of senior women is depriving traditional
American business of an important source of fresh insight and ideas. Much
of corporate America is in dire straits right now and can ill afford so
crippling a brain drain. I would, therefore, suggest that Congress vigor-
ously er~courage corporate America to promote its talented capable women.
As it stands now, the outlook ~or women in the 1990's in corporate
America is far bleaker than it was in the l97O's~. To be blunt, many
corporations have already hired their token woman -- who may have left in
frustration -- and now the corporation feels under no pressure tQ replace
her. The attitude is, "We had one and she didn't work out, so you can't
say we haven't tried."
PAGENO="0547"
541
~eannette Reddish Scollard
Page 4
2. Thete is another interesting ramification of the exit of women from
male-dominated corporate America that is more profound. Not only are
women's ideas lost, so is the impact of their management style. Women's
management style is far more appropriate to the social realities and
econothic contingencies of today. It is more open, subj~ct to give and
take, responsive to the attitudes and insights of their subordinates.
Moreover, women managers tend to inspire more loyalty and have emrned a
reputation among their male superiors for being more loyal than their male
counterparts.
Transfer this management style to the unique advantages of entre-
preneurship and you have an interesting combination. As you know, one of
the key strengths of privately held business is that it has the privilege
of thinking long term. Such a business is not at the mercy of investors
who think only short term and are preoccupied solely with the price of the
stock and the dividends which will be paid next quarter. Since an entre-
preneur must answer to no outside interest she can plan for the long term.
Therein lies much of her. business's future strength.
To summarize, we have a new management style that inspires job satis-
faction and loyalty in a setting where a long term view is possible.
Women entrepreneurs can provide a fresh new work environment which might
compare favorabiy with the much touted Japanese style. The style of women
entrepreneurs is much more in keeping with the trends of the 1990's than
is the more rigid and increasingly outmoded approach of our traditional,
but beleaguered American businesses.
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542
~ieannette 1~eddish Sco]lard
Page 5
~ Can Do:
What is the major challenge facing these women? Money. Women entre-
preneurs typically have more difficulty than their male counterparts in
raising capital. Banks routinely discriminate against women. American
bankers simply have nOt kept up with the changing nature of the workforce
and very few of them recognize what an important market is emerging in
women-owned businesses.
We really need help a~id you can provide it. The solution is very
simple. You in Congress must help us open the eyes of the banking commu-
nity to this major economic trend of the 1990's. You must encourage them
to give women a break. You can mandate incentives to encourage banks to
stop discriminating against women-owned businesses.
B. Middle Mana9einent Outplacejnent
The second trend I would like to call to your attention is a result of
the takeover mania that currently possesses corporate America. We're
seeing an extraordinary consolidation of major companies as they take turns
swallowing each other up. The mergers have a direct result on the workforce
mecausa they eliminate jobs. Combined companies have redundant jobs. For
instance, how many accounting and personnel departments does a single busi-
ness need? Mergers result in a massive outplacement of middle management.
Middle levei management is fired or forced into'early retirement.
Corporate America may not have many jobs -for outplaced 50-year-old
managers, but entrepreneurial America surely does. These experienced
managers are a great potential source of assistance for traditionally under-
managed entrepreneurial companies.
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543
Jeannette Reddish Scollard
Page 6
t_C~n~r~s~ Can OO:
The challenge here is twofold: first of all, the outplaced managers
need to be educated about the opportunities in a world they know little
about -- small business. And they need to be trained in the lean cost
efficient management style that is indigenous to small business. Banks
have to take women business owners seriously and fund them as they create
new jobs for what is now an idle reserve of talent.
Once agath, Congress oan be of great assistanOe in providing a solution.
We need educational and job placement programs to facilitate the recycling
of these seasoned managers to help the u~ually understaffed entrepreneur.
And we need incentives that reward banks for funding payrolls expanded to
include otherwise unproductive members of the displaced management community.
ç. Women Returning To The Workforce
The final trend I would like to bring to your attention is the entry of
housewives to the workforce and the return of women who took time out of
the formal work place to raise children. Traditionally, these women would
have worked at lower levels in corporate America; but as entrepreneurism
increases they ~re starting small businesses, frequently selling the skills
they learned in the home. They sell their housewifery skills, their cooking
skills, their child care skills. Usually these businesses are started
with very little money -- under $500. And usua'ly they operate from the
home.
Once again, they need assistance. They need to learn more about busines:
about marketing and record keeping. They also need access to small amounts
of capital.
PAGENO="0550"
544
Jeannette Reddish Scollard
Page 7
~h!t_cQn~r!s~ Can Do:
What can Congress do to help? Encourage the banks again. Persuade them
to set up departments specifi.cally oriented to investing in tiny emergir~g
businesses. I can't think of a better investment.
We need to underwrite basic business classes to help these women on thei
way.
Thirdly, tax laws should be redesigned to encourage the smallbusiness
person operating from her home. There is no reason why she should b~
penalized simply because it is more efficient and cost effective, to keep the
business at home.
Finally, simplify the paperwork necessary for the operation of small
businesses that employ only two or three people. Encouragethese small
businesses. Many of the greatest success stories in American business
began in the home.
* * * * * * * * *
In short, these three trends -- the brain drain of female executives
out of corporate America, the outplacement of (mostly male) middle managers
from corporate America and the entry of housewives and full time mothers
into entrepreneurial America -- are all challenges which can be met with the
same basic solutions:
Increased knowledge and access to capital.
You in Congress have the power of authorizing various agencies to fill.
the educational needs I have brought to your attention and of persuading
PAGENO="0551"
545
~ieanriette Reddish sco].iard
Page 8
the banks to give women an equal chance. Moreover, you can legislate tax
incentiVes to help small businesses grow into bigger ones.
As has been reported to you in earlier sessions, by 1990 at least half
of all new business startups in this country will have been initiated by
women. What we need now is to form, consciously, an environment where these
enterp±ises can flourish, creatin~ new jobs and bringing. long term economic
benefits to the American economy.
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546
U3fl
:The National Federation of Business
Sod Professional `Mmens Clubs Inc.
of the Cnited States of America
2012 Massachusetts Avenue, NW.
V~bshington, D.C 20036
(202) 293-1100
STATEMENT BY BPW/USA
THE NATIONAL FEDERATION OF
BUSINESS AND PROFESSIONAL WOMEN'S CLUBS
TO
THE HOUSE COMMI~EE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
HEARINGS ON WOMEN AND BUSINESS OWNERSHIP
TUESDAY MAY 17, 1988
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547
My name is Beth Wray. I am the President of the National
Federation of Business and Professional Women's Clubs, Inc.
(BPW/USA). Mr. Chairman, members of the Committee, I want to
thank you fOr giving BPW/USA the opportunity to present testimony
to this Committee on issues of great importance to BPW women's
business issues. I also want to commend you, Chairman LaFalce,
for once again demonstrating your commitment to a proactive
approach to the needs of America's small businesses. Heat~ings
such as these provide all of us government, private seOtor,
education, and the non-profit community -- with fOod for thought
and recommendations for action. Thank you.
BPW is the oldest and largest organization in America
dedicated to the needs of working women. We are 120,000 women
and men from across America. Our members are business people and
professionals and range from corporate vice-'pre sidents to
entrepreneurs who are the business. Since 1919, we have been a
leader in the development of public policy affecting working
women, and we work at all, levels -- federal, State and local
government; within our own businesses; and in organizations to
which we belong. BPW sees its role as two told: promoting
women' a rolf in the workiorce and helping buSiness to adapt to
the social and economic climate created by women's changing role.
We are especially sensitive to the needS of small businesses
* because one third of Our members are employed in or own small
1
PAGENO="0554"
548
businesses. Many others serve these small businesses as bankers,
computer specialists, accountants, telecojnmunicatjo~i experts.
Our experiences and our livelihoods give us a unique perspective
on the issues being disct~ssed today. As businesswomen we deal
daily with the impact of the changing labor force and the
changing economy on the bottom line. As women, we know the
personal impact of these changes, and the adaptations we as
individuals need from businesses and our government. And as
citizen lobbyists, we have the unique ability to take and promote
a broader view backed up by research.
CHANGING LABOR FORCE
The American labor force is being transformed by the
incorporation of women into the labor.. force and the increased
percentage of workers who have parental responsibilities without
someone at home to assume full-time family and household
responsibilities. In 1988 women comprised 44.8% of all~workers as
compared to 33.4% in 1960. About 40% of the workforce is now
made up of families with both spouses working~, with another 6%
being single parents. About 60% of married m~n who work have
wives working full-or part-time.
The needs of families are going to play an increasingly
larger role in recruitment efforts, benefit plans, and
2
PAGENO="0555"
549
productivity incentives. Employees, particularly women, cannot
leave their problems - at home as their employers might prefer
because increasingly there is no one left in the home to take
care of family and household needs. By the year 2000 women will
constitute almost half (47.3%) of the working population.
Two-thirds of the 15 million new entrants expected by the
year 1995 will be women. Most of these women will get pregnant
at some point during their work lives, work up until their ninth
month, and return to Work after their babies are born. ay 1995,
80% of women aged 25 to 44 will be working 90% will be
mothers. Two-thirds of all preschool children and 4 out of 5
school-aged children will have working mothers. The productivity
level of the American labor force will depend on business
policies that allow for balancing woric and family
re*ponaibilities of these mothers (and fathers who increasingly
share in at least some of the family responsibilities).
TRANSFORMING THE ECONOMY
Demographic shifts often create new demands On the economy.
~ust as the baby boom Led to an increase in public schools,
health care services, and the growth of child-related industries
from Gerber, to Mattel, to Walt Disney productions, the
incorporation of women into the labor force has led to dramatic
3
PAGENO="0556"
550
changes in the climate in which business must operate;
One of the most dramatic consequences of the changing
workforce is the growth in businesses and services that were once
provided by homemakers. For eximple, people are now buying child
care. Nearly 8 million working women depend on baby sitters,
relatives, pre~school, or day care centers to look after their
children. Between 1977 and 1985, licensed child care programs
experienced a 72* growth rate in just 8 years, increasing from
slightly over 133,000 to 229,000. Middle income families are
spending from 9* to 11* of* their annual income on child care.
Working women spend about $11 billion on child care services.
The incorporation of women into the labor force has also
meant that people have become time-poor and are willing to
purchase services and products that compensate for lack of time.
For example, more people are using cleaning services and buying
microwave ovens, frost-free refrigerators, and VCRs to manage
time. People are certainly eating out a lot more. In 1960,
consumers spent $16.9 billion dollars eating out as compared to
$124.2 billion dollars in 1985. This was almost as much as they
spent on food consumed in the home ($150.4 billion). While
restaurant use continues to increase (10* between 1982 and 1986),
people are now looking~ for financially inexpensive ways `to eat at
hom. fueling th. growth of home delivery and' take-out food
4
PAGENO="0557"
551
services.
The rhythm of work life means many people can no longer shop
during working hours. About 70% of households have no adult home
to do the shopping, go to the bank, or pick up the dry cleaning.
This means stores will have to change their hourS, opening
earlier and closing later. Many people have little time to
shop and less patience to enter stores -~ witness the growth in
personal shopping consultants and shopping through catalogues.
Mail order sales brought in $46 billion in 1985 when an estimated
47% of adults shopped by mail (45% men; 53% women). Television
shopping brought in $60.2 million. By 1995, out-of-store sales
could account for up to one-third of retail sales.
These combined forces have created a climate for American
business in which they must adapt or die. For example, let us
look at an American tradition -- the Fuller Brush Company. Here
is a case where both the product and the mode of delivery had to
change. Women now use Vanish and Scrub Free instead of
specialized brushes and elbow grease to clean their homes. And
the American woman is also no longer at home to answer the door
when the Fuller Brush man rings. Fuller Brush adapted. It now
specializes in beauty care brushes and sells them by mail (with a
telephone order system personed by female customer sales
representatives).
5
5555 ~555~ S
PAGENO="0558"
552
SMALL BUSINESS
Small businesses are always the first to adapt to changing
demographic and economic shifts. In recent years they have been
on the cutting edge of the shift in the composition of the US
economy from manufacturing-based to service based industries. By
the year 2000, small business will employ 44% of the American
labor force and produce 40% of the nation's goods and services.
Changing business climate, consumer pool and personnel needs
of ten force many small businesses to redefine their markets and
policies. Because of their greater flexibility in responding to
a changing. economy employment growth among small businesses has
far out-paced large businesses (5.1% compared to * 7%).
The small bu~iness community is also Changing as a growing
number. of women deCide to start their own businesses rather than
work for others. Women own an estimated 25% of the nation's small
businesses. The nUmber of women-owned business increased from
1.9 million in 1977 to 3.3 million in 1983 at twice the annual
rate of growth than men (9.4% annually as compared to 4.3%). At
the same time the number of businesses jointly oWned by husbandi
and wives increased from 257, 899 to 461,955 (10.2% annually).
If the current trend continues, women may own half of all small
businesses by the year 2000.
PAGENO="0559"
553
In 1982, despite significant barriers, women-owned firms
generated receipts of $98.3 billion, 10% of the total of all
small businesses. Businesi women make a substantial annual
contribution to the tax base in' this country paying $37 billion
in federal and `$13 billion in state and local taxes.
Women-owned businesses are concentrated in the fastest
growing segment of small business'community --sales and service,
particularly in export services which are the cutting edge
industries. Almost `half of businesses in retail trade (45%) and
three-quarters of personal services are owned `by wàmen. The
three top industry groups accounting for the largest dollar
volume of receipts by women-owned firms in 1982 were: eating and
drinking places; food stores, and personal services. Together
they represent 5~3,559 firms and over $18 billion in receipts.'
Small businesses have traditionally employed greater numbers
of women than large industries. Between 1980 and 1985, 6.9
million new jobs were created in the female-dominated sectors of
service and sales. By the year 2000 over half of small business
employees will be women. Women-owned businesses tend to be small,
averaging four employees. These women have `many of the same
personnel concerns as men who own small businesses. Their
businesses will suffer if a worker is absent or distracted'
because of family responsibilities. But our members tell us that
7
PAGENO="0560"
554
the best policy under these circumstances is to adapt to meet the
challenges of combining work and family.
One of our members, from Kansas, owned an interior design
business for ii years. Many of her young designers were having
children. Community child care was inadequate so projects were
interrupted, appointments were missed, and customers were angry.
She purchased a building near by and started a child care center.
Stress and absenteeism were reduced. Other designers want to
work for her because of the child ~care services. Productivity
and business improved.
Another of our members in Minnesota owns a small catering
business with only .30 employees. Her supervisor got pregnant and
needed parental leave. She worried that it would be very hard on
her and the rest of the staff to pitch in and cover the
additional work for that much time. En the end she concluded it
would be less disruptive and expensive to rearrange schedules
than to hire and train a new supervisor.
POLICY IMPLICATIONS
As. is clear from this discussion the policy innovations
de*end.d by the changes we have outlined are as broad and far
reaching as the changes themselves. Not all of these policy
changes are governmental policy changes. Many can and must be
undertaken by the private sector itself.
8
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555
Economic theory indicates the business community will adapt
to demographic change given sufficient time. We know that and
applaud the businesses who are at the cutting edge of that
change. But sometimes American society does not have that much
time. It is under those circumstances that government needs to
intervene either through provision of information to make change
possible, or funding assistance to alleviate the economic cost of
the change, or sometimes direct intervention to sot a standard
below which American society will not fall.
As we look at the effects of the changes we have described on
American society and her businesses, we see three specific areas
which these hearings should address. The first is the adaptation
of businesses to the fa*ily needs of their workers. The second
is the adaptation of businesses to. the. changing .. economic climate
created by these demographic changes. The third is the specific
needs of the .~ncreasjng number of businesses owned by women * In
each case, ~ believe there are policies which fall into the
areas we have discussed those which should most properly be
undertaken by the busineSs itself and which are not the direct
concerm of this Committee, those in which government has a role
in providing data and/or stàt~up funding, and those ~n which
government, has an abiding interest in seeing that action is taken
and therefore legislation which calls for a .p*rtjcu~,ar reiu],t ii
properly needed. ,
9
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556
FAMILY POLICIES
Like most major social change, the reorientation of the
workplace to women' a needs is happening slowly. The demand for
women workers, however, will mean that businesses will have to
adapt to family needs in order to attract and keep qtlality
employees and maintain a high level of productivity.
Experts say most parents who Work must piece together 2 or 3
separate arrangements to insure child care for the full working
day. This means that there are many points of the. day in which
child care arrangements can fall apart and force parents to
interrupt work. A recent Current Population Survey found that
nearly half a million working women lose time from their jobs
because of problems with day care arrangements. About a third of
all American children between 6 and 1.3 are home alone for some
time after school leading to reduced productivity and higher
error and accident rates as employees worry aboht their children.
Many workers are also worrying about their elderly parents.
* Nearly 1 million working women are primary care givers for an
elderly relative. A 1986 study by Travelers Corporation found
that 1 out of 5 employees over the age of 30 provides some care
to an elderly parent (usually widowed mother), 31* of all
10
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557
caregivers are employed outside the home. The majority of these
employees are women. Increasingly, companies are becoming
worried about the level of absehteeism and lateness among
employees caring for aged relatives. This problem is only going
to get worse as the population ages.
While working women still assume the main responsibility for
child care, fathers of young children with working mothers are
being faced with increasing child care responsibilities. A recent
study found that while women are more likely to experience job
stress due to work and family conflicts, men with young children
are also reporting increased stress (66% of women and 50% of men
reported stress). Another study found that the stress over
balancing work and family responsib~ljties is the heaviest
contributor to depression among employees, regardless~ of gender.
Thus far the ma~ority of busiflesses in this countz~y hate
taken little or no action regarding helping employees balance
work and family needs. There are, however, some impressive pa~~~e
setting companies thCt~ provide modelS ~for~how these *oblems can
be addressed.
Merck & Coemany: This major pha**aceutical coipany updated
personnel policies once women comprised a third of thetr
employees. In 1980, Merck invested $100,000 to Open a child care
center near their headquarten's. Thoy~th~d~tiatCt Ete~dti*. in
11
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558
1981, allowing employees to start work at any point from 7:00 am
to 9:30 am. In 1983, parents were allowed to work part-time at
reduced pay but continued benefits. In 1985, counseling programs
weg~e established to help employees cope with the strain of work
and family conflicts. The company offers both men and women
unpaid parental leave for up to 18 months. It is planning to
provide child care resource and referral information for its
employees nationwide. A company study on productivity found
decreases in absenteeism and tardiness as a result of flexible
work schedules.
~:In 1984 IBM spent $1 million to establish the first
nationwide corporate service for ref erring employees to community
child care. IBM funding has also helped upgrade the quantity and
quality of child care facilities nationwide. A recent in-house
study showed that 30% of. employees had some responsibility for an
elderly relative, leading the company to offer additional
benefits including access to a company-funded network of
community agencies providing consultation on problems with the
elderly, referrals to medical services, home-delivery meals and
other services. IBM also offers flexible work schedules and a
year of part-time work for employees returning from up to a year
of unpaid leave. The company is also piloting a referral program
f or sick-child care.
Camuball Soun .çomnanv: The company has an on-site child
12
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559
care facility at its headquarters with room for 3.23 children six
weeks old to kindergarten age. Campbell subsidizes about 60% of
costs with parents' net fees ranging from $41/week for a
preschooler to $59 for an infant. It also provides three months
of unpaid parental leave, flexible work scheduling and job
sharing (for' those employees not on production-shift work).
small companies are also experimenting with creative ways of
providing services to their employees. Small businesses that are
located near each other (such as industrial parks) can pool
resources to run a center on a joint basis. Seven television and
radio stations in the Washington, D.C. area created
Broadcasters' Child Development Center' in a local school. Small
businesses can also collaborate with school districts and
community agencies to run before- and after-school programs. The
HOuston Committee On. Private Sector InitiatiVes coordinates
funding from 30 coapani.~ to enable nonprofit agencies to offer
after-school care in schools, churches, and storefronts,
These privatB sector initiatives are to be applauded. We believe
that more will occur as time goes on * However, the very pau~iity
of efforts by busineises pOint*. up a specific need for data and
assistance by the goverument. In our continuing efforts tà
educate businesses and pol.icymaker~, we have discovered, as many
of your speakers have, that there Is almost Do reøearch available
outside individ~a1 ),arge corporations, on fa~'d1y policies ~ Most
PAGENO="0566"
560
of the information available on which policies work, which are
cost effective, which boost productivity, whic~i increase
recruitment and retention of workers arid which do not is
anecdotal or specific to the corporation doing the study~ Yet,
as we have identified, it is in America's self-interest to have
these answers and to use this data to develop effective responses.
to today's changing workforce. The need is particularly great
for the small business community. These companies are the ones
which must adapt first and the last to be able to afford the
research that would help them do just that. Therefore, we
propose a study be undertaken under the auspices of this
Committee to determine what America's small businesses are doing
to provide for the family needs of their workers, to document
policies which are working, to set up demonstration projects to
test various responses to the needs of employees and provide
quantitative documentation of effectiveness and cost-benefit to
the employer, and to establish the number of workers actually
covered by such enlightened programs.
In addition, we have consistently supported legiSlation which
will provide for specific results to meet specific needs which
cannot or axe not met within the resources of the business
community. We support the Act for Better Child Care which will,
among other actions, help to increase the availability of quality
child care programs to which employers, especially small
employers, can refer their workers. We support the Family and
14
PAGENO="0567"
561
Medical Leave Act, which wifl set a floor of support for
America's familie5 to care for newborns or in times of famiiy or
Personal illness.. We Support a study of the COmpensation of the
federal work force to determine if action is needed to Provide
Pay equj~7 among workers. We Support several efforts in the area
Of pension law to ensure that the needs of women workers are
recogn~5~~ We thank the members of the Corn ittee who have
joinej us in these efforts.
ECONOMIC CLafJ~
As we have Previousjy discussed much is happening in this arena
as welj. Increasingly businesses are changing their Products
(Proctor and Gambj~ changing their method of Providing the
product or service (Fuller Brush), or even abandoning old
Services and products for new ones which are more needed (Singer
Company), We believe that these adaptations are much needed, and
wj]~l assj~~ not only the business to sUrvive but he~p each of us
reduce the Stress in our own iives.
However thj~ is another area in which small businesses do not
necessag.jly have the abjjj~, to obtaj~ the nee4ed data and
research ofl which to base their future actions, As many
Commentators have noted, the pace of change will continue to
increaSe v. do not ret °O*Pletejy understafld the fuli impact of
the changing famj~y and the changj~g workfo*~~0~ our economy.
15
PAGENO="0568"
562
Many questions which directly affect business practices and
business investment remain. As we all know, it is from America's
small businesses that America's large businesses grow. Yet,
today, our. small businesses are trying to make their way in a
climate undergoing the most dramatic change since the Industrial
Revolution. And they are trying to make their way without a road
map. Imagine how much more productive they would be, how many
more businesses would survive and how many more jobs would be
created if they could have access to the sort of planning
projections currently available only to farsighted corporations.
Again, we call for a study to detail the changes in the workforce
and economy which will be caused by the continuing involvement of
women in the workforce, with special attention to the adaptations
small businesses must make. This study should project workforce
changes to the year 2010, dissect and describe specific economic
needs and markets these changes may produce, and issue
recommendations for adaptation by small businesses. In
combination with the other study we have proposed, this study
will provide small businesses with the kind of help they need to
make it in our dramatically changing economy.
At the current moment, we do not present specific legislative
initiatives to meet these needs.
WOMEN BUSINESS OWNERS
16
PAGENO="0569"
563
?tevious testimony beforethis body ~as Co~5*ed~eli th&~e'eds
and actions of America's most dynamic economic eorce, women
business owners. Currently, almost all progress by these women
has been through individual or collective private efforts aüd
"against cli. odds" to quote Gillian Rudd, President of NAWBO.
Government assistance is needed in two major areas. First,
accurate information must be gathered on Women business owners
and accurate information made available to* women business ownerS
about government programs and procurement and contract
procedures. We believe that NAWBO has proposed an interesting
idea with its Women Business Owner Federal Initiative, and will
be discussing this proposal with them at length. Second, we
believe legislation is needed in some areas. Our first priority
is legislation to ensure women have equal access to commercial
credit. The right to equal `access to personal credit has been
assured since October of 1974. Women deserve no less in their
business dealings. We commend the Chairman for his role in this
legislation, and look forward to working together on this vital
bill.
SUMMARY
The systematic entry of women into the workforce has created a
revolution in our economy, our businesses and our society as
profound as the changes wrought by the Industrial Revolution.
17
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564
Businesses, gover~1ment and society can respond to these changes
with handwringing, denial and stop gap measures designed only to
meet needs so pressing they cannot be denied. Or they can meet
the future with foresight, a sense of challenge and see these
changes as the opportunity for progress and economic gain they
are. We believe the businesses that survive will be those who
pick the latter route. We are working within the system to forge
that route. We ask your help to provide the data, legislation
and support needed. Thank you.
18
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566
FOOD AND BEVERAGES
General Mills, Minneapolis, MN
Pepsico, Purchase, NY
Restaurant Easeeprisea Group, Ireine, CA
FURNITURE
Herman Miller, Zeelunal, MI
Mount CarmelMealicalCenser,
Columbus, OH
PAGENO="0573"
PAGENO="0574"
568
H
banker in Chicago and New York before
taking off several years so raise a family.
when Stanley was 9, his mother bought
a Westchester Coansy, New York, news'
paper, the Ysrkhws Herald, which she ran
for a decade. Other competent women
k, ~ 5,;, """reinforced his
tanley's
ty that
tf the situa `warm and t
level fazty," but it alto made pessect business women m n
PAGENO="0575"
569
selves up with wonsen across she coun- 150 banks in the cousttry. descriptions and mapuals for every op.
try. They keep in touch via telephoise, But so backtrack for a moment: When erasing unit were written. To get the
and if they are in the same town, they Greo left the convent in 1968. it was work out, Greco somOtiines ran the
often get together for lunch or dinner. beforetheexodus olnuns from religious presses in thephotocopyingunit herself.
And at headquarters. management life, and she had a hard time convincing Eventually; she got her big break and
women have takes to nseeting once a potentialemployers thatshewouldii'tbe was named deputy head of personnel;
month br lunch. "When a project goes passingout holy cards on herlunchhour her job was to do the nuts.and.bolts
out on a companywide basis, you already or be offended by strong language. By workofthe department. Two yearslaler,
have support for it in she field," remarks Ise time Fidelity hired her, aftera month she got the top job. By Creco's admis.
Ssaiston, who acts as a sounding board ofjob hunting, t3recowas shorton confi. sion, the consent decree was an easy
and mentor to an assistant store manag. deoce and terrified that she would.fail. one-it didn't require that women be
er in a Sacramento suburb. Herjob was to open new accounts in oise put in certainjobs but that they be in the
This informal network, coupled wish of the branches. To make sure she suc~ pool from which candidates would be
theattitude that "we'se all in this togeth- ceeded, Greco took notes on how todo it chosen. It was Greco's responsibility to
er," has bred a keen sense of compaisy and wrote them out every night, stapling make sure there were qualified women
loyalty. Remkus found the atmosphere a properly filled out forms to the instruc- in that pool. "If you keep putting quali-
far cry front the cutthroat world of tions. In a few ntonths, others in the fiedwornen in front of men making tlse
broadcasting: "In television, you're otis bank got wind of what she was doingand decisiót~s about ajob, alter a while their
on a limb alosse watching people saw at tier noses became the bank's first train~ coissciousness is raised and they become
it. it took me a while to get used to the ing manual. sensitive to talent," she says.
family atmosphere at Payless. Sure, tetss~ Soon she was teaching Vietnam veter- But problems of sex discrimination
pert flare now and then, but they're ons how to be branch managers, assign. weren't the only'ones the bank had ac-
friendly temper flares." ments they usually got in three to six cru~d. Huge louses from unpaid loans
months after joining the bank. Greco's caused a crunch; so did sloppy manage.
BANKING ON WOMEN: title remained the same: secretary. "At intent practices. In one year alone, the
FIDELITY BANK the end of a year, I said, `Enough of this,' bank lost $13 million. Fidelity was in
Insagmne that you are in a marble and and decided to start teaching in the such desperate straits that the Federal
crystal house of nioney, with pillars Catholic schools wlale I finished work. Reserve Board intervened in the l970s.
reaching heavenward fosi tie five sto~ ing on my degree," she retails. "But the Raymond Dempsey, a banker from New
net, brass fittings and railings gleaming day I was going to resign, a regiossal vice York City, was hired to turn the bank
like fools' gold, giant chandeliers spar- president needed a secretary and he arouiid. He immediately put everyone
kling like Christmas lights and elevatoss asked ne." The job paid $15 a week on notice that times had changed: Un'
with wood-paneled doors that gise till mitre than the teachingjob, so she dei:d' lets you were prepared to work long and
the dull patina of years of polish. The ed to stay with the bank for another year. hard, you should apply for a job else.
whole place reeks of tradition and estab- Betterjobs kepucomingalotig, howev. where. And if you were simply
lishment banking, so much so that just er. By the tinse she graduaied magsa doing a marginal job,
walking uiuto the place makes yost feel cam laude from St. Joseph's Uisiversity you were probably
r.i'c'h, like the money in your pursejust us Philadelphia, she was trainingdirector going to lose
had to be inherited. The place isa Holly' for operations. Beinga bankernolonger it. Many of
wood set designer's dreani. In fact, it nsa seemed like a bad idea
the set for the old'line financial institu- But not all women at the bank were
tion that Eddie Mtuuphy took over, in a doing well. In general, they were the
manner of speaking, in Trading Places. tellers, secretaries and bookkeepers,
This us banking, Philadelphia style. with little chance of getting ahead. An'
But Fidelity Bank is not run by Eddie other woman who has been with the
Murphy. his run by a woman. hank since the `GOs, Denise Shields, re
Her nanue us Rosemarie Greco, and calls, forexample, that when a niale boss
she was unanimously elected president tried to get her a title that mattered in
ofthe$lO bmllioim banlsin 1987, nineteen the early I970s, `the counpaisy would
years after she was hired as a branch have none of it." What got senior man-
secretary. Talk about rags to riches! agemenu's autensiota was a sex.discrimi' ., ,~ ~
When sIte was hired, fresh out of a con- nation suit that a computer program- a tyBaacam~,s
vent, the 22 year'old lacked business titer filed after she discovered that "
clothes and the inone~ to buy them. Half sIte was making less than the .
of her sister's wardrobe was altered to fit male programmer who sat fmpmiiaJ~
Greco. At the time, she had no plaiis to next to her doing exactly pii.thig. 100.
be a bautker. Shethought the bankwould the sainejob. A consent -
be a good place to work while she flit- decree followed in - g ` mamingrmamttlsahisiag
ished tip her degree in education. 1975. W .0s t,
- Aa a1a1970 tbsbaaksneatthromighdg.
e . tog g , c i n w 0 e a~~iadai0r00~payl~ul8.a4'.' , -
loss was the batik's gaits. Today Green is task force whose ic' `~entsi hams. Iaaddltlaa to the smandaed am.memniity leans iii chink a
the first md outlv female nuember of the *oh it was to we~.n Suelmea ilhiabliiiy P~7m say emmsplayea amy take thins amimatha at
unpaid lame, patimius gumaraimmeed. The bask offer. psrm.iimmse munch fur
prcvtig u':: s Assc'uiation of Reserve City stsaughien out amamaiger.aadflexihismuorhpiaoe.,tasen asaueferu.i'reioaucs saMunfer
Batik:-:,. ul:,use metnhership is thrown the miens. More ehildesrsfauilils..
tt::o::h:'.::,:ttit'uts'ni f he t th s ~OO sib Mujer copluysmemt casino Corposais uffiec. are Issued mm Cemmuer Cimy
Pmuaadsupm.ua. Therein itt bunush smues ihroaghuui imihoaiierii Pens.
..4sa~i~ and iht iautiea,e Vatiny.
PAGENO="0576"
570
me pace I bad is
neverwant to do
I was apprecia.
o the bank was
- think,
"vdsd
w years olci
sent ~ sen the new
PAGENO="0577"
PAGENO="0578"
NO STRINGS AYFACHED
(continuedfrompage1O4)
me clean up," he says to his mother with
an accusatory giggle. My friend laughs
agreeably. But then she asks me how my
social life iS doing.
I tell her about my last big date: We're
in Disneyland, and the man I'm with
becomes entrancedwith a tinygirlinpink
overalls sitting on thejungle Cruise ride
beside us. He laughs as she laughs as the
hippo rise wide.mouthed outofthe river.
Unwillingly, almost succumbing to the
call of my genes, I like him much better
and notice his good looks. Up to that
point the thought of us spawning togeth'
ci hadn't occurred.
But I'm busy, I have things to do. On a
flightbackto NewYorkCityfromCalifor.
nia, I try to push the image of my Disney'
land rendezvous out of my mind-that
image and the recollection of Michael's
picture. But fate conspires against me, as
it always does against Career Women. As
I'm lost in my reverie, a harried young
mother and her toddlerplop down in the
emptyseat next to mine. Clearlyrelieved,
the motherwbispers tubes-son, "Tellthe
nice lady your name." Eagerly, his does.
Bradley quickly proves a noisy little
annoyance. But way before we land at
Kennedy airport, he's handed me his fa.
vorite GoBot. And I've let him play with
my portable computer. s
Alexandra Peers is a New York-based reporter.
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PAGENO="0579"
573
Opening Remarks of the Honorable Silvio 0. Conte
Hearing on Women's Business Problems
May 19, 1988
Thank you. Mr. Chairman, today's hearing is the sixth and final
hearing on women and business. You are to be commended for
convening these hearings and for the high quality of the
panelists called to testify. These hearings have been most
informative and have served to establish direct lines of
communication between our committee and women business owners
and their organizations.
To all women business owners, I say we have heard your message
and it has prompted many of us to act accordingly. I have
cosponsored H.R. 1897, introduced by our distinguished chairman,
and I have sent out a dear colleague urging all committee
members to sign on and support the Equal Access to Commercial
Credit Act - let us end commercial credit discrimination against
women and minorities now, in the 100th Congress. I am also
considering ideas for studies put forth by the National
Federation of Business and Professional Women's Clubs. They
have made some excellent suggestions and they need to be
developed. Also the National Association of Women Business
Owners has some very good ideas on creating an effective
public/private partnership and Iwant to explore that further.
As is said earlier, a dialogue has been established and I
believe that small business, indeed the American economy, will
be better of f for it.
Mr. Chairman, I look forward to the testimony of today's
panelists and to future action this committee will undertake on
behalf of American women owned business.
PAGENO="0580"
574
TESTIMONY
OF
BEATRICE A. FITZPATRICK.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERICAN WOMAN'S ECO~1CMIC DEVELOPMENT CORPORATION
NEW YORK, NEW YORK
BEFORE THE
COMMITTEE ON SMALL BUSINESS
U.S. HOUSE OF REPRESENTATIVES
MAY 19, 1988
PAGENO="0581"
575
WOMEN BUSINESS OWNERS IN AMERICA - A PUBLIC POLICY CHALLENGE
The Problem
All over the world, countries - as diverse as many African
nations, England, China, Germany, Sweden, the Soviet Union - are
encouraging their citizens to become entrepreneurs. These
nations see in small business the way to increase thetr exports
and raise their standard of living - and are desperately
determined to do so.
Because of this global interest in small business growth and -
development, the United States can no longer be complacent that
our entrepreneurial foundations will automatically carry the day
for us economically.
We have an entrepreneurial tradition second to none. No nation
has the history of supporting creativity, initiative, freedom to
dissent that we do. No other nation has drawn the oppressed
people of the world to its shores with the hope of a better life
and then provided them the opportunity to create one. But we are
only ~.DO years old. And other nations look at what we have
wrought, and, rightly, covet it for themselves. Japan is
teaching us the cost of complacency - and we are only beginning
to learn all the results of that hard lesson.
PAGENO="0582"
576
Will we by default also allow ourselves to lose our
competitive edge in entrepreneurship?
What will we do to maintain our priority as the world's premier
entrepreneurial nation? Will we ignore the fact that in this
country, women - of every age, ethnic, geographic and socio-
economic group are deciding that the answer to their probl~ns
is to go into their own business - or will we help them do that
successfully? Will we ignore the fact that the rate of increase
in the number of women-owned businesses is three times the rate
of increase in the number of male-owned businesses? Will we
ignore the fact that today, 28% of all small businesses are owned
by women, and that in only 12 years by the year 2000 - one
half of all small businesses in the United States will be owned
by women?
Will we ignore the fact that from every direction, women are
fleeing their perceived lack of equal opportunity to start their
own businesses - where they can operate at the level of theV(
talent and ability, free from artificial constraints on their
authority, responsibility and reward?
That is the challenge we face, and the challenge which Congress
must take up.
PAGENO="0583"
517
~
The wholesale migration of American women to small business
ownership presents our nation with an unprecedented opportunity
to create jobs, taxes, capital, business for other businesses and
needed goods and services in our communities while keeping
millions of people ott welfare, unemployment, old age assistance
and other costly social benefit programs. It also provides the
opportunity to multiply our entrepreneurial underpinnings and
strengthen out entire socio~economic foundation - right into the
next century.
Who are these women? They are:
* Minority women who feel the only way they can get a fair
shake is to go into their own business.
* `Older women who `left work to raise a family - a~d now
find themselves unable to get back into the labor force
at anywhere near their level of competence - at the
same time that their financial support is stripped away
by the loss `of ~their spouse through `death, divorce or
separation.
* Younger women, who are single heads of households and
find themselves simultaneously having to support ~
raise their children - with no outside help.
PAGENO="0584"
578
4-
Women who are employed a~d find they cannot reach the
level within their companies that their talent warrants
in a time frame they find acceptable.
They are women of talent, ability, energy, dedication - women,
who, like waves of immigrants before them are knocking on the
doors of our economic mainstream refugees from their socio-
economic past trying to get into the busLness game at the
level of their talent, brains, ingenuity, energy. They are every
bit as motivated as any immigrants who ever hit these shores.
Their own and their tamilies lives depend on their success.
But they can't get into the business game if they don't know the
rules of that game. And that is what we owe them: the
opportunity to learn the rules of the game of doing business
so they become players in it at the level of their skill and
ability.
In our service economy, women are mai~ly going into service
businesses - starting from scratch, based on a skill or talent
they have, finding a niche in the marketplace which they can
fill, using their energy and skill as their capital, and their
home as their place of business.
PAGENO="0585"
579
-5-
While they are highly skilled in the creative end of the
business, they are woefully behind in the business end.
Traditionally, women have reóeived little encouragement either at
hone or at school to develop the skills and attitudes required to
start or run their own businesses. From their earliest years,
socially, educationally, and in the business world, women are
steered away from this as a career option. They are not encour-
aged to learn the financial, analytic and planning skills needed
to become successful entrepreneurs ~- on the assumption that
doing so is `unfeminine'.
Heading your own company is seen as a masculine occupation, while
helping people is considered teminine (nurse, teacher, librarian,
social worker, secretary). Women are steered by their families
and schools to these "Helping" professions. As a result, they do
not acquire the skills of managing money and people, marketing
~ervices and products, costing and pricing, negotiating and
selling, turning a profit, or managing time and resources - all
essential to managing a business. And,as adults, they have been
discouraged from giving up the steady income of a job to pursue
the risky route of entrepeneurship for which they have been
poorly prepared - both culturally and educationally. Indeed,
making a profit might be viewed as "selfish" behavior by women,
PAGENO="0586"
580
6-
and contrary to the nurturing roles they have been taught to
assume, even in the workplace. Firing people might be seen as
"unkind," selling to people one doesn't know' might be viewed as
"aggressive." They have few role models to whom they can turn
either for instruction or inspiration.
Of all occupations in our country, the demands of running and
owning a business probably place women in the sharpest conflict
with socially accepted stereotypes of "feminine behavior," and
therefore require the most persistent efforts to overcome these
socially induced barriers to economic equity. Yet little train-
ing of this nature has been addressed to women. For minority and
and displaced women, and single heads of households, the problems
described above ate compounded.
It is clear that provision of adequate management training,
technical assistance, and cultural support is required if small
businesses owned by women, particularly minority, displaced and
dislocated women, and single beads of hc*iseholds, are to exist,
take root, and grow - as they must if the problems of this whole
sector of the population are to be solved.
Women with the ability, technical. knowledge and training to start
and operate their own business will impact positively on their
local economy as they not only provide a livelihood for
PAGENO="0587"
581
-7-
themselves and their families, but also create and maintain jøbs
for unemployed and underemployed - mainly low income and young
people.
Either these women are provided the tools to become economically
self-sutticient now, or they and their families become candidates
for public financial support for years to come.
While this has iong been known, neither public nor private policy
have made major commitments to the kind of high quality,
long-term, comprehensive management training, technical
assistance, and cultural support which small businesses in
general, and women-owned businesses in particular require.
The American Woman's Economic Development Corporation (AWED) was
founded in 1976 to address these issues, and to help women play a
more significant role in the growth of our ecohomy. it is the
only organization of its kind in the United Stat~s, providing
comprehensive, high~quality, long-term counseling, training, and
peer group suppOrt tO entrepreneurial women who' wish to start or
run their own business.
PAGENO="0588"
582
-8-
AWED History and Services.
In 1976, the U.S. Department of Commerce Economic Development
Administration (EDA) provided a grant, a first for the nation, to
"develop a model entrepreneurial assistanee program for women,"
and establish the American Woman's Economic Development
Corporation (AWED). At. that time, only 4.6% of all small
businesses were owned by women -~ who comprised 54% of the
population.
After careful research, AWED determined that the greatest need
women who wanted to run their own business had was for management
training and technical assistance, and proceeded to develop a
model management training and technical assistance program for
women business owners. AWED's first training group was taught by
the best professors of the Harvard Business School, who came
flying down from Cambridge on a pro-bono basis to teach in it.
Subsequent training groups were taught by Professors *~rom the
N.Y.U. Graduate School of Business and Wharton. Over the years,
AWED learned that the best teachers of entrepreneurs are other
entrepreneurs, and today, our instructors are mainly
entrepreneurs. They continue to teach on a pro-bono basis.
In 1978, the U.S. Small Business Administration (SBA) provided
AWED funds - again a national first to "develop a model
PAGENO="0589"
588
- 9.
counseling program" for entrepreneurial women which AWED
proceeded to do. Gradually, over the years, as we saw new needs
for serving entrepreneurial women, we developed new programs to
meet those needs.
Most recipients of our services are concentrated, naturally
enough, in the Northeast. To date, AWED has provided the
tollowing services to women who' come from every one of the 50
United States:
* 18,000 women, have received individual counseling
averaging 90 minutes each with a small business expert
specially selected to meet their needs
* 19,200 women have attended 8 all day Conferences for
Women in the Businesses of Fashion, Beauty, Fitness,
Food and Home Fashion
* 15,000 women receive our 8 page monthly newsletter,
Woman Entrepreneur
* 6,300 women have participated in various networking and
special events design~d to help them meet each other and
be mutually supportive
PAGENO="0590"
584
10 -
3,500 women are members of our national -networking
program, American Wcxnen Entrepreneurs
1,900 women have participated in two management lecture
series at Lincoln Center
1,220 women business owners have enrolled in an 18 month
Managing Your Own Business training program
1,120 women going into or who just started their own
business have enrolled in-an 18 week Starting Your Own
Bu~iness training program.
Most women rate the services they receive from AWED as Excellent
or Gooq. And~. our success rate bears objective testimony to the
qua~ltty and et±ectiveness of our programs. A survey of AWED
graduates revealed that participants in AWED's 18 Month Managing
Your Own Business Program reported a 121% increase in sales, a
72% increase in profitability, and a 75% increase in assets. 79%
reported their businesses had expanded or diversified. These
graduates created an average of 2.2 full-time and 2.3 part-time
jobs - an over 80% increase in their employees over the year
prior to entering. AWED-'S training program. Participants in
AWED's counseling program also showed substantial gains in all
these areas.
PAGENO="0591"
585
11 -
Of the thousands of women in btisinesS who had been counselled by
AWED, each created an average of .5 full-time and .5 part-time
jobs during her time in the counseling program. They experienced
an average increase in annual sales volume of 69%. 50% related
that their profitability had increased since their counseling
sessions.
Of the 1,220 women business owners who have been enrolled in
AWED's 18 month Managing Your Own Business training program since
May, 1977, only 5 have declared bankruptcy in an economy where
4 out of 5 small businesses tail in their first five years.
Indeed, AWED now has 35 women enrolled in its Chief Executive
Roundtablés - for women whose businesses gross over $1,000,000,
year - almost all of whom are graduates of its earlier training
programs.
At present, AWED trains and counsels approximately 2,500 women
each year, and serves an additional 5,000 through conferences and
lectures, 3,500 in its networking program, and 15,000 who receive
its monthly newsletter Woman Entrepreneüz. The organization is
continuing to grow and develop new programs to meet the
increasing needs of women entrepreneurs.
PAGENO="0592"
586
12
AWED is a not~for~prof it corporation partially supported by user
fees paid by women who participate in its programs. However,
these fees cover a fraction of the operating and administrative
costs of the corporation. As a result, AWED has developed an
extensive network of support from private corporations,
foundations, and individuals.
Approximately 152 private corporations have donated funds to
AWED. Some of these firms have also provided pro-bono services,
including supplying experienced staff at no cost for training and
counseling, and giving direct assistance with legal work, public
information, marketing, and advertising.
AWED has been the recipient of considerable pro-bono support from
Arthur Young Inc. (auditing), Skadden, Arps, Slate, Meagher and
Flom (legal), Helmsley-Spear (space and renovations), Ogilvy and
Mather (advertising), and Howard J. Rubenstein Associates (public
information).
AWED's counselors and teachers contribute their time and
expertise; some are active, retired or semi~retired business
owners; others are professionals from major businesses or corpora-
tions. Speakers at our Open Houses, Conferences and Lectures are
volunteers who pay their own expenses. Counselors, training
PAGENO="0593"
587
13 -
interviewers and training coordinators are all given a token
honorarium in no way approaching the,, fair inark.e.t value of their
services.
There is no question that a major factor in our success is the
high quality of the Board, staff and volunteers we have been able
to attract.
Over the years, government funding for AWED acttvities has
totalled $3,400,000 ($2,950,000 from EDA and SBA; $450,000 from
New York State). The private sector has contributed $3,105,052
cash and $8,087,227 in donated services. Since 1981, when
nominal, below-cost fees for services were instituted,
participants in AWED programs have paid fees totalling
$3,139,244. To date, the total public/private investment in this
organization's creation, growth and development is $9,644,296
cash, $8,087,227 donated services for a total of $17,731,523.
Wom~'n all across the country need our servic~s. In 1980, an
Arthur D. Little study commissioned by the U.S. Department of
Commerce recommended that AWED'S programs be replicated
nationally. A national survey by President Carter's Interagency
Task Force on Womë~n Business Owners found that women business
owners perceived that their greatest need was for management
training. Since four out of five small businesses fail in their
PAGENO="0594"
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- 14 -
first five years, and the major cause of small business failure
is poor management, the women surveyed certainly seemed to know
what they needed.
A 1980 repàrt to President Carter from his Interagency Committee
on Women's Business Enterprise said that the best way to help
women in the United States succeed as business owners would be to
make AWED's program available to women nationally.
In a 1984 Colloquy in the U.S. Senate, between Senators Rudnian
and Stevens, Senator Stevens recommended, and Senator Rudman
concurred, that federal agencies make the necessary funds
available to make this program available on a truly national
basis over three years.
Subsequently, AWED has developed a "Proposal to Establish a Model
National Management Training and Technical Assistance Program for
Women Entrepreneurs Including the Development of Regional
Management Training and Technical Assistance Centers in Chicago,
Los Angeles, Dallas and New York." It requires $4,598,685 in SBA
funds over three years. We will obtain an equal amount of cash
from the private sector, and raise $1.60 in contributed goods and
services for every public and private sector dollar, for a total
of $14,715,792 in contributed goods and services, and a total
project value of $23,913,162.
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15
For this money, SEA and the nation will receive a program that
will establish high quality, long term management training and
technical assistance centers in four regions of our country: New
York (which includes New York State; New Jersey; Connecticut;
Eastern Pennsylvania; Rhode Island, Southwestern New Hampshire;
Southern Vermont; Northeastern Maryland; Northern and
Northwestern Delaware); Chicago (which includes Illinois;
Northern, Northwestern and Central Indiana; Southern and
Southwestern Wisconsin; Northwestern Ohio; Southern and
Southwestern Michigan; and the Western tip of Iowa); Los Angeles
(which inludes Southern California) and Dallas (which includes
Northwestern and Central Texas; Southern Oklahoma; Northwestern
Louisiana; Southwestern Arkansas). In addition a nwnber of
programs will be nationally available: telephone counseling and
hot~line; peer support; Conferences and Lectures; a national
newsletter.
67,742 women will be served in a variety of training and
counseling programs - all of the highest quality that extsts, in
our nation, utilizing the best business knowledge and exparience,
and putting it at program participants' disposal. Thê~federal
cost of the program is S67.89/wóman. A minimum of 21,125 jobs
will be created ~r maintained. The federal cost/job created or
maintained is $217.69/job - fariegg than any public or private
job creation program of which we knoW.
PAGENO="0596"
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16
The private sector's interest in this program is extremely high.
Letters documenting financial support for AWED's national
replication by major corporations have been received from AT&T,
Aetna, ARCO, CBS, CIGNA, Citibank, Equitable Life Assurance
Society, General Electric, Mobil, Prudential, and Xerox. The
interest and support of the private sector in every Region we
will serve is such that we are very confident of our ability to
raise the required matching funds and donated services.
AWED is in position to launch a major public information program
to announce and attract business support and participation in the
project. William Phillips, Chairman and CEO of Ogilvy and
Mather, has agreed to head up the drive for private sector
support of this effort.
If this program were adopted, the federal government would be
utilizing a major new resource for small business growth and
development in our country, the large scale emergence of women as
aspiring entrepreneurs and preparing it for success. In the
process, we will help turn the very high small business failure
rate around.
Banks will be willing to make loans to women business owners
because their businesses will be run on a sound basis.
PAGENO="0597"
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17 -
Contractors will fight to do business with women owned firms for
the same reason.
If knowledge is power and it is making business knowledge
available to women business owners is the best way to guarantee
their success.
It is harder, and requires far greater commitment to them, than
giving them money and telling them to get lost. It is also a far
cheaper and more effective way to promote the permanent growth
and expansion of small business in this country, ot full
employment and the creation of taxes to support programs, among
others, for people who, for reasons beyond their control, can not
be economically self-sufficient.
Do not allow women to be forced into that category. Do not deny
them theit American birthright to operate at the level of their
ability regardless of extraneous gender considerations. Do
not lose this magnificent. opportunity for our nation to mine and
refine this great resource we have developed: millions of
talented, determined women owning and Wanting to. own their own
bus mess.
Think of all the benefits these women could produce if they
succeed - and guarantee that it will become possible.
PAGENO="0598"
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18
Make sound business training, technical assistance, and peer
group support available to women business owners nationally.
We are America's secret business weapon and its undeniable
business future.
PAGENO="0599"
593
TESTIMONY OF ESThER SHAPIRO
To: Members of tile Committee on Sznal1~uslness
Congress of Tile United States
House of RepresentaUves
Mr. Chairman; members of the committee: I am both honored and
grateful for the opportunity to be here this morning, and to speak to you on
the subject of womanentrepreneurs and their economic potential. I am
pleased to be able to Introduce myself to you as awoman entrepreneur, one
of more than three million In our country; It's a designation I take pride In. I
am heartened by the factthat every year there are thousands of women
newly adopting that 1ltl~. Ad. I hope that thousands tore will have the
sam. chance because of the work of this committee.
I am reminded of how, twenty-eight years ago, at thebeginning of my
career, I attended my first general meeting of the Writers Guild of America.
I looked around the hail at them.mbersblp preeent.-about twenty4lve
hundred screen and television writers. And it didn't escape me that the vast
majority wore men; only a handful were women~Iwasyoung, I had,i
think even then, an edtrepreneurlal sp$tthatwas agiftfroin my linmlgraat
parents. Orperhapsitwasjuetthedamn-foolfearlessness 01 youth. But, for
whatever reasons, I entered what was truly a man's world without a sense
of limitations. And. with my husband, Richard, I wont to work.
I created stories focusing on the besieged:teena~e alcoholics
battered wives, Victims of raclaihatret Later~ as avlce*presldentatABC~~
one of the few female VPsata major ntwork atth* time~- 1 was the
executive In charge of'developing such projects as Women's Room, Masada,
PAGENO="0600"
594
2
Friendly Fire, Ike, East of Eden, Inside The Third Reich, and The Winds of
War. I left the netwo~t to become co- Creator, co-executive producer and,
most Important, co-owner of Dynasty, one of tile most popular dramas in the
nistory of television, seen weekly by an audience of a hundred and fifty
millon people worldwide. During this period, I became the Sr. Vice-
President of Creative and Corporate Affairs for the largest independent
production company in Hollywood, with which my company was partnered.
This past televlslonseason, I servedas executive pr~ucer on the pilot for
Heartheat, a one-hour drama about a group of female physicians who run
their own clinic. All told, I have been involved In the development of over
five hundred hours of creative product
Today, there are no longer lii. numerical disparities evidenced years
ago; many women have begun to play Important roles In the entertainment
industry. To cite a few~ Marcy Carsey Is co-xecutivó producer and co-owner
of TheCosby Show, Which has already earned more than three hundred
million dollars in syndication sales, the highest in television history. Suzanne
DePasse is President of Motown Productions. Sherry Lansing is co-executive
producer Of Fatal Attraction, a theatrical film that has grossed more than a
hundredand fifty million dollars to date. Dawn Steel is currently President
and head of production for Columbia Pictures...
3ut such success stories do not reflect the entire picture, I am afraid.
There has still never been a female president of a network division, and the
chances of one emerging are slim. The number of actual owners or CEC* in
the entertainment business is equally disheartening. Men still decide, to a
larg. degree, what the American public watches In movie theaters and on
PAGENO="0601"
.595
3
tneir television sets. This is particularly Ironic in iignt of me ract mat
women com~rlse flfty4wo to fifty-four per cent or the national population
and that the eighteen to fifty-fIve year old female viOwership is the
demographic most eagerly sought by the networks and advertisers.
Two years ago, I was asked to be the keynote Speaker at the annual
American Women's Economic Development confrenc . Frankly, I didn't
know what to expect I had read, with great lnterest~ thó AWED cbarte~, and
I was fascinated win their goals and intentions. But nothing could have
prepared me for what I was about to withess. Mr. Chairman, Itis hard for
me to relate today the feeling I got when I looked out Into that gathering of
nearly four thousand femalO eflirepreneurs, sensed their dedication to the
very best Ideals of the American business community and felt their
commitment to being a continuing and growing part of that community. I
had spent much of my professional life In pursuit of that elusive commodity
called a bit, and I kiiew almost Instantly that AWED was an organizational
blockbuster.
When I was asked to join the board of AWED s.Vral months later,
despite the geographical distance, a husband, t~ children, and a production
company, It was an offer I couldn't refuSe. Here was an orgá atlon that
paralleled my own beliefs and attempts tO help women to become the best
professionals they could be. Here was an organization which benefited
women from every walk of life, not jurt those who went to Ivy League
schools or were born to wealth, but those who, based on ability alone, bad
the potential someday to becOme leaders in a wide van y of field.. Here
was an orian Uón that ezplodød th. myths and put the lie to the
PAGENO="0602"
596
4
stereotypical attitudes that say women cant add and subtract, that they are
afraid to take risks, that theyTe not strong enough to compete In business,
that tears are a sign of Instability, that women need to be taken care of by
men or government Women, ~y virtue of their management of the family,
the household budget, the moral values of the home, were already half way
to becoming good business managers. Here was an organization that trained
women to market their ideas, their products, their skills; to deal with cost
structhres and cash flows and the comple~ties of business UIC. I bad
participated in the workshops and found them exhilarating. Th. staff was
superb. And most impressive of all was AWEDS stnnning record of success:
while the national rate of small business failures In the first five years is a
disheartening four out of five, here was an organization that has h~ad fewer
than five failures for one thousand women trained. Here was an
organization with a pilot program that could help women across the country
to become business people; entrepreneurs; more productive Americans.
Inherent In AWEDS hope for the advancement of women is our belief
that our success will notbe a `Iemale success but rather a human one. We
wantthatsu000ssstocom,notattheezPenseof men, butratherasthe
result of a partnership between men and women. It is my hope that the
partnership and the values that AWED espouses will be part of a new
movement, one for the 1990s and beyond, which will create new possibilites
for millions, men and women, who cant see their way to them now. The
writer of Eccleslastes urged that Wbatsoever thy hand findeth to do, do with
ailthymlght Aswomen,webaveU$edoUrhand$tobatheOurthild(en,ti~)
help our husbands, to soothe the ill, to minister to the wounds of war. What
we now ask is for the opportunity to use our bands to help ourselves as well.
PAGENO="0603"
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5
What we are asking for from thiS committee, and from our countiy, is not a
handout bUtt hand up.
Give mea flsh, Itis said, 0and Ill eat for a day; teach inc to fish, and
Ill eat for a llfetime. WC greatly apprOäat. tie initial neip AWED has had
from Congress and we have already gone Into the private sectoi~ and found
additional funding. But more help Is needed If this program is to be
expanded and If women across the coufltzy are going to be taught tO fiSh the
abundant waters of American business. Women need the continued help of
organizations like AWED. And AWED needs the continued, and now
extended, financial support of Congress. With that help, the st~ry of
womens entrepreneurship in the 1990s will be the accounting of a great
multiplier effect mroug~ which women build on their achievements Of the
past to create new opportunities for themselves, ~or other women, for our
country, for the world.
Esther Shapiro
PAGENO="0604"
598
STATEMENT
of
lAURA HENDERSON
on behalf of
THE NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS
befqre the
Committee Ofl Small Business
United States House of Representatives
~May 19, 1988
PAGENO="0605"
599
Mr. Chairman and. Members of the Committee, my name is Laura Henderson. I am
appearing on behalf of the National Association of Women Business Owners
(NAWBO). I am President and CEO of Prospect Associates in Rockville,
Maryland, a health communications and biomedical research firm providing
services to the federal government and private industry. Prospect employs over
150 staff; had sales of over $7 million in 1987; and anticipates sales of
approximately $9 million for. 1988. Prospect recently received the 1988
Maryland Award for Economic ExceIjence. It is my great pleasure, to appear
before the House Small Business Committee this morning to outline NAWBO's
recommendations on issues affecting women business owners in particular as well
as to direct your attention to se1~ct entrepreneurial issues affecting the
entire business community. NAWBO's goal was to develop recommendations that
are pragmatic, attainable, and manageable, in the real business world,
objectively measurable, and in keeping with the competitive spirit of free
enterprise.
The mass movement of women into the work force has been hailed by social
scientists and historians as,a social change pf momentous proportions,
comparable to the industrial revolution or the waves of immigration in the last
century. "It's the single most outstanding phenomenon of this century," says
Eli Cinzberg, professor at Columbia University. A Bu~ines~ Week article
attributes America's rapid economic growth in recent years to one factor: women
entry into the job market as part-time, full-time, lifetime workers in
virtually all occupations and at all levels of responsibility,
In the l980s women have thus become major players in the economic fabric of the
United States. Furthermore, as the country becomes more fully entrenched in
the information economy, it is becoming clear that, if industrial America was a
man's world, the new information economy is an era when women's economic
achievements can be showcased. Thus, as we approach the 21st Century women
have a unique and very important stake in business, both as owners and as
employees.
Between 1970 and 1985, the female labor force participation rate increased
almost 85 percent, so that 55 pet~cent of all women now work compared with 38
percent in 1960 and only 27 percent in 1940. The Bureau of"Labor Statistics
estimates that in 1995, 60 percent of all women will work. Slowly but surely,
women's labor force participation will move toward matching that of men,
approximately 7~ percent.
Women are crowding into sectors of the work, force, traditionally occupied by
men. From 1972 to 1985 women's share of profeèsional jobs increased from 44 to
49 percent and their share of "management jobs" neally doubled - growing ~rom
20 to 36 percent. From 1960 to 1983 the percentag~ of lawyers who are vonien
had risen from 2 to 15 and the percentage of jobs in banking and financial
management held by women had risen from 9 to 39.
The future ptomises yet more blurring of t~aditiona1 sex roles in the work
force. In the United States currently,, more women than men are enrolled in
college and uniye~sities, and women are earning a stead~1y rising share of all
advanced degrees. Per e~çampie,'in i983, 45 percent of those receiving
PAGENO="0606"
600
accounting degrees, 36 percent of new lawyers, 36 percent of computer science
majors, and 42 percent of business majors were women.
Paralleling the tremendous increase of women in the work force has baen their
influx into the entrepreneurial arena. In the 10 year period between 1972 and
1982, the number of businesses owned by women jumped from less than 5 percent
to over 25 percent. By the year 2000, the U.S. bepartment of Commerce
estimates that 50 percent of America's businesses will be owned by woman.
In 1985, the latest year for available data, the number of women-owned
non.farm sole proprietorships totaled 3.7 million - compared to l.~ million in
1977. It is important to note that this figure does not include datd on women-
owned corporations and partnership. This data is not available because the
federal government does not include women-owned corporations and partnerships
in the Q,~,psus of Women Business 0wners~
Statistics do reveal, however, that women are going into business at a rate two
times faster then men and are thus the fastest growing segment of the
entrepreneurial community. Since the vast majority of these new female
entrepreneurs enter professional and technical service businesses, their
influence will continue to grow as the country shifts further away from a
manufacturing-oriented economy to one that is based on services, high-
technology and information.
Women-owned businesses are also making an economic impact. Receipts from
women-owned non-farm sole proprietorships approximated $100 billion a year,
according to the 1982 U.S. Census. However, the total economic impact of these
businesses far exceeds this level if one takes into account the multiplier
effect of these dollars as they turn over in the economy. Using a conservative
estimate that each dollar will be multiplied 2.5 times in the local economy,
women-owned businesses contribute $250 billion to the national economy. Of
this $250 billion, approximately $37 billion is paid to the U.S. Treasury in
federal taxes, and another $13 billion is paid in local and state taxes.
Consequently, women business owners represent a vital new resource for the
economic future of the country.
Women, as business owners and as employees, are having more than just an
economic impact on society. Women are "neurologically more flexible than men,"
says Eli Ginzberg, "and they have had cultural permission to be more intuitive,
sensitive, and feeling. Their natural milieu has been complexity, change,
ntiturance, affiliation, a more fluid sense of time." As women's attributes of
feminine cultural are brought ittto the workplace, they are providing a much-
needed balance to what has been `a predominantly male environment, and slowly
but steadily they are eroding some of the obsolete practices and prejudices
that have dehumanized work and the work environment.
Business and industry, are in fact, beginning to give serious attention to the
development of a more humanLstic working environment. As the U.S. economy
shifts away from smokestack production towards a greater emphasis on services
and high tethnOlogy, business analysts are calling for a more participative,
people-oriented approach to managing. Many companies are adopting radically
new management philosophies, style and structures. The predominantly
hierarchical authoritarian management style is shifting to a more tonsultutive
2
PAGENO="0607"
601
one in which the actors within the enterprise have real opportunities to have
input on decisions.
In the services and information era, the challenge is to build an operating
environment which encourages freedom, ferment, aggressiveness and innovation.
One that offers opportunity for great personal satisfaction and that provides
respect for all, regardless of job level. There are several ways to do this.
One is to push responsibility down through the organization. To give people
closest to the market or the product more say in what goes on. Another way to
create this innovative environment is to break down some of the rigid
organizational lines that have been established.
Women are exceptionally well qualified to manage in the information and service
economy. Women favor cooperation over competition. They prefer to work in
team structures where power and influence are shared more across the group, as
opposed to a hierarchy where power is concentrated at the top. Women managers
also tend to place strong emphasis on developing positive relationships with
co-workers. rurthermore, they try to relate to employees in a more personal
way than often is the case in the traditional male style.
Naturally, these qualities aren't ones that are observed equally in all women -
nor are they absent in all men. The key distinction is that, as a group, women
tend to exhibit these particular leadership qualities to a far greater degree
than men. The reason for this is rooted in the basic facts of socialization.
Despite this record of accomplishment, women business owners confront barriers
that impede their growth - barriers that were clearly delineated more than 10
years ago in the report, The 8ottom ~ine:, U~iequal Enterprise in America: A
Report of the President's rask Forc~ on Women Business Ownmrship. 1978.
The barriers women business owners face include:
* Access to affordable commercial credit, special finance programs,
and alternative methods of financing.
* Access to federal, state, and local government contracts.
* Lack of accurate data on women-owned businesses.
* Lack of effective and su~tained technical assistance programs.
* Lack, of public sector support through government'wide
institutionalized programs.
NAWBO is particularly concerned with the barriers that face women business
owners, Our concern also has a much wider perspective. We believe that women
business owners can serve as an economic catalyst for entrepreneurship. To
achieve this goal, NAWBO has developed a set of recommendations that will place
women business owners and the entire entrepreneurial c~maunity not only inside
the business and economic mainstream, but also have major ~mplications for our
counlry's future economic growth, job creation, productivity, intern~tiona1
trade and enhanced competitiveness'. The recommendations. outlined to assist
women business owners are to help this segment of the entrep'reneurial community
reach its full potential. As significant barriers that nów'exis~ for women
PAGENO="0608"
602
business owners seeking to participate in government contracting and acquire
business credit diminish, the need for some of the programs we are requesting
will be no longer required and should thus be eliminated. It is my sincere
belief that the recommendations put forth constitute an important agenda for
action and I am proud to submit them for your consideration.
WOMEN BUSINESS OWNER RECOMMENDATIONS
As previously outlined in the oversight hearing by NAWBO President Gillian
Rudd, we recommend that Congress enact legislation to mandate the establishment
of a Women Business Owner Policy Council at the Department of Commerce that
consists of key agencies, the White Mouse, Congressional representation, women
business associations, and individual women business owners. The Council will
be responsible for creating a Women Business Owner Federal Initiative. The
Initiative will include a four-year plan of action with annual targets, goals,
and measurable objectives for each Federal agency to facilitate, preserve and
strengthen women's business enterprise and to ensure full participation by
women in the free enterprise system.
The Policy Council will have budget and staff to carry out its mandate. The
mar~date includes:
* Coordinate the actions of all Federal agencies and departments to
facilitate, preserve and strengthen women's business enterprise.
* Develop a comprehensive Federal plan and specific program goals for
women-owned businesses.
* Work with state/city/local planning bodies, such as the National
Governors' Association, National League of Cities, National
Association of Counties and trade associations to ensure
federal/state/city/county emphasis on this issue.
* Establish agency performance goals, monitor, and report progress to
Congress and the President.
* Define the programs needed by women business owners and identify the
appropriate agency to develop such initiatives. Specific emphasis
will be placed on: capital; procurement; high technology; data
collection; international trade; technical assistance and training;
the Departments of Defense and Transportation; the Office of
Productivity, Technology and Innovation; the Small Business
Development Corporations; and the Small Business Innovative Research
Program.
* Appoint Cabinet-Level Women Business Owner Policy Task Forces:
- - Each Cabinet officer would appoint a Women Business Owners Policy
Task Force under the Assistant Secretary for Administration to
develop a 4-year women business owner action plan, with specific
targets, goals and objectives for each year. The accomplishments
of the goals would be included in the merit increases of federal
employees. Recognizing the barriers women business owners face,
restrictions on sole sourcing and other procurement incentives
4
PAGENO="0609"
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will be established. There would be a sunset provision to
dismantle the Task Fortes if goals and objeetiv~es are reached.
- - Each Task Force would include agency staff, individual women
business owners and representation from women business owners
groups.
- - Each agency would allocate a specific portion of program budget
for the implementation of model programs.
- - Model programs would be funded for 3 years and through matching
grants in subsequent years.
- - The Task Fotces would make a yearly report to the President on
progress and future attions.
* - The Small Business Administration would concentrate on outreach,
build local constituency advisory groups, disseminate program
information, play an advocacy role and establish a separate and
appropriately funded women business owners office with advisory
councils on policy.
PR0CU~EMENT
Throughout the oversight hearings, many women business ownets have described
their frustrations and difficulties in gaining access to the federal government
procurement market. The federal government is the largest purchaser of goods
and services in the United States, representing over $200 billion in purchases
annually. Though women play an important role in the economy through the
ownership of businesses, they received only six-tenths of 1 percent of all
government purchases over $10,000 in ~f 1985 and again only six-tenths of 1
percent of all government purchase over $10,000 in FY 1986.
The limited access of woman-owned businesses to federal procurements represents
a loss of excellent resources to the government and a severe impediment to the
viability of the female entrepreneur. It is in the best interest of the
nation's economy to support women business owners as a vital entrepreneurial
and economic sector. Federal policy must create a climate that supports and
encourages women-owned businesses to participate in federal contracting.
NAWBO proposes the implementation of a two-phase program to assist woman-owned
businesses in gaining access to federal procurements and simplify and
streamline the procurement system. Phase 1 would last three years and involve
actions that we believe would increase the share of federal procurements going
to woman-owned firms and improve the acquisition of professional and technical
services. Phase 2 would be implemented only if the proportion of awards to
woman-owned businesses had not been significantly increased and was not
steadily increasing three years after implementation.
Phase 2 would establish a set-aside program for all woman-owned businesses and
be implemented to supplement actions taken in Phase I. Phase 1 and 2
recommended actions are described below.
88-199 0 88 - 20
PAGENO="0610"
604
Phase 1 Actions
(1) Congress should enact legislation to mandate a Blue-Ribbon Commission
on Procurement and Innovation. The Commission shall:
- - Review and recommend changes in public policy, incentives and
regulations to improve, simplify and expedite the federal
procurement process, so as to enhance innovation, quality and
competitiveness.
- - Review the Small Business Set-Aside program in a bold and dramatic
fashion to determine ways to: increase access for start-ups and
smaller businesses, provide incentives for prime contractors to
increase their use of smaller businesses and provide management
and technical assistance to help these companies grow.
- - Create biennial contract plans that ensure set-asides are
spread evenly across all procurement areas, and that specify which
procurements will be set-aside.
- - In the area of services procurement, the Commission shall examine
the necessity of buying quality rather than lowest cost in the
procurement of sophisticated professional and technical services
and R&D, as well as the importance of technical training for
federal program and contracting personnel who are buying
sophisticated services, so as to assure that high qu~lity services
are obtained in cases where quality is more important than cost.
(2) Professional and technical services constitute a dynamic and fast-
emerging sector of the services industry, as well as a large majority
of businesses owned by women. The current acquisition system was
originally designed to procure hardware, and has not been effectively
adapted to the challenging task of procuring sophisticated, unique
professional and technical services. Moreover, federal government
personnel do not understand or appreciate the waste and problems
created by policies of procuring sophisticated services on the basis
of lowest cost rather than quality.
- - A new, simplified acquisition system is required for contractors
to continue to be motivated to offer high-quality services and to
ensure the long-term benefits of high quality to the federal
government. NAWBO recommends that the Office of Pederal
Procurement Policy (OFPP) develop and implement on a demonstration
basis a simplified alternative acquisition process adapted to the
procurement of professional and technical services - a process
which would ensure to the government the benefits of competitively
procured professional and technical services, and increase access
to the procurement system for businesses of all size, including
small businesses.
* - - Congress and the OFPP shçuld require technical training for
federal program and contracting personnel concerning the
acquisition of professional and technical services, to assure that
6
PAGENO="0611"
605
high~qtiality services are obtained in cases where quality is more
important than cost.
(3) Improve the procurement process for services by developing evaluation
proceduxes ensuring a balance of cost and quality factors with
legitimate "best value" as the ultimate criterion for award. This
can be accomplished by establishing a special corps of contracting
and procurement personnel for purchasing sophisticated technical and
professional services.
(4) Revise the Standard Industrial Classification Code Size Standards to
reflect the growth and contributions of the service sector the Gross
National Product and the economic structure of the United States.
(5) Revise the Size Standards assigned to Major Group 87 of the
Standard Industrial Classification Codes for selected professional
and technical services based on reliable economic data to more
accurately reflect changes in the U.S. economy.
(6) Ease the "graduation" shock that occurs when firms grow beyond their
size standard and can no longer compete as a small business for set-
asides in the market niches that they have captured through small
business competition.
(7) Congress should enact legislation eliminating Federal competition
with the private sector.
(8) Congress should enact legislation codifying 0MB Circular A-76 to
increase contracting-out opportunities Government wide.
(9) Congress should enact legislation prohibiting unfair competition in
which non-profit tax-exempt organizations use their tax-exempt status
and other advantages in selling products and services also offered by
small businesses.
(10) Make interest an allowable cost for government contractors, an action
that would be specifically helpful to small and entry-level
businesses.
(11) Award procurements of $100,000 or less within 60 days of proposal
submissions and other small business set-aside procurements within 70
days of proposal submission.
(12) The Department of Commerce should refine and continue the
sponsorship of MegaMarketplace for another four years to widen the
efforts to bring more women into the procurement process at all
levels nationwide. Monies should be allocated for this effort and
for surveys on the impact of MegaMarketplace on women business owne~ts
and procurement officials, and results in number of cohtracts and
dollars.
(13) Revise federal agency practice to ensure both the planning and the
outcome on an annual basis for the utilization of women-owned
businesses as prime contractors and subcontractors across all of the
7
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606
product and service industries in which they plan to procure for a
given year. A mechanism should be established to ensure review and
implementation of these plans.
(14) Provide financial, managerial, and technical assistance and support
to woman-owned small businesses as follows:
-. Model programs involving woman-owned small businesses should be
established to demonstrate effective approaches for marketing to
and contracting with specific agencies (e.g., Department of
Defense).
- - Majority women business owners should be made eligible for
Minority Enterprise Small Business Investment Company (MESBIC)
funding.
(15) Establish a "woman-owned small business preference procurement"
model, which would preserve full and open competition by executing an
unrestricted procurement but would award preference points to woman-
owned small businesses.
(16) Direct all agencies to include at least one bid from a woman- owned
small business for all small purchase orders under $25,000.
(17) Establish mechanisms to ensure that the quantity and quality of
women-owned business participation as subcontractors under the
Federal Acquisition Regulations is a real and compelling part of
source evaluation and scoring by awarding preference points to
bidders for utilization of woman-owned businesses. This would result
in a positive, self-executing incentive for other than small
businesses to build woman-owned business participation into their
contract structure. To place all prime contractors on an even
footing, the government should specify the level or range of women-
owned business participation that they consider to be responsive on
specific procurement. Also, these procurements should include
explicit mandatory contract requirements for prime contractors to
provide to woman-owned business subcontractors technology transfer
and management training.
(18) Congress should enact legislation applying set-aside programs more
evenly across all procurement areas to (1) ensure that all
procurement areas are open to small, women-owned, and minority-owned
businesses and (2) ensure that excellent, high-performing, growing
small firms will have an opportunity to obtain a fair proportion of
procurement after they exceed technical size standards.
(19) Appoint "Procurement Advocates" for women business owners in all
executive agencies, as well as for the Interagency Committee on
Women's Business Enterprise, to develop effective mechanisms for
increasing procurement with woman-owned small businesses, to identify
procurement opportunities for women-owned businesses and to review
RFP' a from women-owned businesses.
8
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(20) Expand bidders lists for all agencies to include greater
representation of women-o~n~d businesses. Woman-owned firms shoitld
be retained on these listsdurir~g list rotation so that a fair and
representative amount of women-owned businesses remain on the lists
at all times.
(21) Institute education programs on the capabilities of woman-owned
businesses for government technical and contracting staff to
eliminate misconceptions about woman-owned businesses.
(22) Relate the performance appraisal of government contracting
employees to their success in meeting procurement goals, management
assistance, and loan approvals for woman-owned businesses. This can
be coordinated in part through the employee's Personnel Office and
through the award of performance evaluation points.
Ph5se 2 Actions
NAWBO recommends that both small and large women-owned businesses receive a
more equitable share of federal procurement funds. The federal government
should increase woman-business owners percent of total contract dollars one-
quarter of 1 percent by FY 1990, one-half of 1 percent by FY 1991 and three-
quarters of one percent by FY 1992.
Failure to achieve a steady, significant increase ir~ federal contract dollars
within 3 years of implementation would demonstrate that the barriers facing
woman-owned business in trying to do business with the Federal Government are
too great to overcome with actions short of a set-aside program. NAWBO
recommends that if these actions fail, Congress should enact legislation
creating a set-aside program for small and large woman-owned businesses. This
set-aside program should draw 50 percent of its funds from non set-aside
monies, Fifty percent of the set-aside funds should awarded to non 8(a)
businesses.
DATA AND STATISTICS
Unfortunately, Mr. Chairman, no one has been able to testify on just how many
women business owners actually exist, or on our precise economic impact. This
information is not readily available because the government does not actively
collect data and statistics on women-owned businesses and the industry in
which most of us conduct our businesses.
As you are aware, since the end of the Second World War, the United States
economy has undergone major transformations from being primarily a
manufacturing economy to a services and information economy. This
transformation has resulted from interactions among technological developments,
systemic shifts in the structures of industries and jobs and changes in
population. These rapid changes require effective management, but it is
impossible to manage anything effectively if we don not understand its
dimensions. While the federal government produces a multitude of statistics as
disclosed in Statistical Abstracts of the Un~ted States ~nd other reports,
comparatively little information is available on economic growth, innovation
and emerging sectors of the economy - the very components of entrepreneurship.
9
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Women are playing a key role in the transformaiion of the economy by starting
new business ventures in the services, information and high technology
seàtórs. Despite the press attention we receive as the fastest growing segment
of the business community, solid information about the nature and scope of
woman-owned businesses is virtually nonexistent.
(24) To improve the national data on women business owners, Congress
must establish initiatives to ensure the regular collection of
reliable national data on women business owners and further revise
and update the Standard Industrial Codes to reflect the dynamic
changes in the service sector, including the professional and
technical services industry, ihere such a large percent of women
business owners are concentrated.
(25) Congress should enact legislation directing the federal executive
branch to create a dynamic newclassification system as a successor
to the Standard Industrial Classification Codes, which will reflect
the services, information and high technology sectors, and which will
evolve with the continuing growth and transformation of the American
economy.
(26) The Bureau of Labor Statistics should include in its Cen~us of Women
9wned Businesses those women who own regular corporations
partnerships, not just sole proprietorships.
(27) The Administrator of the Office of Federal'Procurement Policy should
compile accui~ate statistics on the participation of women-owned
businesses in government procurement, including minority and
nonminority women-owned firms in the contracting and subcontracting
procurement process.
(28) All government agencies with responsibilities for education and
training for private sector business management should be instructed
to collect data that will identify female/male participation ratios
in all government-sponsored and cosponsored education and training
programs and to monitor and evaluate such programs to determine their
impact on women.
(29) Congress should enact legislation to mandate a privately-funded
commission should be created to study the changing American economy- -
specifically the services, information and high technology sectors- -
and make recommendations with regard to appropriate federal
legislation and regulation which will promote growth and
competitiveness in these areas, and enhance synergy with the
manufacturing, extractive and agriculture sectors.
ACCESS TO CREDIT
Access to credit as a means of obtaining necessary financing for start-up costs
and business growth has been reported as a major problem faced by small
businesses throughout the United States. The inability to obtain commercial
credit is especially problematic for young businesses which have not
established a financial track record and have not accumulated sufficient assets
to qualify for the business financing they need under traditional bank
10
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609
evaluation procedures. Businesses in the service sector, no matter how
promising, often face particular difficulty in obtaining commercial credit
because usually they possess few tangible assets to which a bank could look for
collateral.
Women-owned businesses are overwhelmingly in the service sector of the economy.
Accordingly, the difficulty of obtaining credit for a small, service-oriented
business has a disproportionate impact upon women. In addition, systemic
discriminate places the average American woman at a disadvantage in competing
for capital for her enterprise. A woman's traditional position in the work
force has limited not only her management experience, but also her income and
the amount of collateral she has been able to amass. The problem is even more
serious for minority and divorced women.
(30) The Congress should enact legislation to ensure equal access to
commercial credit for all small businesses, and to ensure that women
and minorities are not discriminated against in the granting of
commercial credit.
(31) NAWBO supports HR. 1897 introduced by Reps. John LaFal~e and Lindy
Boggs. This bill permits the exemption of business loans from the
broad scope of the Equal Credit Opportunity Act of 1974 (ECOA) and
Regulation B only if the Board holds a formal hearing and finds that
the application of the ECOA or particular provisions thereunder to
particular classes of business transactions is not necessary to
promote equal credit opportunities. However, NAWBO favors even a
stronger amendment to the ECOA that does not permit the Federal
Reserve to exempt business credit at all from any protection afforded
consumer credit, rulemaking, periodic review, and discretion.
(32) Expand the bank examination process to examine for compliance with
the ECOA's prohibition against sex discrimination in business lending
and to include data collection on commercial loans granted or denied
to women business owners.
(33) Adopt a specific affitmative action program to help women business
owners overcome traditional lending practices that limit their access
to financing.
(34) Develop a rating system to be incorporated into the examination and
implementation of the Community Reinvestment Act to measure the
impact of the lender's loan practices toward satisfying the credit
needs of women business os~ners.
(35) Sponsor educational programs instructing lending institutions how to
review loan packages for soft asset companies based on cash flow
analysis, rather than asset-based financ1~ng.
(36) Congress should enact legislation to revise the conservatism of the
SEA 7(a) guaranteed loan program and develop new policy that
reflects the borrowing needs of today's economy to include soft asset
loans, particularly for women business owners.
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(37) Improve the quality and information about small business growth in
the United States by expanding the County Business Pattern data to
include women-owned status and business type, sole proprietorship,
partnership or corporation.
(38) Enact legislation authorizing the implementation of a national
Capital Access Program and a National BIDCO Program for women
business owners, on the models being developed so successfully in
Michigan.
ENTREPRENEURIAL REC0MME~DATI0NS
Today, the leadership of the Small Business Committee has the responsibility
for defining the shape and thrust of policy that will guide America's
entrepreneurial community into the 21st century. This will be no easy task.
Currently, business organizations, both large and small, are facing a series of
changes more extensive and more far-reaching in implications than anything
since the "modern" industrial system took shape in the years between 1890 and
1920. These changes in the American business environment come from several
sources, including: the continued integration of the world economy; further
shifts of production from goods to services; the application of advanced
technologies to most industries; faster gains in productivity, particularly in
services; disinflation or deflation in world prices; and increased competition
in product, service and labor markets.
Furthermore, as Our country struggles with complex and far-reaching problems in
such areas as the federal deficit, competitiveness, our decaying
infrastructure, AIDS, education, a slowdown in the U.S. population, as well as
the aging of the baby boom generation, work force training and retraining,
childcare and care for the alderly, and the growing gap between the haves and
haves nots, it is imperative that Congress, the President, and the private
sector unite in a common mission and pressfor solutions to these major
national problems and challenges we face as a country.
The mission to rebuild America so our nation will be strong and sure as we
enter the twenty-first century requires:
(39) Federal policies which encourage savings and investment, as well as
strategic investments in America's long-neglected infrastructure,
including lowering the capital gains tax rate.
(40) A toordinated campaign and partnership by business, labor, education,
churches, and other non-profits, as well as governments at all
levels, to combat substance abuse and AIDS in America.
(41) An initiative emphasizing the importance of excellence in education
at all levels, including lifelong retraining to ensure
competitiveness in the new global economy.
NAWBO would like to thank Chairman LaFalce and all the members of the House
Small Business Committee for holding oversight hearing on issues affecting
women business owners. The House Small Business Committee is at the forefront
in conceptualizing and shaping public policies that unleash the creativity of
capitalism and open new vistas of innovation and opportunity; that train our
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work force of today and tomorrow for cons~tant4y evolving jobs of the future;
that transcend narrow interests and national bordere; that foster trade and the
spirit of international cooperation; an4 that strengthen the fabric of society
and enhance our quality of life,
NAWBO hopes, and trusts, tliat Chairman Lafalce and all the members of the House
Small Business Committee will tontinue to provide such vision and leadership as
Congress addresses the challenges facing America's businesses, -work force and
citizenry as we stride into the twenty-first century.
13
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THE
ABACUS STORY
Feminists in the
Marketplace
Tell Their Story
Produced As a Matter of Public Record by Abacus, Inc.
Abacus, Inc. is a 100% womenowned company.
547 FrederIck Street6 San Francisco, CA 94117(415)759-9508
PAGENO="0619"
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V
613
INTRODUCTIO.N
The Abacus story, and the personal stories of individual owners and
managers of the company, are being told, as part of the Public Record, in order
to establish that Abacus has experienced a pattern of sexist treatment due to
age/gender bias and that this pattern of discrimination has constituted a social
and economic disadvantage to the company and to the individuals involved.
The social and economic disadvantages experienced by the company have
been chronic. Representatives of the company, for instance, have experienced
discrimination at the company's local bank although, in its entire fifteen year
history, Abacus has never bounced a check or defaulted on an invoice.
Abacus, Inc. is a small, 100% women-owned, start-up company specializing in
desktop communications and microcomputer connectivity. The company
offers a wide range of services for its corporate accounts including equipment
sales, applications training, systems consulting, graphics production, and
commercial printing. The ownership and staff of Abacus, Inc. believe that, as
women entrepreneurs, they have had to work harder, wait longer, manage
with fewer dollars, and be content with smaller operations just to maintain
their present levels of independence and business success.
The U.S. House of Representatives Small Business Committee recently made
a bold and far-sighted recommendation with respect to the patterns of sexist
discrimination which are still prevalent in the marketplace. According to
Time magazine, July 4, 1988, "The Committee is recommending that the
Government take several steps to help women entrepreneurs, from givthg
them more loans to making it easier for them to get federal contracts. The
House Small Business Committee asserts that the increase in the number of
companies owned and managed by women may be the "most significant
economic development of recent years.. .Women-owned businesses have
become a central factor in the American economy and will become even
more crucial in the years ahead."
Time magazine adds, "The Committee also found, however, that women
business owners still face considerable difficulties, especially in gaining access
to commercial credit and bidding on government contracts. In addition,
contends the committee, women need better technical and managerial
training to ensure the growth of their enterprises."
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Why are women the most significant economic development of recent years?
Time magazine says "Whether big or small, enterprises begun by women are
having an increasingly significant impact on the U.S. economy. Their
revenues are estimated to be more than $100 billion per year. They pay about
$37 billion in federal taxes and $13 billion in state. and local taxes annually.
Female-owned firms tend to be small and their numbers are rapidly growing.
They are expected to be a major source of new jobs in coming years. The
Small Business Administration estimates that companies with fewer than 500
employees created about two thirds of all new jobs in the U.S. from 1980
through 1986."
The Small Business Administration expects that, by the end of this century,
one half of all self-employed people will be women. Most companies started
by women spedalize in fashion, food, and other areas traditionally viewed as
women's work. This, however, is not true of Abacus. Since its beginning, the
company has entered and performed successfully in traditionally male fields
such as gardening, cab driving, offset printing, and microcomputer
technology. The ownership and management of Abacus, Inc. believe that
Abacus is precisely the kind .of company which the House Small Business
Committee wishes to help. The stories contained in this submission have
been written by individual owners and management personnel. On behalf of
Abacus, and companies like Abacus who have had to work twice as hard to
get half as far as their white male counterparts, the following document is
submitted to the public record for formal review.
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Personal Experiences with Age and Gender Discriminii'ion
During My Association with Abacus, Inc.
Lee Tuip
Marketing Director and Corporate Secretary
Incident #3-Gender and Age Discrimination
On Friday, June 24, 1988 at 11:15 a.m., Shari Tresky and I went to our Wells
Fargo Bank branch at 725 Irving Street for the purpose of establishing a
"Special Collections Account," or "blocked account," for Abacus, Inc. This was
the most critically important financial transaction in the company's history.
We had just secured financing from ITT Commercial Credit that would
enable us to comfortably finance the rapid growth our company was
experiencing in value~added systems sales for Macintosh equipment. Not
only was the financing arrangement the most important move our company
had made to date (representing months of hard work to set up), it also came at
an extremely critical point in the company's relationship with Apple
Computer, Inc.
Apple Computer is the single most important company in Abacus' business
picture. Abacus derives almost all of its income from sales of equipment,
training, consulting, and/or production work directly connected to Apple and
its community of third party developers. Ironically, it came at the precise time
that Abacul was putting the finishing touches on art application and business
plan submission to Apple Computer that would slgmficantly expand and
deepen the relationship between Apple artd Abacus. The submission was due
Monday morning and represented the most important strategic opportunity
that our company had ever received.
The ITT financing, in and of itself, would enable us to continue on our
current, rapidly escalating growth curve. The new relationship with. Apple
would enable Abacus to expand its sales even more dramatically, probably
400% in the first year alone. A key element in the submission to Apple
Computer was the secure knowledge that the ITT financing was securely in
PAGENO="0622"
616
place, including having the actual account set up. Abacus had no more lead
time available and had to respond very quickly. In its fifteen-year history,
never had the company been at this kind of critical "make or break" point.
Top management at ITT assured us that setting up this kind of account was a
very simple transaction. None of its clients had experienced any difficulty
whatsoever. Since this transaction was of such importance to the company,
since we wanted Wells Fargo, as our banker, to be apprised of the exciting
developments in our company, since we understood that it might be a
somewhat unusual account, and since Abacus had suffered a seemingly
endless trail of what appeared to be administrative incompetence and what
was definitely tremendously inconvenient, we asked to speak with the branch
manager directly.
The branch manager did agree to see us-for about two minutes. She was
coldly polite but took no interest in our situation whatsoever. She
immediately told us that the bank would have to take three weeks to research
the situation before making a determination, that she was going on vacation,
and that Mr. O'Dell Williams would help us instead. It appeared that she
could hardly wait to get rid of us and go on to "important" things rather than
waste her time with young girls who really couldn't be doing any serious
business worth her time or courtesy.
Abacus, ii~ fact, had never bounced a check, had held three accounts at the
bank for the past year with a combined average balance of between $50,000
and $100,000, and, in general, had done nothing to represent a problem to the
bank. In fact, anyone looking at the' numbers could tell that Abacus was an
exciting growth company worth watching. Instead, the branch manager
would not `give us the time of day. In fact, her reception was decidedly chilly.
There is `no way that white, middle-aged men dressed in business suits' would
have been treated so rudely. The branch manager would certainly have done
everything possible to give male business clients the reassurance that the
bank was swiftly proceeding through all necessary channels in order to
successfully work out this important transaction inside the requisite time
frame.
Mr. O'Dell Williams, who was given the task of dealing with us even though
he had only been at the bank for two days and knew nothing of our account
whatsoever, was also polite but chilly in his reception. Neither he* nor the
branch manager showed any signs of appreciating the significance of the
transaction even though it was explained to them several times. The name of
our contact person, an ITT executive, was also offered to them on five
separate occasions so that they could check with him for background. That
offering was patently ignored each time it was offered. The branch manager
PAGENO="0623"
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told Mr. Williams to telephone Judy, a paralegál in the legal department
downtown We were left unattended for about a half an hour while the
phone call was made.
When the answer came back from Judy, it was a firm "no." No valid reason,
however, was given. The bank's only response was that they didn't want to
open the account for us because, in the past, we had wanted to deposit checks
made out to Abacus's retail store, Utopian Technology (with its own dba). We
have always requested that our customers make checks payable to "Abacus,
Inc." On occasion, however, customers make checks payable to the name of
an Abacus division, such as Utopian Technology. This problem was cleared
up and successfully solved by opening up a second savings account in the
name of Utopian Technology.
Achieving that, however, came only as the final result of another tale of woe.
Wells Fargo treated our company representatives with contempt and utter
condescension during this entire earlier process. An Abacus representative
had to have more than one verbal confrontation with the branch manager
before the branch manager would accept Abacus's valid dba's and open an
account accordingly. Finally, our persistence was able to solve the problem.
All that Abacus wished to do was to deposit money into the bank; Wells
Fargo, on the other hand, was irrationally behaving as if Abacus
representatives were troublemakers and one step above street urchins. No
other explanation other than a pattern of age and gender discrimination
could explain the chronic and longstanding treatment received by Abacus at
the Wells Fargo branch at which it was an excellent customer.
Although Mr. Williams, and even Judy from the legal department,
acknowledged that the dba/deposit issue was not a current problem, it was
still cited as a stumbling block. Moreover, no other specific obstacle was cited.
Several times we pointed out that they were "mixing apples and oranges" but
to no avail. No intelligent or courteous response was forthcoming.
I experienced a mix of very strong emotions. First, I was forced into a position
of feeling absolutely powerless. I am an intelligent, strong woman but, in this
case, Wells Fargo held all of the cards and I held none. The experience of
being helpless in potentially disastrous circumstances was both infuriating
and terribly frightening. Fifteen years of hard work o~t the part of the
company as a whole, and eleven years of haEd work on thy part personally
were on the verge of collapsing smipiy because people in control at the Wells
Fargo branch had adopted a prejudicial attitude about our firm that was based
solely upon age and gender. I was appalled at the possible consequences of the
treatment we were receiving. I was also thoroughly humiliated to be forced
into an audible conversation in a public place in which I was having to beg to
be treated seriously.
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618
The embarrassment and degradation was even more acute when it came to
informing our ITT representative that we were unable to successfully open
the account. Wells Fargo bank had already opened an identical account for
another ITT client in the same financing program. We had spent a great deal
of time winning the trust and esteem of ITT. We were representing ourselves
correctly as dynamic, seasoned businesswomen, a true representation of our
skills, talents, and background. Wells Fargo, however, sent back a loud and
clear message that we were not a truly a company worthy of respect. Why
should ITT take us seriously when our our branch bank refuses to do so?
The potentially devastating effects on Abacus's two most important business
relationships is not possible to assess at this time. The application and
business plan submission to Apple Computer was necessarily submitted on
Monday morning without having the ITT financing firmly in place. It is
entirely possible that the most important strategic opportunity in the
company's history has been ruined.
Subsequently, Abacus has approached another bank about opening the special
blocked account. Although this bank has had no prior dealings with Abacus,
the entire transaction was handled, with the utmost grace and efficiency,
inside a half an hour. Though the new banking relationship promises to a
highly successful working partnership, it cannot undo the deleterious effects
of not having the financing when we needed it. Time was of the essence and
our own bank prevented us from moving appropriately. The sharp contrast
between the behavior of the two branch banks, both located in our
neighborhood, demonstrates that the treatment we received had absolutely
nothing to do with the nature of the account or with the nature of Abacus,
Inc. In fact, it demonstrates that it had nothing to do with rational reasoning
at all.
I am certain in the knowledge that it would have been impossible for white
middle-aged men in business suits to have received the prejudicial treatment
which my associate and I received as young, casually dressed women. It was
an experience shattering to my self-esteem. and sense of dignity. It is difficult
to feel any pride in your accomplishments when they are summarily
dismissed and trampled upon by institutions which we are taught to respect
and accord a measure of authority. Bearing the brunt of blatant age and
gender discrimination is an appalling and infuriating event, destructive of
personal morale and self-confidence. More importantly, this particular event
is irreversible and potentially destructive to the future growth of our
successful women-owned small business.
PAGENO="0625"
619
STATEMENT OF
CAROL THOMPSON
PRESIDENT, COMPUTERLAND
Mr. Chairman, members of the committee on Small Business, my
name is Carol Thompson. I am the President of ComputerLand of Austin,
Texas and co-owner of CompuRent, a computer rental business in the same
city. Thank you for the opportunity to testify before you regarding my
Computer Rental business and the issue of equal access to credit
In Austin, Texas in January 1985w there was no computer rental
business. Another woman, who had experience with computers, and I
decided to embark on such a business. In order to purchase computer.
inventory, we pooled $25,000 of our savings and purchased computers.
We marketed our concept via daily newspaper ads, word of mouth,
and in the various groups to which we belonged--Chambers of Commerce
and women's business groups. In our first year of business, we were
pleased and, amazed that our market plan was a valid one. Our business
grew as did our inventory from the $25,000 worth of computers initially
to approximately $125,000 worth of computers at the end of year one. We
were showing $13,000- $15,000 profit monthly at the end of the year!
People were using these computers for weekend projects, additional short
term office projects, travel projects, rent-tb-buy options and long~term
PAGENO="0626"
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rentals available for some grant projects.
We were exceptionally pleased with our progress and already had
purchase orders for long-term rentals which would necessitate more
capital. As our business was located adjacent to ComputerLand we had
the fortune to meet a banker who said he had money to loan but his initial
appointment was with ComputerLand. We later set up an appointment with
this same banker to review CompuRent financials and then to ask for a
loan to accommodate purchase orders for rentals, The banker appeared
positively impressed with our financial statement, growth status and
unique business in Austin, He took the paperwork to review and later
called to say that if my husband, Larry Thompson, Computerland's Chief
Financial Officer would sign, we could indeed have a loan.
Needless to say, we were not happy or agreeable to this bank's
conclusion. My partner and I then sought out a bank which we heard had
many women in upper management. They listened to our plan, reviewed
our financial statement, commented humorously that perhaps the bank
should be into rentals andgave us the requested loan. This loan has
always had timely payments. Our staff has increased and we are seeking
out a second location in Austin, Texas even in the face of Texas' depressed
economy.
PAGENO="0627"
621
CompuRent and ComputerLand both have survived in a very difficult
Texas business market. I personally am very involved, in networking for
business, but it will be a long time before a "good ole girl" network rivals
the "good ole boy" network in this location. The National Association of
Women Business Owners has provided initial groundwork for leads and
mentoring. .1 am chair-elect of the Women's Chamber of Commerce of
Texas which also is developing a broad-based agenda for women's specific
issues. Who has money to lend? Where are the best bids pending and how
to be on the list? Who are key people to align oneself with to develop
business prospects?
I am also on the board of the Austin Chamber of Commerce which is
made up of thirty-seven men and five women. Here I chair the Small
Business area whose members total eighty percent of this ninth largest
chamber in the United States. Again we are trying to strengthen the
backbone of America's business, namely small business. These exciting
plans currently are on our agenda here. One plan is being conceived with
the University of Texas and begins with a May 11th workshop on " The Role
of Risk Capital Networks In Emerging Companies". Another chamber plan
is to involve a large committee of key people who will evaluate local,
statewide, national, and international sources of financing. We plan to do
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an indepth study of regular banks, venture capitalists, investment
institutions and any other resources which can strengthen our business
arena. Lastly, the Austin Chamber's small business sector is embarking on
a "Buy Austin" program to keep our procurement dollars here. Current
estimates show three out of four dollars leave Austin, We aim to change
that with a broad-based program which will help both small business and
large business.
Women, as you know, are now admitted to Rotary, I am one of six
women in Austin's seventy-five year old Rotary with a membership of four
hundred men. Business alliances are slowly being formed in this area also.
This is an environment which will allow women to interact faster and
with more credibility in the business world, I believe.
In conclusion, my initial negative experience with equal access to
credit has caused me to be much more aware of what makes successful
businesses work. I have learned not to take no for an answer but to
positively persevere all avenues open to me. I am convinced thatwomen
business owners, who are increasing now 3 to 5 times the national
average, are and shall continue to be a vital force in reshaping the face of
America. Witness the success of the National Association of Women
Business Owners.
PAGENO="0629"
623
Lastly, I hope my sixteen year old daughter will never have to hear,
"If a man signs this bank note, the loan is yours."
Thank you for this opportunity to speak up for the many women who
have been denied and continue to be denied equal access to credit!
Carol Thompson
CompuRent
3201 Bee Caves Rd
Austin, Tx. 78746
PAGENO="0630"
624
A
Rapr~ss4 fre-F.dseal R.gtstsr I Vol. 44. No. 100 I Tuesday. May 22. 1979 I Presidential Documntta
Presidential Documents
Ex.cutlve Order 12135 of May 15, 1570
Creating a National Women's Business Enterprise Policy and
Prescribing Arrangements for Developing, Coordinating and
Implementing a National Program for Women's Business
Enterprise
In response to the findings of the Interagency Task Force on Women Business
Owners and congressional findings that recognize;
1. the significant role which small business and women entrepreneurs can play
in promoting full employment and balanced growth in our economy;
2. the many obstacles facing women entrepreneurs; and
3. the need to aid and stimulate women's business enterprise:
By the authority vested in me as President of the United States of America. in
order to create a National Women's Business Enterprise Policy and to pta.
scribe arrangements for developing, coordinating and implementing a national
program for women's business enterprise. it is ordered as follows:
i-i. Responsibilities of the Federal Departments andAgencies.
1-101. WithIn the constraints of statutory authority and ~a otherwise permit.
ted by law:
(a) Each department and agency of the Executive Branch shall take appropn.
ate action to facilitate, preserve and strengthen women's business enterprise
and to ensure full participation by women in the free enterprise system.
(b) Each department and agency shall take affirmative action in support of
women's business enterprise in appropriate programs and activities including
but not limited to:
(1) management. technical. financial and procurement assistance,
(2) buainess.related education. training, counseling and information dissenti'
nation. and
(3) procurement.
(c) Each depariment or agency empowered to extend Federal financial assist-
ance to any program or activity shall issue regulations requiting the recipient
of such assistance to take appropriate sffirmative action in support of
women's business enterprise and to prohibit actions or policies which dis-
criminate against women's business enterprise on the ground of sex. For
purposes of this subsection, Federal financial assistance means assistance
extended by way of grant. cooperative agreement. loan or contract other than
a contract of insurance or guaranty. These regulations shall prescribe sanc-
tions for noncompliance. Unless otherwise specified by law, no agency sanc-
tions shall be applied until the agency or department concerned has advised
the appropriate person or parsons of the failure to comply with its regulations
and has determined that compliance cannot be secured lly voluntary means.
1-102. For purposes of this Order, affirmative action may Include, but Is not
limited to. creating or supporting new programs responsive to the special
needs of women's business enterprise. establishing incentives to promote
business or business'related opportunities for women's business enterprise.
collecting and disseminating information In support of women's business
enterprise. and insuring to women's business enterprise knowledge of and
10
PAGENO="0631"
625
ready access to business.retated services and resources If. In implementing
this Order, an agency undertakes to use or to require compliance with
numerical set'asides. or similar measures, It ahell state the purposf of such
measura. and the measure shall be designed on the basis of pertinent factual
findings of discrimination against women's business enterprise end the need
for such measure.
1-103. In carrying out their responsibilities under Section 1-1. the departments
and agencies shall consult the Department of Justice. end the Department of
justice shall provide legal guidance concerning these responsibilities.
1-2. Establishment of the mt., agency Committee on Women's Business Enter.
pris~.
1-201. To help insure that the actions ordered above are carried out In an
effecin e manner I hereby establish the Interagency Committee on Women
Business Enterprise (hereinafter celled the Committee).
1-202. The Chairperson of the Committee (hereinafter called the Chairperson)
shall be appointed by. the President. The Chairperson shell be the presiding
officer of the Committee and shall have such duties as prescribed in this Order
or by the Committee in its rules of procedure. The Chairperson may also
repr~sent his or her department, agency or office on the Committee.
1-203. The Committee shall be composed of the Chairperson and other
members appointed by the heads of departments and agencies from among
high level policy.making officials. In making these appointments, the recom.
mendations of the Chairperson shell be taken into conaideration. The follow.
Ing departments and agencies end such other departments and agencies as the
Chairperson shell select shell be members of the Committee: the Departments
of Agriculture Commerce Defense Energy Health Education and Welfare
Housing and Urban Development Interior justice Labor Transportation
Treasuryr the Federal Trade Commission: General Services Administration:
National Science Foundation: Office of Federal Procurement Policy: and the
Small Business Administration. These members shall have a vote. Nonvoting
members shall include the Executive Director of the Committee and at least
one but no more than three representatives from the Executive Office of the
President appointed by the President.
1-204. The Committee shall meet at least quarterly at the call of the Chairper.
son, and at. such other times as may be determined to be useful according to
the rules of procedure adopted by the Committee.
1.208. The Administrator of the Small Business Administration shell provide
an Executive Director and adeqi ate staff and administrative support for the
Committee.The staff shall be located In the Office of the Chief Counsel for
Advocacy of the Small Business Administration or in such other office as may
be established specifically to further the policies expressed herein Nothing In
this Section prohibIts the use of other ptoperIy evailable funds end resources
in support of the Committee.
1-3 Functions of thecommittee~ The Càmmitt~e shall In a manner cohsistent
with law:
1-301, *Promot'e, coordirteteand monitprthe plans. programs end operations of
the departments and agencies of the Executive Branch which may contribute
to the establishment, preservation end strengthening of women's business
enterprise. ltttsdy, as appropriate, develop `somprehenalve interagency plans
and specific program goals for women a business enterprise with the coopers
tion of the departments and agencies.
1-302 EstablIsh such policies definitions procedures and guidelines to govern
the implementation Interpretation and application of this order and generally
perform such functions end take such steps as the committee may deem to be
neceSsary Or aporopriate to achieve the purposes and cary out the provisions
-hefeof.
11
PAGENO="0632"
626
Federal Register I Vol. 44, No. 100 / Tuesday, May 22. 1979 / PresidentIal Documents 29639
1-303 Proteots.the mobilization of activities snd resources of State and local
governments,business end trade associations, private industry, colleges and
wiiveriities,foundatlons. professional or~anlzations, and volunteer and other
groups toward the growth of women's business enterprise, and facilitate the
co~~a~i of 4hs efforts of these ~e with those of the departments and
agencies.
an ~nal assessment of the progress made in the Federal
Government toward assisting women's busines~ enterprise to enter the main-
stmam of bOsiness ownership and in provide recommendations for future
actions to the President.
1-305. Convene and consult as necessary with persons inside and outside
government to develop and promote new ideas concerning the development of
women's business enterprise.
1-306. Consider the findings and recommendations of government and private
sector investigations and studies of the problems of women entrepreneurs.
and promote further research into such problems.
* - 1-307. DesIgn a comprehensive and innovative plan for a joint Federal and
private rector effort to develop increased numbers of new women-owned
businesses and larger and more successful* women-owned businesses. The
plan should set-specific reasonable targets which can be achieved at reason-
able and Identifiable costs and should provide for the measurement of prog.
ress towards these targets at the end of two and five years. Related outcomes
such as income and tax revenues generated. jobs created, new products and
services introduced or new domestic or foreign markets created should also be
projected and measured in relation to costs wherever possible. The Committee
should submit the plan to the President for approval within six months of the
effective date of this Order~
1-4. OtherResponsibilitiss of the Federal Departments and Agencies.
1-401. The head of each department and agency shall designate a high level
official to have the responsibility for theparticipatlon and cooperation of that
department or agency in carrying out this Executive order. This person may be
the same person who Is the department or agency's representative to the
çommjttee.
- 1-402. To the extent permitted by law, each department and agency upon
request by the chairperson shall furnish lnformatlqn, assistance and reports
and othgrwise cooperate with the Chairperson and the Committee in the
performance of their functions hereunder. Each department or agency shall
enáure that óystematic data collection processes are capable of providing the
Committee qurrent data helpful In evaluating and promoting the efforts herein
described..
1-403/The officials designated under Section 1-401. when so requested. shall
review the policies and programs of the women's business enterprise program,
and shall keep the Chairperson Informed of proposed budget. plans and
programs of their departments or agencies affecting women's business enter-
prise. -
1-404. Each Federal department or agency, within cOnstraints of law, shall
continue current efforts to foster and promote women's business enterprise
-. . * and to support the program herein set forth, end shall cooperate with the
Chairperson and the Committee In increasing the total Federal effort.
1-3 Reports. -
1-401 lIre Chairperson shall, promptly after the close of the fiscal ~,ear
submit to the President a full report of the activities of the Committee
- blaring the previous fiscal year. Further, the Chairperson shall. from
time to time, submit to the President the Committee's 2econimendations for
legislation or other action to promote the purposes of this Order.
PAGENO="0633"
627
Federal *asjstsr f VGL4&No,100/ Tuesday. May 22~ 1979 / Presidential Documents
1-102, Each Feder*1 department and agency shall report to the Chairperson as
hereinabove provided on a timely basis so that the Chairperson and the
Committee can consider such reports for the Committee report to the Pixel-
dent,
1-6 DefiaitIeo& For the purposes at this Order, the following definitions shall
apply:
1401. "Women-owned business" means a business that is at least 51 percent
owned by a woman or women who also control and operate it. "Control" in
this context means exercising the power to make policy decisions. "Operate"
In this context means being actively involved in the day-to-day management.
1-602, "Women's business enterprise" means a woman-owned business or
* businesses or the efforts of a women or women to establish, maintain or
develop such a busiz~ess or businesses.
1-603. NothIng in subsections 1-601 or 1-602 of this Section (1-6) should be
construed to prohibit the use of other definitions of a woman-owned business
or women a business enterprise by departments and agencies of the Executive
Branch where other definitiotis are deemed reasonable and useful for any
purposenot Inconsistent with the purposes of this Order. Wherever feasible,
departments and agencies should use the definition of a woman-owned
business In subection1-601 above for montiOring performance with respect
to women's business enterprise in order to assure comparability of data
throughout the Federal Government,
1-7, Cormtrvction, Nothing in this Order shall be construed as limiting the
meaning or effect of any existing Executive order,
ThE WHITE HOUSE -`c75.~w~si~t
Moy*1979. f
pa ru~ is-isis
russ s-rues ia
smescod. sass-ui-N
PAGENO="0634"
628
29463
Federal It-.' Presidential Documents
Vat 48. No 124
Monday. (ime 27. 1983
Title 3-. Executive Order 12426 of June 22, 1983
The President President's Advisory Committee on Women's Business Owner.
ship
By the authority violist in me as President by the Constitution and laws of the
United Stairs of America. unit in order tt.t establish, in accordsnce with the
provisions of ihr l't'dcrat Advisory Committee ACt~s amended (5 U.S.C. App.
1). an advisory committee on women's business ownership. it is hereby
ordered as follows:
Section 1. E~utohfi~uhmunt.. (a) There is established the President's Advisory
Committee sn Women's Business Ownership. The Committee shall be corn-
poseo ii no (hire hate 15 members appointed or designated by the President.
These members shall have particular knowledge and expertise concerning the
current status of businesses owned by women in the economy and methods by
which these enterprises might be encouraged to expand.
(b) The Pr,'sident shittl designate a Chairperson from among the members of
the Coniniittee.
Sec. 2. Punelu)fls. (itt `11w Committee shall review the glottis of businesses
owned tty women; luster through the ,..nvate sector, finant:ial, educational.
and ~rocurement stipporl for women entrepreneurs; and provide appropriate
iilvici~ to Ito, President and the Administrator of the Small Ilusiness Adminis-
trution on these issues.
(b) The Committee shall submit reports to the PresIdent on a periodic bttsis.
Sec. 3. ,ld,ninislrotüm. (a) `l'he hutids of Executive agencies shall, to the extent
perntitted by law, provide the committee such information as it may require
for purposes of carrying out its functions.
(b) Members of the Committee shall serve without compensution for their
work on the Committee. Ilowever, members appointed from among private
citizens of the United Stittea may, sub)ect to the availability of funds, be
allowed travel expenses. inchttding per diem in lieu of subsistence, as author'
(red by law for persons serving intermittently In the government service (5
U.S.C. 5701-5707).
(C) The Administrator of the Small Business Administration shall, to the extent
permitted by law, provide the Committee with such administrative services,
funds, facilities, stuff and other support services sa may be necessary for the
performance of its functions.
PAGENO="0635"
629
29464 Federal Register / Vol 48, No, 124 / Monday, Juno 27, 1983 / Presidential Documents
Sec. 4. Gemre/. (a) Notwithstanding any other F.xttr,utlve Ordór. the fUnctions
of the I'rf'snlent umlor the Federal Advisory Committee i\ct. as nmefl(tet.
except that of reporting to the Cengrnss. whteh are applinabte to the Commit.
tee, shall b n~rformed by the Administrator of the Small Business Attminis.
tration, ill accorduhht~ with guidelines and procedures established by the
Administrator of General Services.
(b) The Committee shall terminate one year from the date of this Order,
TIlE WI IITE i lOUSE
FR Doc. 53-15425 June 22. 7983.
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PAGENO="0636"
630
Co-ventures
30 Irving Place
9th Floor
New York, New York 10003
for Women's Enterprise (212) 505-2090
Jing Lyman, FOUNDER
Testimony Prepared by
Jing Lyman, President
Hub Co-ventures for Women's Enterprise, Inc.
for the
US House of Representatives Small Business Committee
Representative John LaFalce, Chair
May 9, 1988
PAGENO="0637"
631
US HOUSE OF REPRESENTATIVES SMP~LL BUSINESS COMMII'rEE TESTIMONY
Representative John La Falce, Chair
Thank you for this opportunity to present testimony on the issue
of women's access to credit, the constraints on their entrefre-
neurial potential, and how we can be responsive to this potential.
For almost five years Hub Co-ventures for Women' s Enterprise, Inc.
(HUB) has been working in the United States and alxoad to prcu~te
an environment in which women of all ages, cultures and economic
levels can develop their full potential for self-employment,
entrepreneurship and job creation. HUB encourages a particular
focus on the often-unrecognized resources of low-income ~nen
and women of color through:
o Networking and coalition-building across
diverse constituencies,
o Training programs, lectures and forums
that build capacity for women's successful
business ownership,
o C~nunity education,
o The resources of an information clearing-
house and publications, and
o Assistance with community economic
development for women.
HUB has developed a series of tools and a çrocess by which
local communities can obtain standardized information about a
depth of women's business ownership and entrepreneurial activity
never before assessed. ~Whether "the cc*mununity" identifies itself
as an entire state, as in the case of the relatively rural states
of Maine and New Hampshire, a metropolitan area, as in the case
of Newark, Essex County, or a contained urban city-limits focus,
as in Philadelphia, the results of the information gathered are
overwhelmingly consistent. Based on responses to the HUB Women
Business Owner's Survey, the HUB Support ServIces Survey (which
collects information through one-on-one interviews on the training/
technical assistance, financial services, and day-care offered
to all business owners in a given carifflunity) and the variety
of forums held locally both for women business owners,. and
those women with an active interest in self-employment, we
already know the following:
o Women of all economic levels, cultures
and ages can and do start successful
businesses.
PAGENO="0638"
632
Page 2
o There is an almost total lack of
accessible support services sensitive
to the significant entrepreneurial
qualifications of women.
o The demeaning of women' s business
activity resulting from issues
of scale, location, timing and their
own isolation and lack of seif-conf i-
dence -- severely undercuts the
potential productivity of these
businesses.
o Women need to determine for themselves
the environment and scale at which they
can operate most effectively, given
their personal life situations and their
caregiver roles.
To kring these points home in relation to the issue of
access to credit I share quotes from reports about Philadelphia
and the state of Maine. These statements are reinforced by all
of HUB's work and that of all direct service providers who
work to enhance women's entrepreneurial productivity.
Philadelphia: "Capital is seldom available from
traditional sources: family, friends and associates
may not be in a position to offer assistance,
particularly in the case of low-~income women. In
addition, conventional lenders shun small deals (less
than $10,000) due to the transaction costs and do not
finance start-up businesses. Government funded loan
programs favor larger enterprises. To compound this,
women often have no visible credit rating or collateral,
and often they don' t know how to speak business language.
"Only 20% of survey respondents had applied for a bank
loan. This is consistent with bank lenders' impression
that women represent a small percentage of commercial
applications, and usually less than 10-20% of loan
recipients. Survey respondents cited these common
reasons for not applying:
o 14% were discouraged by loan officers
o 15% could not meet collateral, equity
or credit requirements
o 26% said the loan amount needed was
too small
PAGENO="0639"
638
Page 3
"Our survey indicated that success in financing
was also tied to marital status: 7% of married
respondents who applied for a loan received one,
in contrast to only 38% of single loan applicants.
"The types, location and relatively small scale of
many wcruen' s businesses make it difficult for them
to meet the minimum loan size and collateral require-
ments of most conventional lenders. Given that
their work experience is predc*~iinantly in the
service sector, wanen are less likey to start manu-
facturing or other kinds of businesses with fixed
assets (e.g., equipment) which can serve as col-
lateral. They are also less likely to own personal
assets outright." (See Final Re~xrt to Atlantic Rich
field Foundation.. . below.)
Maine: "Almost one-third of the survey respondents
started their businesses with less than $1,000,
and another twenty-six percent with between $1,000
and $5,000. Thirty percent reported bank partic-
ipation in their financing, while government
loans were a factor in one percent of the cases.
Personal savings were the largest source of start-
up capital; family earnings a factor in twenty-two
percent of the cases; and extended family members
in twelve percent of the businesses.
"A reliance on personal resources or networks for
start-up capital can limit the ability of w~en
to enter small businesses. Wanen, in general,
have earned less and accumulated fewer assets
than their male counterparts. Thus, they face
the dilemma of having less ability to generate
their a.in capital and less likelihood of attac-
ting any.
"The problem is even worse for wc~nen who are low-
incane. The survey demonstrates that small
business is an option for poor wanen. Bighty
percent of the survey respondents reported
having received sane form of social assistance."
(See Testimony on Behalf of Wctnen Business
Owners... below.)
PAGENO="0640"
634
Page 4
I append to these quotes the full repcrts from whiOh they
were taken, in addition to a variety of materials fran HUB' 5
work that reinforce their conclusions and recaiu~tendatjons.
Thank you for the opportunity to share our extensive
insights on women's potential for self-employment.
PAGENO="0641"
635
D
US GOVERNMENT
Interagency Committee on Women's Business Enterprise
1441 L 31,.., NW.
W..hh,~ton, DC. 20411
MEMORAHDUM FOR READS OF AGENCIES AND DEPARTMEN~rS
FROM: SUSAN E. PHILLIPS
CHAIR~N
INTERAGENCY coMMr'rTEE ON WOMEN'S
BUSINESS ENTERPRISE
~nclosed is a Model Training Program my Committee has
developed for use by the novice woman business owner who
wants to do business with the Federal goverxunen~~ I
would appreciate your recommending its use whenever a
woman-owned firm reguests procurement information from
your Small and Disadvantaged Business Utilization Office
(OSbBU).
I have taken the liberty of enclosing a directory of all
OSDBU Directors and their agency affiliation, which I
commend as part of your agency's handout material,
together with a one page handout entitled "How to Learn
What the Government Buys." I believe these three docu-
ments will assist the novice through the bureaucratic
maze that more often than not has acted as a discourage-
ment for women business owners. Women-owned business
firms have not been competing for Federal contracts in
the numbers we had antjcjpate~ W~ hope the enclosed
reference material will help improve the statistics in
the future. I want you to know I appreciate your assis-
tance in this matter ~f mutual concerm.
17
88-199 0 - 88 - 21
PAGENO="0642"
636
Model Training Program Guidelines
for Women Business Owners
Selling to the U.S. Government
Step 1 `Wade associations and women business owners should become familiar with the
types of goods and services each Federal agency acquires, the location at which
they are bought, and the total dollar volume of purchases in any given area. Virtually
* every Procurement Headquarter's Office or Small and Disadvantaged Business
Utilization (OSbBU) Office in each agency or department maintains such a list or
can direct you to the source materials. Write to each agency in which you may have
an interest. A good starting point tQ collect relevant information regarding the
agency's mission is its "Annual Report to Congress:' Most agencies will provide the
* annual report without charge. Additionally, the small business specialist at each field
office can often provide guidance regarding your firm's prospects for doing business
with the field office. There are also quarterly and annual procurement reports each
agency maintains in pursuit of goals negotiated with the Small Business Administra-
tion. Summary data on procurement actions for the preceding fiscal year are also
available and are useful in approximating spending levels.
Step 2 Once a woman business owner determines that a Federal agency represents a
viable market, she can increase the likelihood of finding specific procurement oppor-
tunities by getting on the agency's solicitation mailing list. The application consists of
Standard Form 129 (enclosed) which requires a description of the company and
specific information regarding products and/or services provided by the firm. Apply to
each Federal agency active in your field of interest by writing to the Headquarters
Procurement or Small Business Office closest to your business or in cases of large
Federal agencies, the field or regional office. You can find the appropriate addresses
in the Federal Government Section of your local telephone book. To further assist
you, the Small Business Administration (SBA) maintains a Procurement Automated
Source System (PASS) and the Minority Business Development Agency (MBDA)
maintains a "Profile" system. These systems are used by many Federal agencies to
supplement their in-house lists and all women-owned firms are invited to be included
in these systems. For further information on how these twp government wide lists
may assist your business write or call the nearest SBA District Office or MBDA of-
fice. (MBDA "Profile" is limited to minority-owned companies)
If your firm markets a standard commercial product likely to be used by many
Federal agencies, you should be sure your products are included on the Federal
Supply Schedule. For `those application procedures you must contact the nearest
General Services Administration Business Service Center.
Step 3 Inclusion on the solicitation mailing list will entitle you, in most cases, to be placed
on the agency's sourcC list for the goods and/or services for which you have ex-
pressed an interest. To avoid being &opped from the agency's SF-i 29 listing,
periodically stay in touch with the office to whom you mailed your application. This
will demonstrate a continuing interest in solicitations. Update your application on file
as the need arises.
One note of caution at this point, do not assume that because you are listed in an
agency's mailing list system you will be notified of every procurement in your field of
interest. At times there are more firms in an agency's source system than are needed
to achieve adequate competition and the agency may rotate its source list to give
each firm a fair chance at procurement opportunities. Make a point to review the
18
PAGENO="0643"
637
Commerce Business Daily (CBD) each working day for specific SOlicitations issued by
all Federal agencies and request copies of those solicitations that appear to be of in.
terest to you. Generally, all procurements over $25QO0 are synopsized in the CBD.
Subscriptions may be obtained from the Superintendent of Documents, Government
Printing Office Washington, DC 20402 at a cost of $243. This is the current first
class price and issubject to change. This publication is available in mdst public
libraries.
Step 4 Perhaps the most productive technique for identifying potential procurement oppor-
tunities in any Federal agency is via direct contact with agency personnel. There are
two categories of specialists you must get to know. The first is an administrative type
called a Small Business Specialist; the other is a technical type in charge of a
specific procurement requirement often referred to as the "requiring offic&' It is a
must to contact the Small Business Specialist first. In many of the smaller Federal
agencies especially in the area of research and development where long range plan.
ning is necessary, you may have some difficulty meeting technical personnel without
first contacting the Small Business Specialist. Most large Federal agencies like DOD,
NASA, and GSA welcome inquiries and encourage discussions between technical
personnel and company representatives. Often this is accomplished directly by con-
tacting the agency in question or the Small Business Office, which will arrange such
meetings or respond to written inquiries. It is desirable to have the Small Business
Specialist at any meeting with technical personnel since they can follow-up either
through further discussions or can help you furnish additional information requested
by the technical office.
Step 5 Finally, there are various procurement workshops that each Federal agency itself
conducts each year to acquaint small business owners with the various programs it
administers. You should write or phone the Small Business representative of the
agency where your principal interest may be to find out the particulars of these train-
ing Workshops. This is an excellent way 10 match a potential agency requirement with
the skills and expertise your business possesses There are several excellent large-
scale workshops conducted annually in Washington, DC, where most of the Federal
agencies are represented. These include the MegaMarketplace Symposium for
women business owners in the Spring (In 1987, a MegaMarketplace was held on the
east coast in April and the west coast in May); the National Small Business Week
conducted by SBA in May; arid the Minority Enterprise Development Week (MED
Week) in October. These offer training workshops in the form of question and answer
discussions on a variety of marketing and procurement topics as well as agency-
operated booths with detailed literature on the procedures and programs ad-
ministered by each agency. Invariably a Procurement Or small business specialist
from every Federal agency is in attendance. Such functions are a must for the newly
initiated women business firms attempting to do business in the Federal market
place.
19
PAGENO="0644"
638
HOW TO LEARN WHAT THE GOVERNMENT BUYS
If you are a small business person who would like to do buSiness with the Federal Govern-
ment and your previous attempts have been less than productive, here are some tips that
may be helpful:
1. Obtain a subscription to the Commerce Business Daily (CBD). The CBD is a daily list
of U.S. Government procurement invitations for bid, subcontracting leads, surplus-
property sales and foreign business opportunities. It is the means by which Govern-
ment agencies make their needs for research, goods and services known to the world
at large. Anyone who is sehous about doing business with the Government should
subscribe to it and read it daily. A subscription currently costs $173 a year via second
class mail or $243, via first class mail. Send your order and check to the Superinten-
dent of Documents, U.S. ~óvernment Printing Office, Washington, DC 20402.
2. Order a copy of the U.S. Government Purchasing anq Sales Dfrectory, ($5.50) from the
Government Printing Office, Washington, DC 20402. This book lists the goods and
services commonly purchased by the Government. It also tells which agencies buy
which products and how to contact their procurement offices.
3. Visit the nearest office of the Small Business Administration. Their counselors should
be able to tell you which Government agencies are your best prospective customers.
While you are there get a Standard Form 129, Bidder's Mailing List Application, and
find out how to get on an agency's or department's "bidders" list.
4, Contact the General Services Administration's Business Service Center in your area.
GSA acts as the purchasing agent for many items of equipment and supplies used by
the Government. They also have counselors who help business people make their way
through the maze of departments and agencies involved in procurement. These
centers are located In Atlanta, GA; Boston, MA; Chicago, lL~ Denver, CO; Fort Worth,
TX; Houston, TX; Kansas City, MO; Los Angeles, CA; New York, NY; Philadelphia, PA;
San Francisco, CA; Seattle, WA; and Washington, DC.
5. When. you do zero in on a particular agency or department, find out who the program
or project officers are who buy the servicesor product that your company sells. Per-
sonally call on these people and follow up your initial calls. Stay in touch. Successful
marketing is hard work. It requires strategy, perseverance and a steady, aggressive
marketing plan
20
PAGENO="0645"
The House Committee on Small Business has scheduled a series
of oversight hearings on the subject of women's business
enterprise. These hearings will begin on April 26, 1988. One of
the subjects which the Committee will be addressing will be
government policies and programs which affect women business
owners.
In connection with these hearings and the development of a
complete hearing record which will permit the Congress to develop
appropriate recommendations or legislation, it is requested that
you supply the Committee with answers to the following questions:
1. Executive Order 12138 requires that each Federal
department and agency "take appropriate action to
facilitate, preserve and strengthen women's bt~stness
enterprise and to ensure full participation by women in
the free enterprise system." Please identify every
initiative your agency has undertaken pursuant to this
executive order, the impact of the initiative, the office
responsible for the initiative, your assessment of the
success or failure of each, and your recommendations for
future initiatives.
2. Please supply the Committee with the following
information for each of the last four years:
a, the number, total dollars, and relative percentages
such figures represent for all contrac~ts awarded by your
agency to women-owned businesses identifying separately
awards made pursuant to section 8(a) of the Small
Business Act;
639
~onjress of tht %lnited ~tatcs
iI~onze of Rq1restntatit~eB
iooth ~on~ress
COMMITTEE ON SMALL BUSINESS
2301 KnMburn I~ousc effice )~uff ding
~UashIngton, ~ 20515
April 19, 1988
MAJORITY MAM.ERS
JOHN J LAFALCE. NEW YORE
CHAIRMAN
NEALSMYII, IOWA
OESDD.fON. ADSSOUEI
RUDDY DORMER. LOUWODA
Dear
.JOSETO H. HIDADE, PROOSYLUATHA
JOH500.OR. SOUSA
ORUIIA. AULLO, HEW JERSEY
RD Y RUDER LOtUS LANA
JOELOOFLEY, COLORADO
RREDRDICK S. UPTON. MOULUAN
A DREW WATT. MDIORLTYSYAFF
AREACODE HOE
PAGENO="0646"
640
2
b. the efforts made by your agency to ensure that women-
owned businesses appear on government bidders lists and
are being forwarded solicitation packages for contracting
opportunities;
c. total dollar amount of subcontracting commitments made
by large prime contractors with your agency and efforts
to encourage primes to utilize women-owned small business
concerns.
3. If your agency makes grants or loans, please supply the
following information for each of the last four years:
a. the number, total dollars, and relative percentages
such figures represent for all such grants or' loans made
to women-owned businesses;
b. efforts made by your agency to encourage the
participation of women in grant and loan programs.
14* If your agency has programs relating to, ~or regulatory
authority over, the provision of commercial credit, In
any form, describe any initiatives undertaken by the
agency, or subject to its programmatic or regulatory
authority, that are directed toward women business owners
or that may be more likely to affect such owners in any
significant way. In your response, please detail such
program or authority and provide such statistical or
other data that may serve to describe the efforts of your
agency.
5. Please list all types of data within the control of your
agency regarding women-owned businesses indicating the
usage that your agency has for such data, the sufficiency
of the data, its reliability and any improvements in data
collection, retrieval or usage planned or desired by the
agency to better assist its efforts in this area.
In order for the Committee to prepare effectively for these
hearings, I would appreciate receiving your answers to the above
questions no later than May 2, 1988.
Sincerely,
JOHN J. LaFALCE
Chairman
JJLlfvp
PAGENO="0647"
641
Honorable Frank C. Carlucci
Secretary
Department of Defense
Washington, DC 20301-1155Mr. Secretary
Honorable George P. Shultz
Seoretary
Department of State
Washington, DC 2O52OMr. Secretary
Honorable James A. Baker III
Secretary
Department of the Treasury
Washington, DC 2O22OMr. Secretary
Honorable Donald P. Hodel
Secretary
Department of Interior
Washington, DC 2O21~OMr. Secretary
Honorable Richard E. Lyng
Secretary
Department of Agricultu~'e
Washington, DC 2O25OMr, Secretary
Honorable C. William Verity
Secretary
Department of Commerce
Washington, DC 2O23OMr. Secretary
Honorable Arm McLaughlin
Secretary
Department of Labor
Washington, DC 2O2lOMadas Secretary
Honorable Otis R. Bowen
Secretary
Department of Health and Human Services
Washington, DC 2O2O1Mr. Secretary
Honorable William J. Bennett
Secretary
Department of Educaticn
Washington, DC 2O2O2Mr. Secretary
Honorable Samuel B. Pierce, Jr.
Secretary
Department of Housing and Urban Development
Washington, DC 2O~t1OMr. Secretary
PAGENO="0648"
642
Honorable James H. Burnley IV
Secretary
Department of Transportation
Washington, DC 2O59OMr. Secretary
Honorable John S. Herrington
Secretary
Department of Energy
Washington, DC 2O585Mr. Secretary
Honorable Edwin Meese III
Attorney General
Department of Justice
Washington, DC 2O53OMr. Attorney General
Honorable James Abdnor
Administrator
U.S. Small Business Administration
Washington, DC 2O~416Senator Abdnor
Honorable James C. Fletcher
Administrator
National Aeronautics and Space Administration
Washington, DC 2051$6Mr. Administrator
Honorable Terence C. Golden
Administrator
General Services Administration
Washington, DC 2O~O5Mr. Administrator
Honorable Alan Greenspan
Chairman
Federal Reserve Board
Washington, DC 2O551Mr. Chairman
Honorable John A. Bohn, Jr.
President and Chairman
Export-Import Bank of the United States
Washington, DC 2O571Mr. Chairman
Mr. Eric Bloch
Director
National Science Foundation
Washington, DC 2O55OMr. Bloch
Honorable Thomas K. Turnage
Administrator
Veterans' Administration
Washington, DC 2OLI2OMr. Administrator
Honorable Lando W. Zech, Jr.
Chairman
U.S. Nuclear Regulatory Commission
Washington, DC 2O555Mr. Chairman
PAGENO="0649"
648
DEPARTMENT OF AGRICULTURE .
OFFICE OF ASSISTANT SECRETARY FOR 5DMINISTRATION
WASHINIOTON, D.C. 20250
Honorable John J. LaFalce
Chairman APR 2 71988
Committee on Small Business
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman~
Your April 19, 1988, letter to Secretary Lyng was referred to me for a
response. We responded to your inquiry in the following sequential order:
1. Executive Order 12138 requires that each Federal department and agency
"take appropriate action to facilitate, preserve and strengthen women's
business enterprise and to ensure full participation by women in the free
enterprise system." Please identify every Initiative your agency has
undertaken pursuant to this executive order, the impact of the
initiative, the office responsible for the initiative, your assessment of
the success or failure of each, and your recommendations for future
initiatives.
a. The Department of Agriculture was one of the first agencies to
publish procurement regulations (February 20, 1980), that included
goals for women-owned businesses. The regulations stipulate that
the procurifl9 agency will establish aggressive women-owned business
goals based on the annual review of advance procurement plans. The
impact of this initiative has been increased procurement dollars to
women-owned businesses and bated on that fact alone we believe it
has been a successful initiative. The Small and Disadvantaged
Business Utilization (SDBU) Office was responsible for this
initiative.
b. On April 4, 1984, a Secretary's Memorandum 9700-1 was issued to all
of USDA `s procuring agencies. The purpose of the memorandum is to
emphasIze and encourage Federal sector efforts that will improve
government services to women business owners and assure equitable
procurement opportunities (See Exhibit I).
c. An Assistant Secretary for Administration's Special Achievemer~t
Award has been established as an incentive to our procuremest
employees to enhance the contract opportunities for small and
disadvantaged businesses (including womQn-owned) in doing business
with the Department. The overall impaci has been the addit~en of~
women-owned businesses to our agencies' source ll~ti~and publicizing
the agencies and firms involved in the award process. The SD~U
Office was responsible for this initiative. This also has proven to
be a successful initiative because the Assistant Secretary for
Administration gives a plaque to the deserving agency, a
photographer takes pictures, top level management is present and a
reception culminates the event.
PAGENO="0650"
644
-2-
d. We conduct procurement assistance reviews of our major procuring
agencies to determine if regulations and policies concerning small,
minority, 8(a), women-owned and LSA have been initiated and are
understood. During the course of the review, we check the agency's
goal achievement in the preference program areas, source lists,
publications and conduct mini training sessions when appropriate.
The impact of the initiative has been better communication between
our SDBU Office and our field agencies and an ongoing learning
experience for all involved. The SDBU Office was responsible for
this initiative. This initiative has proven to be successful
because we can monitor whether the agency has met its goals,
developed source lists, maintained publications and if additional
training is necessary.
e. The SDBU Office participates in outreach seminars, conferences and
trade fairs that are centered entirely around women-in-business.
Further, we coungii~nd refer women to the contract or program
personnel in the agencies that can utilize their particular products
or services. We also suggest that they identify themselves on their
Standard Form 129, Solicitation Mailing List Application, as being
women-owned; this enables the Department to keep accurate records.
The impact has been the addition of literally hundreds of wo~n to
our source lists. The SDBU Office is responsible in part for this
initiative and the remaining credit goes to the various
organizations requesting our participation. This has been a
successful initiative because we can meet and counsel large numbers
of women at one time and acquaint them with the procedures for doing
business with the Department.
f. We have developed a fact sheet on women-owned businesses and the
purpose of the fact sheet is to briefly answer a few of the most
frequently asked questions by women entrepreneurs. The impact of
this initiative has been a handy and convenient tool to distributP
during conferences, mass malltngs, etc. which helps to reduce the
office's work load. The SDBU Office was responsible for this
initiative. We believe this has been a successful initiative
because we get repeated requests from our constituents for
additional copies.
g. As for future initiatives, we are currently engaged in a project
cafled Minority and Women Business Enterprise Enhancement Program
(MAWBEEP). This program is concerned with the participation of
minority and women-owned businesses in the procurement and program
opportunities of the Department. We are attempting to get program
officials just as active relative to program participation as the
procurement officials are with regards to procurement participation.
Towards encouraging commitment and creativity among USDA program
officials, we began a process to involve agencies in considering
ways to enhance program participation by minority and women-owned
businesses. We have asked our agencies to do the following:
PAGENO="0651"
645
-3-
1. to consider providing participation plans, goals, and
achievements by. sp~cif1c progvam areas r4ther than just agency,
summaries;
2. to consider disseminating Information and providing t*cPtnlca~
assistance to minority and women-owned businesses to increase
their ability to participate in USDA's programs; and
3. to give special recognition to agency employees, minority and
women-owned businesses as well as majority businesses that ha~è
made outstanding contributions to program participation and
related third-party contracting and subcontracting.
As part of this process, we are having the second annual observance
on July 28, 1988. We hope to have a dynamic key note speaker at the
10:00 a.m. opening program, with the participation of our Secretary,
Deputy, Under and Assistant Secretaries. During the program, we
will present special awards and our agencies, major corporations and
trade associations will have exhibit booths around the patio. Our
affair will close with a catered reception on the patio.
2. Please supply the Committee with the following information for each of
the last four years: (A) the number, total dollars, and relative
percentages such figures represent for all contracts awarded by your
agency to women-owned businesses identifying separately awards made
pursuant to section 8(a) of the Small Business Act; (B) the efforts made
by your agency to ensure that women-owned businesses appear on government
bidders lists and are being forwarded solicitation packages for
contracting opportunities; and (C) total dollar amount of subcontracting
commitments made by large prime contractors with your agency and efforts
to encourage primes to utilize women-owned small business concerns.
a. See Exhibit II. In this particular exhibit we indicated percent of
total procurement and percent excluding commodities becaus~ food
commodity purchases continue to dominate our statistics and heavily
influence the achievement of all our procurement preference program
goals. Commodities are purchased by our Agricultural Stabilization
and Conservation Service (ASCS), in support of P.L. 480, Ti~tle II
and through the price support activities of the Commodity Credit
Corporation. ASCS purchases large quantities of grains, oils,
processed cereal products, and dairy products which have limited
small business participation. Other food purchases are made by the
Agricultural Marketing Service (AMS), in support of the National
School Lunch Program and other nutritional feeding programs. AMS
purchases meat, poultry and canned fruits, vegetables and juices.
Meat and poultry products are purchased biweekly in large quantities
and while there is small business participation, the dollar value is
limited because of plant and production capacity. More than sixty
percent (60%) of our total procurement budget is tied to the
commodities area.
b. See responses in 1 b, c and d above.
PAGENO="0652"
646
-4-
c. We track our subcontracting data from the Standard Form 295, Summary
Subcontracting Report. This is a standard federal form which needs
to be revised to include women-owned business in the commitments
section.
3. *If your agency makes grants or loans, please supply the following
information for each of the last four years: (A) the number, total
dollars, and relative percentages such figures represent for all such
grants or loans made to women-owned businesses; and (B) efforts made by
your agency to encourage the participation of women in grant and loan
programs.
a. The Farmers Home Administration administers a Business and
Industrial Loan Program (B&I).
~isted below are B&I data for the last four years.
FISCAL NUMBER OF NUMBER OF TOTAL DOLLAR DOLLAR AMOUNTS
YEAR TOTAL LOANS LOANS TO WOB AMOUNT TO WOB
1984 73 - 0 - $124,352,250 - 0 -
1985 49 3 61,337,500 $3,411,000 (5.5%)
1986 35 - 0 * 54,802,600 - 0 -
1987 67 2 95,699,770 2,084,000 (2.1%)
During a telephone conversation with Mrs. Lavonne French on
April 22, 1988, she indicated these figures should not include
statistics related to farming.
b. We also have the Small Business Innovation Research (SBIR) Program.
Our Cooperative State Research Service agency administers this
program (See Exhibit III). Unfortunately, we only have statistical
data for women since Fiscal Year 1985. Listed below are the SBIR
data for the last three fiscal years.
FISCAL NUMBER OF NUMBER OF TOTAL TOTAL DOLLARS
YEAR GRANTS WOB GRANTS DOLLARS TO WOB
1985 34 3 $3,150,946 $312,2~6 (9.9%)
1986 43 1 3,555,845 144,000 (4.0%)
1987 35 1 3,505,971 49,165 (1.4%)
PAGENO="0653"
647
-5-
c. In order to encourage the participation of women in grant and loan
programs, we attend and participate in state meetings and
conferences. We have publications which describe in detail the B&I
Loan and SBIR Programs.
4. If your agency has programs relating to, or regulatory authority over,
the provision of commercial credit, in any form, describe any initiatives
undertaken by the agency, or subject to its programmatic or regulatory
authority, that are directed toward women business owners or that may be
more likely to affect such owners in any significant way. In your
response, please detail such program or authority and provide such
statistical or other data that may serve to describe the efforts of your
agency.
This particular one is not applicable to us.
5. Please list all types of data within the control of your agency regarding
women-owned businesses indicating the usage that your agency has for such
data, the sufficiency of the data, Its reliability and any improvements
in data collection, retrieval or usage planned or desired by the agency
to better assist its efforts in this area.
We receive quarterly computer print-outs which indicate number of
contracts and dollar amounts to women-owned businesses. In addition, we
maintain capability statements and solicitation mailing list applications
in our agency. This information is used to make reports to the Small
Business Administration, other agencies, etc. and to use when making
referrals to our various sources. The SDBU Office is in the process of
establishing information regarding our capability statements and
solicitation mailing list applications.
Hopefully, this information will assist you with your upcoming hearings.
Sincerely,
J N J. FRANKE, JR.
ssistant Secretary
for Administration
Enclosures
PAGENO="0654"
648
EXHIBIT I
UNITED STATES D~PAWVMENT OF AGRICULTURE
OFFICE OF THE SEC~E1'A~Y
WASHINGTON, 0. C. 20250
SECRETARY'S MEMORANDUM _____________
Women-Owned Businesses
PURPOSE
To emphasize and encourage Federal sector efforts that will
improve government services to women business owners and assure
equitable procurement opportunities.
2 RESPONSIBILITY
The President has established a National Initiative Program on
Women's Business Ownership. One of the program's components is
the White House Interagency Cormnittee on Women's Business
Enterprise. The Corimittee will promote, coordinate and monitor
Federal sector efforts on behalf of women business owners.
The Department has been a strong advocate for women entrepreneurs
interested in contracting opportunities with USDA. In Fiscal Year
1983, our women-owned business goal was $17 million, and we
achieved $36 million, an increase of 211 percent over our
projection. Each USDA agency with procurement authority is
charged with the responsibility of continuing and furthering our
efforts on behalf of women business owners.
3 SCOPE
On June 20, 1983, the President stated "Small business is the
gateway to opportunity for those who want a piece of the American
dream. One of the most exciting trends in our country is the
surge in numbers and size of women-owned businesses. Almost 3
million women-owned businesses bring about $40 billion a year - a
solid contribution to the health of our economy at every level of
society." The President further directed the U.S. Small Business
Administration (SBA) to develop and conduct conferences for women
who are owners of their own businesses or hope to be in the
future. ~ in major cities
throughout the country which have a large representation of
women-owned businesses. Three~successful conferences have already
been completed.
DISTRIBUTION: 97 OPI: OSDBU
PAGENO="0655"
649
SM 9700-1 April 4, 1984
4 SPECIAL INSTRUCTIONS
a To comply with the President's initiative, I appointed the
Deputy Assistant Secretary, Marketing and Inspection Services,
as the Department's representative to the White House
Interagency Conanittee on Women's Business Enterprise.
b This Administration encourages all agencies to fully cooperate
with SBA by participating in as' many of the conferences as
possible.
c The Office of Small and Disadvantaged Business Utilization is
coordinating the Department's effort at the conferences and
will be contacting the agencies in the near future.
d Your support of these conferences and the Department's
women-owned business goals would be an excellent way to
demonstrate agency backing for the President's initiative.
SEC TARY OF AGRICULTURE
2
PAGENO="0656"
EXHIBIT 2
ti S I)eei~tr~ tmeeri 1; cf Acir~ i c~i I tLLr?
wo~nen--O~~in~J 1n~SS ~chzeve~nents
Fis~a1 Years 1984 ~hrouqh 1987
FY 1984 FY 1985 FY 1986 FY1987
W.O.B TOTAL DOLLARS 27,877,000 40,381,000 32,320,000 38,784,000
Percent of Total Procurement 1.6 h 2,0 % 1.5 %
Percent Excludinq Food Commodities 38 % 5.2 % 3.0 7.
W.O.B. NUMBER OF ACTIONS 751 706 73L~
Percent of Total Procurement 4.3 7, 3.9 7. 3.8 ~/.
Percent Excludiriq Food Commodities 5.1 % 4.8 u 4.5 7.
8(a) W.O.B. TOTAL DOLLANS 4,580,000 8,894,000 6,342,000 13,898,000
Number of Actions 33 59 90
PAGENO="0657"
- 651
f THE $ECRETARV OF COMMERCE
54 j Washington, D.C. E0230
MAY 02 1988
-~VED
Honorable John 3. LaFalce.
Chairman, Committee on Small Business
House Of Representatives `988
Washington, D.C. 20515 -
Dear Mr. Chairman: S S
Comrnue u~ ~ Bu~I$s3
Thank you for your letter regarding women's business
enterprise. S
The Department of Commerce is proud of its work in support of
women's business ownership. In fact, our Assistant Secretary
for Administration, Kay Bulow, was named Women Business Owner
Advocate of the Year in 1985 by a national women's group.
Commerce's initiatives, among the most effective in the
Federal Government, are so extensive that I have enclosed a
chronology of the significant activities and achievements.
Since the signing of Executive Order 12138, the Department has
increased employee awareness of women's business enterprises
through the commitment of key personnel. Our management
efforts are supported by administrative policies and
procedures that require program and procurement personnel to
make effective use of available reference materials for
identifying women's businesses. S
The Department also created new reference resources from the
MegaMarketplace series of national business conferences, As
co~convener of the conferences, together with state and local
government, Commerce brought government and industry together
with women business owners. The conference directories
provide not only government personnel with information about
additional businesses that can meet their agency's needs, but
also inform women of who is buying what in both the public and
private sectors.
Finally, we successfully use small purchasing as a way to
introduce businesses to our buying needs and to the Fedetal
contracting system. I think you will agree that the
Department of-Commerce's achievements In the promotion and use
of women's businesses are significant ones.
Thank you for the opportunity to tell you about our program.
Sincerely,
Secretary of Commerce
Enclosure
75 Years Stimulating America's Progress * 1913-1988
PAGENO="0658"
652
Enclosure
1. Initiatives in response to Executive Order 12138.
o August, 1979 to June, 1981 - The Department of Commerce (DOC)
~saigned a business specialist to design and establish a program
~ women business owners in the OSDBUfr Responsible
organization: Office of Small and Disadvantaged Business
Utilization
o January, 1980 - Published The Guide to the U.S. Department of
for Wommm ~mminegn Owners. Responsible organization:
Office of Business Liaison
o April, 1980 - Published A Directory of Federal Government
~p$r&es~Asa~stance Proqrains for Women Business Owneré.
Responsible organization: Economic Development Administration
o June, 1980 - C~fltr1buted to Annual Report to the President,
~ The report, prepared by an Interagency Committee on
Women's Enterprise, outlined the efforts made by the Federal
Government to support Executive Order 12138. To quote from the
report, "Only SBA and the Department of Commerce had developed
any programs specifically related to women business owners."
$ji~hteen Commerce Department offices reported on efforts and
initiatives in support of the Executive Order. Responsible
organization: Office of Business Liaison
o October, 1980 - Women-Owned Businesses 1977 and Selected
~ g~ Wqmen-Owmed Business 1977 published by the
~u~eau of the Census4. The census of women-owned businesses is
conducted every five years to obtain basic economic data on
businesses owned by women. Responsible organization: Bureau of
the Census
o October, 1983 - Published ASK~j~, a listing of U.S.
Department of Commerce programs to aid women business owners;
one of our most popular publications. Responsible organization:
Assistant Secretary for Administration
- -
/0 January, 1984 to Present - Assigned a Women's Business ~-.
/ Sp4cialiBt to OB1~U to manage Coiü~ërce Women's Business Program. \
po~ is the onl Federal agency with this full-tine position.
1~esponsible rganization: Assistant Secretary for Administration
o March, 1984 - Organized a marketplace for a Whi e use---
~~fere?nce f or women business owners. Responsible organization:
Assistant Secretary for Administration
PAGENO="0659"
653
-2-
o August, 1984 - Outreach to 10,000 women-owned businesses in
an effort to enhance the SEA Procurement Automated Source System
(PASS). Responsible organization: Assistant Secretary for
Administration
o August, 1984 DOC members of Interagency'Comnittee on
Women's Business Enterprise (IACWBE) initiated a study of PASS in
an effort to improve its response to women business owners.
Responsible organization: Intergovernmental Affairs
o September, 1984 - IACWBE published Women Business Owners:
Selling to the Fedetal Government, a 65 page handbook.
Responsible organization: Intergovernmental Affairs
o October, 1984 IACWBE produced a series of one day
procurement conferences for women in 17 cities on how to sell to
the Federal Government. Responsible Organization:
IntergOvernmental Affairs
o October, 1984-1987 - Featured minority women business owners
at Minority Enterprise De*telopment Week event. Responsible
organization: AsCistant'Secretary for Administration
o February, 1985 - Business America, a DOC publication,
featured an examination of the `growing role of American women in
international business. Responsible organization: International
Trade Administration
o April, 1985 to present - Industry Advisory Committees for
Trade PoliCy, a cooperative effort of several Commerce offices,
continues to target business women with intetnational trade
experience to serve on these important Committees, Responsible
organizations: Assistant Secretary for Administtation
o May, 1985 A low cost and successful forum fat women
business owners was.otganized by the (OSDBD). The capabilities
of 150 businesSes were matched with DOC program officers having
budget author ity. Each attendee had at least two private
interviews with.a DOC official. Responsible organization:
Assistant Secretary `for Administration
o May 1985 J~uIU~I 4"'.S ~
~ was distrthuted to heads of contracting
offlces. ~~`It states that "All Department'purchasing and
contracting offices are asked to take affirmative action to
assist women-owned businesses in securing a fair proportion of
the Department's procure1de~nts.4' `The new policy will instate that
women-owned firms are included on each procurement mailing list
and that all prime contractors will include women-owned firms on
their vendors lists for each requirement." kesponsible
organization: Assistant Secretary for Administration
PAGENO="0660"
654
-3-
o June, 1985 - Participated in a trade mission for women in the
service industries to London, Frankfurt and Madrid. Responsible
organization: International Trade Administration
o June, 1985 - Attended a World Congress of Women Business
Owners in Madrid along with women from 18 nations, Responsible
organizations: Assistant Secretary for Administration and
Intergovernmental Affairs
o July, 1985 - Assistant Secretary for Administration,
Kay Bulow, was named 1985 Women Business Owner Advocate of the
Year by the National Association of Women Business Owners as a
result of her leadership at the Department of Commerce.
Responsible organization: Assistant Secretary for
Administration
o September, 1985 - DOC published an annotated bibliography of
literature related to women business owners, This was an effort
to prevent duplication'of efforts in research; to provide a
research source f~r writers and women's program planners; and to
insure that statistics on women entrepreneurs are maintained.
1~esponsible organization: Assistant Secretary for Administration
o September, 1985 - ~ a direct~yo~
~u~n ~s~ess~wn*~ J~J~ w~ ~ ~
and~ to key persons in the public and private sector. Responsible
organization: Assistant Secretary for Administration
o October, 1985 - Outreach to 25,000 women business owners,
continuing the effort to add to the PASS data base. There are
now 28,000 women-owned firms profiled in PASS out of the total of
143,604 businesses in PASS. Responsible organization: Assistant
Secretary forAdministration
o October, 1985 - DOC participated in women's business
conferences in Kansas City and Syracuse. Responsible
organization: Assistant Secretary for Administration
o January, 1986 - Special efforts were made to include women in
the DOC Small Business Innovation Research Program. Responsible
organization: Assistant Secretary eor Administration
o May, 1986 - ~ dS ~ a
national procurement conference for women business owners, in
Washington, D.C. Computer matched attendees with a government
buy list and provided specially designed workshops for the
particular needs of women-owned small businesses. Responsible
organization: Assistant Secretary for Administration
PAGENO="0661"
655
o May, 1986 - Published directory containing business profiles
of women attendees at MegaMarketplace. Also included were
listings of Federal, prime contractor, state and local
government purchasing and program officials. Responsible
organization:. Assistant Secretary for Administration
o August, 1986 Special efforts were made to include women in
the White Nouse Conference on Small Business. Responsible
Organization: Assistant Secretary for Administration
o April, 1987 - Sponsored, and continued as lead agency for, a
~ procurement conference for 1,000 women in
WashinW~1Y.C~. ffàlf of the attendees were minority. Published
a directory featuring all conference attendees. Responsible
organization: Assistant Secretary for Administration
o May, 1987 ~ ~ was held in
Los Angeles and a directory was published. All directories were
distributed, to contracting offices. Responsible organization:
Assistant Secretary for Administration
o September, 1987 - A compendium of the two 1987
MegaMarketplace directories was published and distributed to all
participants and public and private sector purchasing offices. It
is now in its second printing. Responsible organization:
Assistant Secretary for Administration
o August, 1987 - ___________________________
Q~~.~usinesses~ As part of its econoiniäàensus, t~he Census
Bureau examines how women began their business, where they got
their money, their age, marital status, etc. Responsible
organization: Bureau of the Census
o Continuing efforts - The OSDBU routinely provides 1isti~gs of
women business owners for contracting and program contracts and
opportunities to showcase goods and services for women business
owners from all areas of the country.
The Office of Business Liaison (OBL) otfers monthly briefings for
National Association of Women Business Ot~ners (NAWBO) members
featuring DOC programs and services. OBL attends monthly NAWBO
meetings and inc)~udes NAWBO leadership in all mailings concerning
Commerce activities.
PAGENO="0662"
656
Our assessment of each of these initiatives as individual efforts
and as a whole is that they achieved their purposes very well. As
you can see from the statistics below, we have achieved
considerable progress by increasing general awareness of the
availability of women's businesses to meet our procurement needs,
and through our efforts to bring buyers and sellers together in
effective marketplace settings.
2. (a) Women-owned Business Contracting Information
Number Total Percentage of
of Actions Dollars Total Contracts
FY 85 145 $ 7.0 million 2.2%
FY 86 193 13.1 million 3.4%
FY 87 196 20.0 million 5.4%
FY 88* 100 10.2 million 5.0%
*(2 Quarters data)
Women-owned 8(a) Contracting Information
Number Total Percentage of
of Actions Dollars Total Contracts
FY 85 29 $ 2.6 million 43.4%
FY 86 49 5.5 million 55.4%
FY 87 58 8.8 million 56.9%
FY 88* 29 6.7 million 73.5%
* (2 Quarters data)
(b) Efforts made by Commerce to ensure that women-owned
businesses appear on bidders lists and are being forwarded
solicitation packages for contracting opportunities:
Acquisition Letter No. 25, Woman-owned Business Contracting
Initiatives, was distributed to heads of Commerce contracting
offices in May, 1985. The policy requires all Department
purchasing and contracting offices to take affirmative action to
assist women's businesses in securing a fair proportion of the
Department's procurements by including them on procurement mailing
lists. Prime contractors are also required to include women-owned
firms on their vendor's lists for subcontracting needs.
A strong advocacy program, expressed during activities such as
annual goal setting and accomplishments reporting, and a
secretarial level Management by Objective process also figure
prominently in the Department's level of compliance with stated
goals and policies.
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657
(C) Total subcontracting commitments since ~Y 85: $97,184,148.
Prime contractors are encouraged to make use of women's businesses
through standard contract clauses covering the use of these
enterprises and by our efforts to include as many primes as
possible at our marketplace events.
3. Agency grant programs do not currently emphasize the collection
of data relating to the gender of the recipients.
4. Programs relating to commercial credit Not applicable
5. The primary source for achievement data related to women~
owned businesses is our procurement data base. This data is
considered very reliable by the Department and serves as the basis
for our annual goal projections, quarterly Management by Objective
reporting and annual report to the SBA.
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658
OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR ACQUISITION
WASHINGTON, DC 20301-3061
F 12 MAY igqe
Honorable John J. LaFalce
Chairman, Committee on Small Business
House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
Please refer to your letter of April 19, 1988 to the Secretary
of Defense, Department of Defense (DOD), which informed us that your
committee has scheduled a series of oversight hearings on the
subject of women's business enterprise, which, in part, will deal
with government policies and programs affecting women business
owners. Further, your letter requested that we supply the Committee
on Small Business with answers to five numbered questions.
We are delighted to furnish information on DoD accomplishments
on the subject of women's business enterprise. Women-owned
businesses play an increasingly important role in DoD procurements.
Much of the success is the result of the presidential authority of
Executive Order 12138 of May 18, 1979, by which departments and
agencies were directed to take affirmative action in support of
women's business enterprise in appropriate programs and activities,
including, but not limited to, procurement. This program was
strongly embellished by Executive Order 12426 of June 22, 1983,
which established the President's Advisory Committee on Women's
Business Ownership. Since inception, DOD has strongly adhered to
the intent and spirit of these executive orders and our procurement
accomplishments in this program reflect it. Though we will discuss
some of the details more fully later, we would like to provide an.
order of magnitude of program growth. In FY 1979, in response to
the executive order, the DOD purchased $70.6 million in products and
services from women-owned business firms. This significant
achievement has continued through the concerted efforts of field
commanders, small business specialists, contracting officers, and
many other specialists who take the women-owned business program as
a serious matter. Through their abundant energies, the DoD, in FY
1987, awarded over $1.1 billion to women-owned business firms, a new
Federal record that is, indeed, exceedingly. satisfying. From the
vantage point of FY 1988 experience, there is no reason why this
progress should not continue through the current and succeeding
years.
To facilitate your review, we will repeat your question, which
will be followed by our response:
PAGENO="0665"
659
2
Question #1 Exechtive Order 12138 requires that each Federal
department and agency "take appropriate action to fdcilitate,
preserve and strengthen women's business enterprise and to ensure
full participation by women in the free enterprise system." Please
identify every initiative your agency has undertaken pursuant to
this executive order, the impact of the initiative, the office
responsible for the initiative your assessment of the succesC or
failure of each, and your recommendations for future initiatives,
Response #1 - Since inception of the program, hundreds of DoD
initiatives have been undertaken by hundreds of field activities
authorized to purchase products and services. These initiatives vary
location to location to meet the individual needs of buying
activities. It would be almost impossible to. capture all of the
initiatives since 1979; however, we can cite some qf the major
initiatives, and by doing so, place the program intg proper
perspective.
o Establish Regulatory.Basis for DOD Wo~en-owhed Business
Program - DoD first issued guidance to procurement personnel in
1979. That guidance can currently be foun4 in Subpart 19.9,
entitled Contracting Opportunities for Women-Owned Small Businesses,
of the Federal Acquisition Regulation (FAR). Enclosure 1 covers FAR
references to women-owned small business, specifically Subpart 19.9,
Subpart 19 * 304 (Solicitation Provisions), and Subpart 52.219-3
(Women-owned Small Business Representation). This initiative
continues to work very well and certainly will continue t~ be a part
of the regulatory requirements affecting operational personnel.
o Alter ~Repo~ting .~atistigs to Ref lect ~te, Women-owned
Bu~in5ss .Progra~ - During 197~,. DoD also developed guidance to field
personnel to cnpture procurement statistics on awards to women-owned
businesses The guidance can currently be found in Subpart 4 6
entitled Contract Reporting of the Defense Federal acquisition
Regulation Supplement (DEARS). Enclosure 2 is an extract of DEARS,
which provides guidance to procurement personnel on coding contract
awards to women-owned b~sinesses.' The vehicie for collecting award
data on contracts e~qeeding $25,000 is DD Form 350, Individual
Contract Action Report a copy of which is appended as Enclosure 3
Periodically, the DO Form 350 is modified aS need for new data is
generate4. There is no plan to change our collection data for
women-owned small business, inasmuch as the current system suffices.
o EstablIsh Goals - Since inception o~ the program in FY
1979, the DoD planned to set women-owned business goals for the
Military Services and the Defense Agencies. ~~~ginning in 1980, all
field activities were assigned annual goals and developed very
active programs in fulfilling women-owned business goals The
annual goals assigned to individual activities were generally met
but not always met However even when not m5t, the DOD aggregate
of dollars flowing to women-owned business invariably emceeded the
PAGENO="0666"
660
3
goal. Enclosure 4 reflects performance against goals. Even though
the goals were most challenging, they were exceeded year after year.
They were only attained through careful nurturing of individual
firms by small business specialists. At times, we were astounded at
our success, especially since w~e~6'dThuaine~s~asa
~ the defenseproduOtswe purchase..
In'~the"near'~future ~-we-~expect~a---leveling offi of awards ~to
-women~ownedbusiness;~ü~~there-isasubstantial growth of
manufacturers~in ~thatbusiness~ sec~bt. Our goal setting program for
women-owned business proceeds well. We do not pla.n to alter the
program, which is geared to the concept of assigning challenging
goals to the Army, Navy, Air Force, and the Defense Agencies.
o Develop Outreach Programs - Outreach is the term
generally used to describe the actions taken by DoD activities to
identify and encourage business firms to compete for government
contracts. In its broader context, outreach also includes actions
taken by the DOD to assist contractors that are,doing business with
the government, including women-owned small bu~inesses, in resolving
problems encountered in the performance of their DoD contracts.
Inherent in the concept of outreach is building relationships with
other activities for the furtherance of small and disadvantaged
business. The success of the DoD Small and Disadvantaged Business
Utilization Program is properly traceable to the integral part
played by outreach programs.
Outreach programs vary location to location as the result of
the types of commodities, systems, or services procured and the
supply demands placed upon procurement activities. A typical
outreach program at the local level would include: the day-to-day
f~~ata1og~ and similar references for new sources; a
thfl-freeThumbe1~ in place to assist firms desiring to do business
with the government; active participation in numerous Federal,
state, and other procurementconferences; liaison with~ other.
government agencies, such as the Department of Commerce and the
Small Business Administration; `~fl ~open-door policy~' on counseling
business firms; assisting local and state governments by providing
training~-to~-their procurement specialists so that they can more
effect~ivelycounsel~theirClieflt5 on doing business with the
government; sponsoring - commodity/trade~ fairs~ at the local activity;
and engaging in national outreach efforts to the extent practicable,
since this activity will be constrained at times as a result of
limited resources and travel funds.
Specia~l outreach efforts are frequently undertaken to address
known procurement deficiencies, such as a paucity of sources for
competition, a lack of interest by industry in doing business with
the government, a surge of military requirements in new commodity
areas, and a lack of in-depth knowledge of the nature of øertain
highly specialized industries. At times there is an urgent need to
identify the composition of an industry, such as clothing and
PAGENO="0667"
661
apparel, or the ethnic display of individual industries for purposes
of attracting new firms or reducing historic barriers to
competition. To assure success of special outreach programs, DOD
has utilized the services of Dun and Bradstreet, Boone Young and
Associates, and othets.
DoD outreach requires continuous coordination and cooperation
among all participants. In order to provide responsible and
responsive counseling and assistance to the broad variety of
business firms indluded in the DoD Small and Disadvantaged Business
Utilization Program, small business specialists must have an
intimate knowledge of the entire DoD acquisition process, technical
data, marketing strategies, production processes, contract pricing,
financing concepts end practices, quality assurance requirements,
and the Federal cataloging and supply systems. They must know who
buys what, not only within their assigned activity, but also the
Military Services and other Federal agencies. They must also know
the types of managerial and financial assistance that are available
from the Small Business Administration, Department of Commerce, and
other Federal agencies. For the individual activity, maintaining
currency in these various and dynamic areas requires day-.to-~day
rapport and coordination with other disciplines within their own
activity, with the Military Services, and with other Federal
agencies. In addition, as a result of the intensive interest by the
Congress in small business matters, DOD small business specialists
have many opportunities to coordinate with and support members of
Congress, particularly in conducting procurement outreach
conferences and in assisting in the resolution of problems referred
to members of Congress by representatives of small business and
other firms.
To be successful in these efforts, DOD small business
specialists must coordinate their program implementation concepts
and procedures. Coordination to this extent serves to maximize the
returns from their efforts, to optimize the expenditure of
resources, and avoid duplication. For example, when one of the
Military Services is designated as coordinator fc~ a Federal.
Procurement Conference~ sponsored by Congressional rep~esenTtatives,.
coordination is effected with the Department Of ~omnteDce for Federal
civilian agency partioipation, the Small Business Administration,
and other agencies within DoD, including the other Military Services
and the Defense Logistics Agency.
DOD small business specialists, in pursuijig their individual
outreach programs in support of women-owned enterprises mnst
maintain effective lthes of communication ~zith other small business
specialists within the DOD and the Federal agencies. ~This is a very
critical element in assuring program effectiveness and efficiency
The magnitude and complexity of some of these outreach programs
require extensive im~terplay, not only at the working levels, but
also at the highest levels of management to facilitate the
PAGENO="0668"
662
5
coordination of day-to-day activities. To that end, DoD routinely
publishes current rosters of personnel assigned to the DOD Small and
Disadvantaged Business Utilization Program. The title of that
publication is Small Business Specialists (see Enclosure 5). It is
frequently used in connection with advancing women-owned businesses.
Some of the programs that actively involve DOD small business
specialists in outreach endeavors stem from the White House Small
Business Conferences, Carribean Basin Initiative, Puerto Rico
Initiative, Southwest Border Initiative, and other White House
Initiatives, such as the Interagency Committee on Women's Business
Enterprise, a committee on which DOD serves as an active member.
Other programs stem from sponsoring or supporting procurement
outreach conferences and trade fairs, involving members of Congress
and other Federal agencies, including the Department of Commerce.
Some outreach involves such technical specialties as contract
financing, size standards, and the Certificate of Coinpotency, which
requires extensive coordination with the Small Business
Administration. Other outreach efforts involve American Indian
tribes, Federal Prison Industries, the National Industries for the
Blind, the National Industries for the Severely Handicapped, and
cooperative agreement and procurement outreach progra~us requiring
interface with many state and local governments, especially economic
development agencies.
One of the most important ways DoD keeps abreast of outreach
endeavors is through the strong support given to the thirteen OSD
sponsored Small Business Area Councils organized throughout the
country. DoD small business specialists contribute considerably to
the success of these councils. They also learn from other Federal
agencies at these councils, which have proven to be most effective
in developing and maintaining good working relationships with
counterpart small business specialists throughout the Federal
government. DoD small business specialists frequently usethese
councils as a forum to advance the women's business enterprise.
Outreach programs within the DOD have contributed considerably to
strengthening women-owned businesses. Inasmuch as outreach
approaches have been so helpful in promoting awards for women-owned
businesses, we do not intend to diminish our efforts in this area.
o Develop Pro~ram Statistics - One of the key initiatives
relates to the orderly gathering and analysis of data affecting
women-owned business. By maintaining close tabs year after year, we
are able to place the women-owned small business program in
perspective as a proper subset of all small business, Women-owned
small businesses have, in defense business, grown rapidly as
compared with non-women-owned businesses. Enclosure 6 is a display
of the DOD Women-owned Small Business Program, compared with total
business awards by the DoD for each fiscal year, beginning Fl 1979
and ending Fl 1987, with small business awards for~the same period,
with small disadvantaged business awards, and with awards to
PAGENO="0669"
663
6
women-owned business as a percentage of total awards, small business
awards, and small disadvantaged business awards.
Question #2 Please supply the Committee with the following
information for each of the last four years:
a. the number, total dollars, and relative percentages such figures
represent for all contracts awarded by your agency to women-owned
businesses identifying separately awards made pursuant to section
8(a) of the Small Business Act;
b. the efforts made by your agency to ensuz~e that women-owned
businesses appear on government bidders lists and are being
forwarded solicitation packages for contracting opportunities;
c. total dollar amount of subcontracting commitments made by large
prime contractors with your agency and efforts to encourage primes
to utilize women-owned small business concern~.
Response .#2 - Enclosure 7 displays the DoD awards over $25,000
to women-owned small business and women-owned small business 8(a),
as compared with total business, small business, and small
disadvantaged business awards for FY 1984, FY 1985, FY 1986, and FY
1987. The' `growth rate* for that' periodis16:O%" for women-owne4 small
business and 38 * 0% for women-owned small business' under the" 8 (a7
~ptogt~ain. The growth rate for total awards during the same period is
2.6%; For the longer period covered under.Eficlosure 6, that is, Fl
1979 - Fl 1987, the growth rate for women-owned small business is
41.2% as compared with the growth rate of 11.2% for total awards.
Both Enclosures 5 and 6 reveal that awards towoinen-owned businesS
as a percentage of total awards made by~the DOD to domestic industry
r~~Imss than 1%, which we find neither disturbing or alarming, even
though women-owned business in the United States now represent about
25% of domestic small business. Thecurrent~makeupofwo1nen-owned~
b~sineS~'Yev~ls ~"that'~,ery `small* portion relates to manufacturing
of products-and-commodities purchased by the DoD As indicated
áböve, a quantum leap in "the percentage of women-owned business'
awards-to-total-DoD-awards-will only be possible through major
restructuring of the women-owned business sector~.
Much of the goods and services procured by the `DoD is through
the use ~f bidder's lists coded to the appropriate Federal Supply
Class (FSC). All of our buying activities maintain bidder's lists
to assure thmt our supply needs are met, with competitive prices
offered by bidders. The operatives in the DoD purchasing community
are very attentive to the maintenance of bidder's lists, the basis
for which resides in the Standard Form 129, S~licitatiOn Mai~ling
List Application. These lists identify whether a firm is small
business, other than small business, disadvantaged business, ~hd
women-owned business. ~hroughout the DoD, there is no problezr in
women-owned businesses receiving solicitation packages for
PAGENO="0670"
664
7
contracting opportunities. In general, our bidder's lists are
monitored very closely. When women-owned business firms are
identified, they are quick to be added to the bidder's lists. We
feel that much of our success with the women-owned business program
is traceable to the attention paid to these lists at all of our
buying activities.
In Fl 1987, the DOD prime contractors awarded a total of $53.1
billion in subcontract awards, of which $21.6 billion or 40.6 went
to small business. In Fl 1986, the DoD prime contractors awarded
38.5% of subcontract awards to small business, We do not colleô
data ~ business because we-lack
authority todo so~. The* DoD,Thowever, within its - statutory~
authority encourages defense primeThontractbrS~tdeveloThTviab]e
women-owned small business program desig~edtO~increasethe~-number
and dollar awards to women-owned~smallbusineSS. SOmedefens~riafe
contractors have established voluntary programs~tó do this Fhdwe~er,
without a mandatory program, they are not eagei~to seize thö
~initiative in this area because of cost and oth~er reason~. `Sóm~
firms are quick to indicate that fragmenting the'purchasing~actiVit~'
to assure that data on women-owned business arc collected is not~
high on the action agenda.
Question #3 - If your agency makes grants or loans, please
supply the following information for each of the last four years
a. the number, total dollars, and relative percentages such figures
represent for all such grants or loans made to women-owned
businesses;
b. efforts made by your agency to encourage the participation of
women in grant and loan programs. -
Response #3 - The DoD does not make grants or loans to U.S.
business firms.
Question. #4 - If your agency has programs relating to, or
regulatory authority over, the provision of commercial credit, in
any form, describe any initiatives undertaken by the agency, or
subject to its programmatic or regulatory authority, that are
directed toward women business owners or that may be more likely to
affect such owners in any significant way. In your response, please
detail such program or authority and provide such statistical or
other data that may serve to describe the. efforts of your agency.
Response #4 - The DOD is not engaged in commercial credit and
related activities.
Question #5 - Please list all types of data within the control
of your agency regarding women-owned businesses indicating the usage
that your agency has for such data, the sufficiency of the data, its
PAGENO="0671"
665
8
reliability and any improvements in data collection, retrieval or
usage planned or desired by the agency to better assist its efforts
in this area.
Response #5 - The-DoD~useS DD~ot~i~5Oás its principal devicm
to capture data on women-owned busineSsawards. It has been a very
successful device over the years. We anticipate no major changes to
it. Periodically, as ne~, legislation comes into being, certain
adjustments are made to the DO Form 350. Currently, modifications
to the form are being made to reflect Public Law 99-661 and Public
Law 100-180. These modifications affect small disadvantaged
business and historically Black colleges and universities and other
minority institutions. We consider the data collected as both
sufficient and reliable. 0ne~ improvement in data collection relates
to defense subcontracting. As discussed above, prime contractors
are not required to report subcontracting awards to women-owned
small businesses, that is, it is a voluntary, not a statutory~
program.
In sum nin9 up, we would be remiss if we did not affirm that the
DOD maintains a high degree of visibility for the women-owned small
business program, which is an integral part of the way we do
business. As indicated above, we have assigned goals Since FY 1980
to our buying activities for awards to women-owned small business.
Further, we expend considerable resources in identifying and
providing counseling to women-owned small business on prime and
subcontracting opportunities. It is not by accident that three of
our major small business publications bear the name of women-owned
business on its covers. They are: Smal]~ Business Specialists; Qni~
to the Defen~e Contracting Regulations f~r Sm~ll ~us.iness. Small
Disac~va~tage~ Business Woi~te~-gwned Bus~ness (Enclosure 8) and
~ui4e to 1~e Defense Contraçt~ Finance Regulations ~or Sm~ll
B4slness Small Disadvantage~ Business Women-owned Business
(Enclosure 9) The visibility of women-owned business is
accentuated by our publications, as well as by our procurement
conferences (congressionally sponsored and others) and periodic
training conferences for our small business specialists situated at
contracting and contract administration activities.
The Department of Defense is pleased to furnish information on
the subject of women's business enterprise.
Sincerely,
* ~HQflAC~' . ~CROUCB *
* Director
Enclosures
PAGENO="0672"
19.808
whether its contractor shall be required to provide a
performance bond.
19.808 Presward considerations.
The contracting officer should request a preaward
survey of the SBA's contractor whenever considered
useful. A cognizant contract administration office may
be requested to assist in reviewing a specific element of
responsibility.
19.809 Preparing the contracts.
19,809.1 General.
(a) The contr5ct to he awarded by the agency to the
SDA shall be prepared i5 accordance with agency pro-
cedures and in the same detail as would be required in
a contract with a business co.ncern. The contracting
officer shall use the Standard Form 26 as the award
form, except for construction contracts, in which case
Standard Form 1442 shall be used as required in
36.701(b).
(b) The agency shall prepare the contract that the
SBA will award to its contractor in accordance with
agency procedures, an if the agency were awarding the
contract directly to the SBA's contractor, except for the
following:
(I) The award form shall cite 41 U.S.C. 253(c)(5) or
10 U.S.C. 2304(c)(5) (as appropriate) as the authority
for use of other than full and open competition.
(2) Appropriate clauses shall be included, an neces-
sary, to reflect that the contract is between the SBA
and its contractor.
(3) The following itemn shall be inserted by the
SBA when it makes the award:
(I) The SBA contract number.
(ii) The effective date.
(iii) The typed name of the SBA's contracting
officer.
(iv) The signature of the SBA's contracting offi-
cer.
(v) The date signed.
(4) At the same time the items in subparagraph (3)
above are completed, the SBA will obtain the-signs.
ture of its contractor on the contract.
(5) If the contract is for construction work, it shall
include requirements of the Miller Act with respect
to performance and payment bonds (see Part 28).
19809.2 Contract clauses.
(a) The contracting officer shall insert the clause at
52.219-li, Special 8(a) Contract Conditions, in con-
tracts between the SBA and the agency when the ad-
FEDERAL ACQUISITION REGULATION (~~)
quisition is accomplished using the procedures of this
subpart.
(b) The contracting officer shall insert the clause at
52.219-12, Special 8(a) Subcontract Conditions, in con-
tracts between the SBA and its 8(a) contt~actor.
19.810 Contract administration.
(a) The contractittg officer sltall assign contract ad'
ministration functions, as required, based on the loca-
tion of the SBA's contractor (see DOD Directory of
Contract Administration ~ervices Consponents (DOD
4105.59-I-I).)
(b) Ihe cottiract for tIn,- SI3A ntd its contractor shall
be provided to tlte SI)A along with the one betweets
the SBA and the agency, aqd shall be distributed by
the SBA. Both contracts shall be executed and distrib-
uted in accordance with I'art 4.
(c) To the extent consistent with the awarding agen-
cy's capability and resources, SBA coCtractors furnish-
ing requirements shall be afforded production and tech-
nical assistance, includipg, when appropriate, identifica-
tion of causes of deficiencies in their products and
suggested corrective action to make such products ac-
ceptable.
~PART12,~iNC~OPPORTUNI~
TIES FOR WOMEN.OWNED SMALL BUSI.
NESSE~
`i9.90f"i~ii~cy. -
In response to the need to aid and stimulate women's
business enterprise, Executive Order 12138, May 18,
1979 directs agencies to take appropriate action to fa.
cilitate, prèse~ve; and strengthen women's business en-
terprise and to ensure full participation by women in
the free enterprise system. Appropriate action includes
the award of subcontracts under Federal prime con-
tracts.
19;902'~Cohfrãë1~Iiii~E'~
To encourage theudèbf Wóthé~dinédu~all'busi~~-
~1T11 subcontrsctin~thecontractingiiffkef'hhalI1nuerr
~
~ ~nd contracts-when the
"~iifriât amount is expected to exceed the small purchase
*Limitation.except_
(a) Contracts that, including all subcontracta thereun-
aei~'-'are to be performed entirely outside the United
States~its possessions, Puerto Rico, and the Trust Tern-
~toryofthe Pacific Islands; àTid - -,
~b)-Contracts for personal services, -
t~ ~) .~. ~
- 666 -
FAC 84-21 AUGUST 29, 1986
19-22
PAGENO="0673"
FAC 84-12 JANUARY'20, 1986
FEDERAL~U
I The SBA decision, if received before award, will apply to (iii) The reasons why the contracting officer's
the pending acquisition. SBA rulings received after award determination is alleged to be erroneous;
shall not apply to that acquisition. (iv) Documentary evidence to support the alle-
(j) A protest which is not timely, even though re- gation; and
ceiveçl before award, shall be forwarded t.~ the Small (v) The name, address, and telephone number of I
Business Administration regional office (see the appellant; and `I
l9.302(~)(I) above), with a notation on it that the pro. (vi) A statement certifying that copies of the ap.I
test is not timely. The protestant shall be notified that peal (save been provided the c,ostrsctng officer.
the protest cannot be considered on the instant acquisi- (3) The Offlce.of Hearings and i5~ppeals will notifyl
titsn but has been referred to SI3A for itt consideration the contracting officer of the date it received the appeal I
in any. future actions. A protest.re~cetved (sy a contract- and the docket number assigned.The contracting of-I
ing officer after award of a contract shall be forwarded fleer's response, if any, to the appeal must include ap. I
to the Small Business Açlministration regional office propriate argument and evidence, must include the cer-I
with a notation that award has been made. Th~protes. tificatlon in paragraph (c)(2) above, and must be filedi
(ant shalt be notified that the award has been made and with the Office of Hearings and Appeals no later than I
that the protest has been forwarded to SBA for its 5 business days after receipt of the appepl. The Office
consideration in future actions. of Hearings and Appeals,, if possible, will inform the I
19.303 Determining product or service classifications, contracting officer of its ruling on the appeal before I
(a) The contracting officer shall determine the appro. the end of' the.solicitatiot~ period. The SBA decision, if I
priate product or service classification and related sm~ll receivec~ before the date. ~fferes are due, shall be con-
business size standard and include thesis in Solicitations, sidered final and the solicitaion shall be amended to Ii)
except when small purchase procedutes are used. reflect the decision and (ii) change the date offers are
(b) if different products or services are reqsired ~ due, if appropriate. SBA rulings received after the due
the same .s~1icitation, the solicitation shall identify the date shall not apply to' the pending acquisition, but
appropriate small business size standard for each prod- shall apply to ftmthre acquisitions of the product or ser-
vice.
uct or service.
(c) Th~ contracting officef's detetminatios is final 19.304Sóllcltation:proytslsmg;
unless appealed as provided below. ` (~) The contracting officer shall insert the provhion
(1) If the solicitation period is longer than 30 days, at 52.219-I Small Business Concern Representation, in
the appeal must be filed not'.less than 10 business solicitations when the contfact is to be, performed
days before the bid opening or proposal submission inside the United States, its territories or possessions,
date. If the solicitation period is shorter than 30 days, Puerto Rico, the Trust Territory of the Pacific Islands,
the appeal must be filed not less than 5 (susiness' days or the District of Columbia.
before the bid opening oc proposal submission'date.
(2) The appeal shall be in writing and shall be ad. (b) The contracting officer `shall insert the provision
dressed to the Office of 1-teai'ings and Appeals, %flall at 52.219-2, Small Disadvantaged Business Concern
Business Administration~ Washington, DC. )4~~ Representation, in solicitations (`other tiesh those for
N~ par(icular form is prescribed fot the appeal. small purchases), when the contract ig~to be perfornsed
inside the United States, its territories or posseasions,
However time limits and procedures sec forth in SBA's Puerto Rico, the Trust' Territory of the Pacific Islands,
regulations at 13 CFR 121.11 are strictly enforced. The or the District csf'Columbia.
appellant shall submit an original and one legible copy
of the appeal. In the case of telegraphic appeals, the (c) The'uontracting"officer-shall-'insert'~the.-provision
ar52:219.3,' Women-Owned Small ~
telegraphic notice shall be confirmed by the next day
mailing of a written appeal, in duplicate. The written ~tion;1n~solicltations~(other"than-those-f6r"smalrpur~1
appeal must contain the following certification: ,~ `~hases), when'the"contract-is~to-'be-'perfortsied'1nsii5d
have read this document and, under penalty of perjury the United State's, its terl'itbrles or possesSions, Puerto
and the sanctions imposed under 18 U.S.C. 1001', of Rico, t'he Trust Teri~1tory' of the Pacific Islands, or the
District of Columbia.
which I am aware, I certify that~ to the best of my
knowledge, the statements made therein are true, and
correct, and tltat this document is nçt beiflg filed for SUB~ART 19.4-CooPERATIoN WITh n~
(lie purpose of delay or harassment." The appeal shall SMALL BUSINESS ADMINISTRAflON.
include'-
(I) The substance and date of the determination 19,401 General.
being appealed; (a) The Small Business Act is the authority under
(ii) The number and date of the solicitation, and which, the Small Business Administration (SBA) and
the name, address, and telephone number of the agencies consult and cooperate with each other in for-
contracting officer; mulating policies to ensut-e that small business `and
19-10
88-199 0 - 88 22
PAGENO="0674"
668
FAC 84-28 APRIL 16, 1987
52.218
52.218 Reserved.
(R 7-104.27(c))
(R 1-1.1508-2(d))
52.219-1 Small Business Concern Representation.
As prescribedin 19.304(a), insert the following provision:
SMALL BUSINESS CONCERN REPRESENTATION
(MAY 1986)
The `ófferor represents and certifies as part of its offer
that it 0 is, 0 is not a small business concern and that
o all, 0 not all end Items tb be furnished will be manufac-
tured or produced by a small business concern in the United
States, its territories, or possessions, Puerto Rico, or the
Trust Territory of the Pacific Islands. "Small business con-
cern," as used in this ~,rovision means a concern, including
its a(filiates, that is independently owned and operated: not
dominant in the field of operation `in which it is bidding
on Government contracts, aad'~qualified as a small business
under the size standards in this solicitation.
(End of provision)
52.219-2 Small Disadvantaged Business Concern
Representation.
As prescribed in 19.304(b), insert the following provi-
sion in solicitations (other than those fof sthall purchases),
when the contract is to be performed inside the United
States, itS territories or possessions, Puerto Rico, the Truss
Territory of the Pacific Islands, or the District of Columbia:
SMALL DISADVANTAGED BUSINESS CONCERN
REPRESENTATION (APR 1984)
(a) Representation. The offeror represents that it 0 is,
0 is not a small disadvantaged business concern.
(b) Definitions.
"Asian-Indian American," as used in this provision,
means a United States citizen whose origins are in India,
Pakistan, or Bangladesh.
"Asian-Pacific Ame~ican,~' as used in this provision,
means a United States citizen whose origins are in Japan,
China, the Philippines, Vi$sam, Korea, Samoa, Qttam, the
U.S. Trust Territory of the Pacific Islands, the Northern
Mariana Islands, Laos, Cambodia, or Taiwan.
* "Native Americans," as used in this provision, means
American Indians, Eskimos, Aleuts, and native Hawaiians.
* "Small business concern," as used in this provision,
means a concern, including its affiliates, that is independent-
ly owned and operated, not dominant in the field of opera-
don in which isis bidding on Government contracts, and
qualified as a small business under the criteria and size Stan-
dards in 13 CFR 121.
FEDERAL ACQUI$ITION REGULATION (FAR)
"Small disadvantaged business concern," as used in this
provision, means a small business concern that (1) is at least
51 percent owned by one or mOre individuals who are both
socially and economically disadvantaged, or a publicly
owned business having at least 51 percent of its ntock owned
by one or more socially and economically disadvantaged
individuals and (2) has its management and daily business
controlled by one or more such individuals.
(c) Qualified groups. The offerór shall `psesume that
socially and economically disadvantaged individuals include
Black Americans, Hispanic Americans, Native Americans,
Asian-Pacific Americans. Atiafl-l~dian Americans, and
other i~dlviduals found to be qualified by the SBA under
13' CFR 124.1.
(End of provision)
(R 7-2003.74 1980 AUG)
(R 3-50l(b)(3), Pars IV, Section K, (i)(B) 1980 AUG)
SZ219O-'-Women~O*1~etrSmallThl5ln5sm
Repi~esen*ation,
As prescribed in I~9.304(c), insert the following prlivi-
sion in `solicitations (other thanshose for small purchases),
when the contract ii to be performed insidC she United
States, its territories or possessions. Puerto Rici, theTlust
Territory of the Pacific Islands, or the District of Columbia:
WOMEN-OWNED SMALL BUSINESS~
REPRESENTATION (APR 1984)
(a) Representation. The offeror represents that it 0 is,
o is not a women-owned small business concern:
(b) Definitions. ` *
"Small business concern,' as used in this provision.
means aconcern, including its affiliates, thatis independent-
ly ownedand operated, not dominate in the flOldof opera-
tion in whiSh isis bidding on Government contracts, and
qualified aS asniall business Onder the criteria and size Stan-
darils in 13 CFR 121.
"Women-owned," as used in this provision, means a
small busineSs that is at least 51 percent os4~ned by a woman
or women whti are U.S. citizens and who also control and
operate the business.
(End of Provision)
(R PPR Temp. Reg 48 1978 DEC)
52.219-4 Notice of' Small Business-Small Purchase
Set-Aside.
As prescribed in 19.508(a), insert the following provi-
ston in each written solicitation of quotations or offeri: I
NOTICE OF SMALL ~USINESS-SMALL I'URCIIASE
SET-ASIDE (APR 1984)
52-64
PAGENO="0675"
669
DAC p86-6, 1 sEpT~BER 1987 k.6..26
(v) Use code 5 if not awarded to small business for~anyo~her'
reason.
(3) Item D3~Srna1l Disadvantaged Business.
(i) Enter code 1 if the contractor is not a8n2ll disadvantaged
business concern in accordance with the representation required in FAR
19.30Z4(a).
(ii) Enter Code 2 if the contract was awarded to the U.S. Small
Business Administration (SBA) pursuant to section 8(a) of the Small
Business Act (FAR 19.8).
(iii) Enter code 3 iF the *ward is not an SBA 8(a) award but is
made to a firm determined to be a small disadvantaged business concern
in accordance with the representation requir~e4 in FAR i9.39~4(b).
(~) Item DZ~, Reason Not Awar~Øed to Small ~isadvantag.ed Business
Concern. If the action was no~ awarded to a small disadvantaged
business concern,, enter an appropriate code from the available codes
below. Otherwise, leave blank.
(1) Use Code 1 i~ there was no known small disadvantaged
business source.
(ii) Use Code 2 if there was a known small disadvantaged business
source but it was not solicited for a bid or proposal.
(iii) Use Code ~ if a small disadvantaged business concern was
solicited, but no bid or proposal was received from such concern, or
the concern did n~t offer sufficient quantity to cover the total
requirement but received an award for theportion bid on.
(iv) Use Code ~4 if a small disadvantaged business concern was
solicited but the low or most advantageous offer was not from a small
cliaadvanta8ed business condern.
(v) Use Code 5 if not awarded to a small disadvantaged business
for any ether reason.
`~D5~WS~eii~0wned ~nall Business
(1) ,vEnterCode `1 `if the contractor's responseto FAR ~2.2193
indicates the firm is not a women-owned small business.1
(ii) ~nter~~ode~?if the' response to FAR 52.21i9..3 `indicates `Tn
~he~affi'rmatjve that"the contractor is a women~wned `smallbusines~,
(iii)' ~ the .itoró~tión~.ii not available beoause'4the
contraator~did notëomplete the certification under' FAR ~2.219..3.
(6) I~ern 06, Sm~il Business Set..Aside Preference.
(i) Enter Code 1 if the solicitation/award was not totally or
partially set aside for small business pursuant to F'AR 19,50~..2, FAR
19.502~3, and 20.70.
(ii) Enter Code 2 if the, solicitation/award was totally set aside
for small business pursuant to FAR 19.502..2.
(iii) Enter code 3 if. the solicitation/award was partially set
aside for small businesa pursuant to FAR .19.502..3 and 20.70.
(7) Item D7! Suboontraoting Plan for ~a1l gnd ~naU
P~!advant~ed Businesses. Enter the appropriate aodé as follows:
(i~ Eater Code 1 if a subcontracting plan was not included in
the contract because subcontracting possibilities do not exist (FAR
19.706).
DOD FAR SUPPLE7IEWr
PAGENO="0676"
670
~ A~TION REPORT (OVER $2~OOO)~. ~ C0N0*0~S0UUOL000($t0*~I,4
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PART aNTON ~u~sA Na COON 00 ON COCOS 0* 00
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055 TS000pAT000LATTNGT00000500S0500NPONINTSN0000S000CTV!5005 TSNOS.ON50000I01501NOON000I50000)GNCO0CONNS
0131. SAMSON CO 0000000S (Rio.. SOY OMANICNI ACT 0000NNT OT000SEICN I DT2C. COUNTeR oo ORIGIN CODE
003. OOISITACT AN.ANCJNO (VCO$N&PJ100NA(543100.OI010OC0000TDC3*A TOOC01011A000IIIAESD.305.%6
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PART TI. NAMIOOCONTEAOTINACEN)CN 0000PNISINT*T(VS NO SlosaT001 OR o4~eaososo. O4.VATI~o'
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PAGENO="0677"
671
WOMEN-OWNED SMALL BUS IN~SS E'ROGRAM
CONTRACT AWARDS AS COMPARED TO ESTABLISHED GOALS
(DOLLARS IN MILLIONS)
FISCAL
YEAR
WOSB WOSB
AWARDS GOALS ACCOMP
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
$70.6
$192.4
$336.1
$401.8
$527.3
$718.7
$897.5
$1,100.0
$1,114.5
N/A
$124
$235
$305
$420
$550
$735
$925
$1,000
$1,100
*
*
N/Ar
fi55J2%
143.10%
131.~7%
125.5%
130.~1%
122.1%
118.~9%
111.5%
N/A
PAGENO="0678"
`DOD WOMEN-OWnED SMALL BUSINESS PROGRAM COMPARED TO:
TOTAL BUSINESS, SMALL BUSINESS, SMALL DISADVANTAGED BUSINESS AWARDS
(DOLLARS IN MILLION)
GROWTH
F'i 1979 S'Y 1980 FY 1981 FY 1982 S'Y1983 FY 1984 ~`Y 1985 FY 1986 FY 1987 RATE
~ota1 Awards $58,544 $66,704 $87,195 $102,463 $121,096 $124,912 $139,587 $136,497 $135,340 11.0%
SB Awards $12,170 $13,588 $17,770 $20,143 $22,769 $23,816 $26,049 $26,914 $26,624 10.3%
SOB Awards* $909 $1,207 $1,874 $2,187 $2,390 $2,710 $2,899 $3,122 $3,317 17.6%
W~sB Awarda $70.6 $192.4 $336.1 $401.8 $527.3 $718.7 $897.5 $1,100.0 $1,114.5 41.2%
% of Total 0.i2~ 0.29% 0.39~ 0.39% 0.44% 0.58% ~ 0,81% 0.82%
.% oi S~ 0.6% 1.4t. 1.9% 2.0% 2.3% 3.0~ 3.4~ 4.1~ 4.2%
% of SOB 7.8% 15.9% 17.9% 18.4% 22.1% 26.5% 31.0% 35.2% 33.6%
* Sft~a11 Disadvantaged Business Awards data includes awards made under the 8(a) program.
PAGENO="0679"
DOD AWARDS OVER $25 THOtJSA~ TO WOMEN...OWNED SMALL BUSINESS,
WOMEN-.OW~D SMALL BUSINESS S (A) AS COMPARED TO
TOTAL BUSINESS, SMALL BUSINESS M~D
SMALL DISADV~TACED BUSINESS AWARDS
(DOLLARS IN MILLION)
GROWTH
FT 1984 FY 1985 FY 1986 FY 1987 E~.A~tE
$114,926 $129,093 $126,005 $124,178 2.6%
$21,166 $20,500 3,5%
$2,911 $3,072 7.2%
$875.9 $862.5 16.0%
0.70% 0.69%
4.1% 4.2%
30.1% 28.1%
$102.6 $135.6 38.0%
0.09% 0.11%
0.48% 0.66%
3.52% 4,41%
11.71% 15.72%
673
Total Awards
SB Awards
SD? Awards*
WOSE Awards
% of Total
% of SB
% of 5DB
WOS? 8(a) AWDS
% of Thtal
% of $F3
% of SD?
% of W05~
$18, 512
$2, 491
$552 .8
0.48%
3.0%
22.2%
$51.6
0.05%
0.28%
2 . 07%
9.33%
$20, 384
$2, 693
$698.3
0.54%
3.4%
25.9%
$122.0
0.10%
0.60%
4.53%
17.4 7%~
PAGENO="0680"
674
Y 13 1Q88
UNITED STATES DEPARTMENT OP EDUCAtION
T SHE SECRETARY
MY 12 988
luau Business
3e~ `~r. Cau4rcca:
Thank yOu for youc Letear concerning the Dcçartaont of Ctecation u activities
rewarding ocean's bucimess entergrisa. ie are tuite proud of our reward with
iseali ousiness concerns. Of :carticuiar note are our awardo under the 3(a)
section of the Basil Susiness Act. During Fiscal Year 1937, about $13 million
ot S ~ercent of our contract dollars eat through the 3(a) rorograns. As you
will sea in the attacnea aetailed rea~panse to your guastions, a significant
portion uS these miardo Yore to ocaon~uaaod businesses. Other amarde to
oar-conch ausisesoas sore rods throggo the norrol cwtj~etltive roce$s.
Comparing awards to seen-asied businesses to the total for all contracts
coached by the Deportuent of ducatiun :ioy se misleoding. As you know,
contractr that go to other-than-so ar-uonod businusues arc not naceuuerily
siarfad to solo-owned buoinouoea. :any contractors are not considered
ousinassos at oil. sousue of rho nature of tie 5rojoctc conducted by the
bul:nrtlent and restrictions in autsorising lugislation, re :iward almost half Of
uur contruets coca year to nonprofit organirations. olthough the remaining
contracts are aisrhea to lonsinosses, root of these are awarded to widely-held
puW~ic corporations.
Id is can provauc odoltionol inforaotiun to tile cotuittos, please contact tgr.
liryond S Ira oasolth, director of tronte cad Contracts Service, at 732493.4,
Sincerely,
PAGENO="0681"
675
Page 1 AttochDont
Duestion 1:
The Office of ~aal1 end Disadvantaged Business Utilization maintains an
extensive outreach program. The Office attends dational conferences
involving the contracts cctmaunity such as those conducted by the National
Contract Management Association. The Department's programs are explained
and firms are encouraged to meet with the Office staff for more particular
information. The standard Solicitation Mailing List Application is
requested. ~7e believe that the positive impact of the outreach effort is
evidenced by the composition of our mailing list (see 2b.).
question 2:
a. ForF~ 19Q7
Dumber of contract actions aoL
Dollar values of contract abtions $ l75~77$,9l6
Contract actions with women~med
busj~esses ~3L ( 3.9%)
Dollar value $ 45ih~B2~ ( 1.4%)
Proportion of women-owned awards
accompl~shec1 under SPA 8(a) program 25 (80.6%).
Dollar value $ 1,586,621 (54.6%)
For FT lO$6
~flb~r o~ contract actiod~~ 6~5
Dollar values of contract actions $ l59,7O~.75~
captract actions with women-omnod
businesses ~3L ( 4.6%)
Dollar value $. 5~l$~469 ( 2.0%)
Proportion of women~own~d awasds
accomplished under 504 8(a) program 17 (54.8%)
Dollar value $ ~~797.5?2 (56.8%)
For PT. 1$~3~$,
Dumber of cQn{radt actiQns ______________
Dollar values of dontract actions ~ l~$.94~1~
Contract actions with women-owned
businesses ~7 ( 2.0%)
Dollar value $_~ _~ 497~ ( 2,7%)
PAGENO="0682"
676
Page 2 - Attachiimflt
Proportion of women-owned awards
accomplished under SDA 3(a) program -~ 5_ (29.4%)
Dollat value 3,97l~ (84.6%)
~2~IY .1984
Number of contract actions 723
Dollar values of contract actions. $6,~7845~_
Contract actions with women-owned
businesses 12 ( 1.7%)
Dollar value $ 3.392.~83.3_ ( 2.8%)
Proportion of women-owbed awards
accomplished under 313A 8(a) program 7~. (53.3%)
Dollar value $ 2.306~27~ (72.1%)
b. Our contract bidders list contains 956 organizatiOns. Of thede, 169
are 8(a) firms. There are 20]. women-owned businesses, sane of which
are, of course, 3(a) firms. Depending on the response to our s.rar~
~ r~ail~j notices and the number of 4 irma on our itsniling list ~for
a particular product type, we mail two to three hundred cop~es of our
solicitations.
c. Phile the total dollar amount of subcontracting commitments made by
our 1ar~ trice contracts to women-owned business concerns is not
available, in the developtant of required subcontracting jDlans, large
prime contractors are urged by the Departpeftt o~ Education to utilize
to the aaximurr~ e;ttent possible women-owned businesS concerns that also
are qualified as small business concerns or small disadvantaged
business concerns.
Question 3
~ie have no loan programS for women-owned buminesses. ~ile we do rake a.
few grant awards to businesses, the majoriby of our grth~ts go 0 edutation
organizations and nonprofit concerns. ~1e are not ~aware of any grants to
women-owned businesses, per se.
Nbile not awards to businesses, the Christa ilcfanliffe Followship Program
provided 82 fellewahips to women during the program's first year (1987).
This represented 75% of the fellowships. The total value was $1,431,633.
Question 4
The Department of Education has no programs relating to commercial credit.
PAGENO="0683"
677
Page 3 - Attachaent
Question 5
The material. presented herein represents the extent of data that we
currently maintain regarding women-owned businesses. We are in the process
of installing a new information and scheduling system. This system will
allow earlier and more effective outreach 1~ the Office of Small and
Disadvantaged Business Utilization.
PAGENO="0684"
678
The Secretary of Energy
Washington, DC 20585 JUN 0 ~ 1988
June 3, 1988
Dear Mr. Chairman:
We are pleased to provide the information requested in your letter of
April 19, 1988, on the Department of Energy's acquisitions from
women-owned small businesses. The enclosure includes responses to each
of your questions.
In FY 1987, the Department awarded over $32 million to women-owned
businesses, nearly double the performance in FY 1986. The Department's
Management and Operating (M&O) contractors awarded over $166 million in
subcontracts to women-owned businesses in FY 1987. We are continuing,
however, to seek and promote more contracting opportunities for this
sector of private industry.
If we can be of further assistance, please do not hesitate to contact
Mr. Leonel V. Miranda, Director, Office of Small and Disadvantaged
Business Utilization, at 586-8201.
Yours truly,
Enclosure
Honorable John J, LaFalce
Chairman, Committee on Small Business
House of Representatives
Washington, D.C. 20515
cc:
Honorable Joseph N. McDade
Ranking Minority Member
Committee on Small Business
House of Representatives
Washington, D.C. 20515
PAGENO="0685"
679
Department of Energy
Women-Owned Business Efforts
Ql. Executive Order l2l3S requires that each Federal department and
agency "take appropriate action to facilitate, preserve and
st~engthen women's business eh~erprlse and to ensure full
participation by women in the tree enterprise system.", Please
identify every Initiative your agency has undertaken pursuant to this
executive order, the Impact of the Initiative, theoffice responsible
for the initiative, your assessment of the success or' failure of
each,. and'your recommendations for future Initiatives,
A. The Department of Energy (DOE) has been Involved In a number of
Initiatives supporting `women-owned businesses:
In October 1984, the DOE's Assistant Secretary for Management and
Administration and the Director of the Procurement and Assistance
Management Directorate conducted workshops In Detroit, I~enver,
`Chicago and St. Louis, for women business owners, on selling to the
DOE. This was part of a White House coordinated program under the
auspices of the Interagency Committee on Women's Business
Enterprise. This successful effort Introduced many women business
owners to' the opportunities and procedures of Federal contracting.
The Office of Small and Disadvantaged Business Utilization at
Headquarters has been actively involved in the Mega Marketplace
effort, trade fairs for women-owned businesses In Washington, D.C.,
and Los Angeles, California. The DOE provided financial support for
that multi-agency program and was involved Th the planning process
and the execution of the events. Feedback from women-owned
businesses indicated that Mega Marketplace was a valuable marketing
event for participants This allowed the DOE to Increase the number
o'f women-owned businesses t!at could partlcl~ate In our programs.
We are currently in the proces~ of developing~a procurement and
educational event designed specifically for women business owners to
meet personnel of agencies and corporations seeking to Increase their
women-owned business participation. This regional conference,
co-sponsored by the DO~t's Chl~ago Operations Office will' ,bé `held
October 19-20, 1988, In Chicago. The specific goal of the conference
is to increase the amount of contracting dollars awarded by
government and prime contractors to women-owned businesses.
The DOE and Its major contractors will continue to participate In
special outreach activities diretted at women-6wned businesses, as
well as the marketing efforts directed at small business, In general,
where women-owned businesses are always invited. The DOE looks to
the Interagency Committee on Women's Business Enterprise for
reconiiiendatlon of major agency~wide Initiatives, as suggested by
Executive Order 12138'. , ```
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2
Q2. Please supply the Committee with the following Information for each
of the last four years:
a. the number, total dollars, and relative percentages such figures
represent for all contracts awarded by your agency to women-owned
businesses identifying separately awards made pursuant to section
8(a) of the Small Business Act~
b. the effOrts made by your agency to ensure that women-owned
businesses appear on government bidders lists and are being forwarded
solicitation packages for contracting opportunities;
c. total dollar amount of subcontracting,~commitments made by large
prime contractors with your agency and efforts to encourage primes to
utilize women-owned small business concerns.
A.a. Women-Owned Business
Prime Contracts Percent .8(a) Women-Owned Business
(#) (00051, of Total* CQntract$ (000s)
F? 1984 80 $15,740 0.13 $6,9~9
F? 1985 110 $11,275 0.09 $5,125
FY 1986 242 $18,465 0.14 $7,540
FY 1987 280 $32,681 0.25. $24,322
b. ~ur Headquarters da~abase, Automated Contractor. Cap~blllty and
Experience Source System (ACCESS) contains information, Including
women-c~wned status, from Standard Form 129, "SOllc~itatlàn Mailing
List Application." DOE fiel.d offices use similar, automated systems.
These systems are used to identify women-owned businesses for
competitive, procurement, as well as those that are also certified
under the Small Business Administration's (SBA'!) .8(a) program an~
with whom the DOE may. contract noncompetitively.
*Based on total DOE prime contracting, excluding foreign milita~y
sales, non-appropriated funds contracts, contracts awarded and performed
entirely outside of the United States, all Federal Supply Schedule orders
and interagency transfers to other agencies.
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3
~Women-Owned Business
C. Total SubcontPactlng Subcontracting by M&0
Contractors
(000s) (000s)
FY 1984 $4,224,223 $103,081
FY 1985 $4,639,103 $145,172
FY 1986 $4,657,299 p32,368
FY 1987 $5,099,439 $166,812
As figures above reveal, the DOE actively encourages its Management
and Operating (tl&0) contractors which operate DOE-owned plants and
laboratories,to co~1tv'act with women-owned firfl~s. Due to the
Department's special relationship with M&0 contractors, their
subcontracting with women-owned businesses are included in the
Departmental goaling program. By agreement, the SBA's Women Business
Ownership office recognizes M&0 contractors' accomplishments as part
of the DOE's results. In other prime contracts, however, the DOE
inserts the "Utilization of Women-Owned Small Business" clause in
solicitations and contracts, as required by the Federal Acquisition
Regulation. That clause requires only that the contractor "agrees to
use its best efforts to give women-owned small businesses the maximum
practicable opportunity to participate in the subcontracts It
awards ...."
Q3. If your agency makes grants or' loans, please supply the following
information for each of the last four years:
a. the number, total dollars, and relative per~entages such figures
represent for all such grants or loans made to women-owned businesses;
b. efforts made by your agency to encourage the participation Of
women in grant and loan programs.
A. The DOE makes financIal assistance áWarOin the form of grants and
cooperative agreements In the absence of any legal or other
requirement for determining whether such awards are made to
women-owned businesses, the DOE does not collect such data
Accordingly we are unable to supply the Inforifiation requested under
this~section.
The Office of Minority Economic Impact has a small loan program for'
the preparation of bids and proposals to the Department from minority
businesses. During the past four' fiscal years, none of the'loans was
made to wôrnen~owned businesses. V
PAGENO="0688"
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4
Aside from insuring that the Department's grant and loan programs are
administered in a non-discriminatory manner, the DOE has made no
special effort to encourage women participation in those programs.
In the area of financial assistance, the Executive Order requires
only that recipients take appropriate affirmative action in support
of women-owned businesses. On October 1, 1988, the DOE will
incorporate the new 0MB Circular A-l02 in financial assistance
instruments. The new circular requires that grantees and subgrantees
"take all necessary affirmative steps to assure that minority firms,
women's business enterprises, and labor surplus area firms are used
when possible."
1~4. If your agency has programs relating to, or regulatory authority
over, the provision of commercial credit, in any form, describe any
initiatives undertaken by the agency, or subject to Its programmatic
~r regulatory authority, that are directed toward women business
owners or that may be more likely to affect such owners in any
significant way. In your response, please detail such program or
authority and provide such statistical or other data that may serve
to describe the efforts of your agency.
A. At this time, the DO~ has a limited number of programs that involve
the provisionof commercial credit. These programs are In the
process of being phased out. There are no known initiatives that
were directed toward women business owners while those programs were
viable. The Geothermal Loan Guaranty Program, for example, was.
Intended to stimulate private sector risk-taking for geothermal
projects. Of the eight loan guarantees that were issued, none was
with a women-owned business.
`Q5. Please list all types of data within the control of your agency
regarding women-owned businesses indicating the usage that your
agency has for such data, the sufficiency of the data, its
reliability and any improvements in data collection, retrieval oi~
usage planned or desired by the agency to better assist its efforts
in this area.
A. The DOE collects, directly and from its M&O contractors, information
on awards to women-owned businesses which results in the following
automated data reports:
Procurement and Assistance Data System (PADS), Socioeconomic
Goal Achievement Report. This is a report of achievement in the
Oepartment's small business programs in prime contracting. The
report captures obligations to women-owned small businesses.
Subcontracting Reporting System (SCORS), Socioeconomic Goal
Achievement Report, This is a report of. achievement in the
Department's small business programs in subcontractij~g. . The
PAGENO="0689"
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5
report captures women-owned business obligations from the
Department's M&Ocont~actors, but not other DOE prime
contractors. The Federally mandated form for gathering such
data from prime contractors, Standard Form 294, "Subcontracting
Report fore Individual Contracts,' does not provide for the
collection of any information on women-owned business.. The
collection of women-owned business data from N&O contractors is
solely a DOE initiative.
Both of~these reports are used extensively in monitoring and in
recogniztng the DOE and M&O contractors' smallbusiness activities.
The DOE and its major contractors use the SBA'~ Procurement Automated
Source System (PASS) and ACCESS (and the field equivalents) to
identify womeñ~owned businesses as potential sGurces.
In the absence of a preference program ~t~argeted to women-owned
businesses, our wOmen~owned business data is considered ~sufficient,
and collection of additional women-owned business data would impose
an unwarranted ~paperwork burden on the Department ard its
contractors The data is consi~1ered fairly reliable based on
verification studies and efforts are continually made to improve its
reliability.
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S EXPORT-IMPORT BANK OF THE UNITED ~TATES
WASHINGTON, D.C. 20871
PRESIDENt S R E C E I Vi ECA~EAODRE9$ "EXIMBANK"
CHAIRMAN S S TELEX 89461
May 17, 1988 MAY 25 1988
.5 CommiUce un ~a~I
Dear John: S S S
In regard to your letter of April 19, you indicated that
your Committee would be holding hearings on government policies
and programs effecting women business owners. In particular, you
wanted to obtain information from government agencies showing how
much procurement is actually going to businesses owned by women.
In this regard, I would point out several distinctions between
Eximbank and other government ager~cies. S
As you are aware, the primary function of the Expç~rt-Import
sank of the United States is to provide financing in so.~pport of
the export of U.S. goods and services. In doing so, Exirnbank
responds to requests from potential U.S. suppliers, borrowers and
private lenders. Exirnbank is not involved in arrangements
relating to the underlying export sales transaction and plays rio
part in the selection by a borrower of a particular U.S. supplier
or lender.
For the incidental needs of our small staff we primarily
obtain our goods and services off the schedule of the Gerieral
Services Administration. The procurement from women-owned
enterprises would largely be reflected in that agency's report to
your cormoittee.
The Bank also has a non-GAO procurement program for small
businesses, including women-owned enterprises. In Fiscal Year
1987 our small business procurement amounted to $1.4 million with
sully one quarter of that amount going to women-owned
enterprises. It was only in PY' 86 that the Bank developed an
automated procurement tracking system. In its procurement
program, as well as in its own hiting practices, the Bank assures
fair treatment of. all applicants and employees without regard to
political affiliation, race, color, religious creed or sex.
As you may know, the Bank has over the past several years
been engaged in a marketing effort to make our prbgram more
accessible to small and medium-sized enterprises. In 1987 the
Bank launched its City/state Pilot Program to create another
distribution syitem to reach the small business ccrnimunity.
PAGENO="0691"
685
Unfortunately, I cannot give you any kind of breakdown on hOW
many women~owned businesses have benefitted as a result of the
initiat~i.ve because only in the past six months have we developed
an automatic data collection system oovering this kind of
information.
Please be sure to contact .me if you need additional
information. .. . *
Best regards,
Original Signet by
John ~. B~o1m1 Jr
~onn A. sonn, Ji~.
The Honorable
John J. LaFalce
Chairman
Committee on Small Business
2361 Rayburn House Office Building
Washington, DC 20515
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686
:~ General Services Administration
~ Administrator
* ~ Washington DC 20405 E C E I V E D
MAY 1 8 988
Cumrn;ticc t~ L~
May 13, 1988
The Honorable
John J. E~a~alce
Chairman, Committee on Small Business
House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
The General Services Administration is pleased tO respond to your
letter of April 19, 1988, concerning the agency's policies and
programs that affect women-owned business concerns.
Enclosed is our response to the Committee's questions on women
business enterprise. We have responded to the questions in the
order in which they were requested.
If you have any questions regarding the information provided,
please contact John Wynn, Director, Office of Small and
Disadvantaged Business Utilization at 566-1155.
Sin erely,
John Alderson
Acting Administrator
Enclosure
PAGENO="0693"
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~uestion 1
The General Services Administration's (GSA's) Office of Small and
Disadvantaged Business Utilization has participated in numerous
congressionally sponsored procurement conferences held all over
the country. The intent of these conferences is to help
minority, women and small business concerns make greater strides
in the Federal. procurement market. They also provide the
business community with an Opportunity to meet procurement
officials to discUss contracting opportunitieS. GSA is
represented on the Interagency Committee on Women Business
Enterprise which was established to address the concerns of women
business owners.
In addition to congressionally Sponsored confereflces, the Off iôe
of Small and Disadvantaged Business Utilization has participated
In various seminars, workshops and conferences sponsored by local
trade organizations Including the 1987 Women's MegaMarketplace
business conferendes held in Washington, DC, and t.os Angeles,
California. GSA has issued several publications which describes
the procurement preference programs including those for wMch
women-owned businesses may be eligible.
The success of these conferences is evident by the large number
of business owners and representatives who attend, and the
numerous letters received commending the agency on the overall
success of these activities.
GSA has Business Service Centers (BSC"s) ~1Ocated in each of its
11 regional offices. The BS~'s wete established ~to assist~firms
interested In doing business with GSA as well asothet Federal
agencies. Duting fiscal.year 1987, the BSC's counseled 143,391
individuals Interested in doing business with the Federal
Government, 27,357 of which were women. Statistics available for
fiscal years 1985 and 1986 reveal the following:
Fiscal Total Number of Number of Women
Individuals Counseled Counseled
1985 136,077 29,129
1986 155,908 3~,189
FAR 52.219-13, Utilization of Women-Owned Small Businesses was
revised to define "su~uall business concern"; to expand the
definition of "women.~owned small businesses" to include the
criterion that women-owned small businesses are small business
concerns; and, to specify that the contractor, acting in good
faith, may rely o1 written representations by its subcontractors
regarding their Status as women-owned small businesses. GSA
published this revision in Federal Acquisition Circular 84-21,
PAGENO="0694"
688
-2-
dated August 29, 1986. GSA Contracting Officers are required to include
the clause entitled "Utilization of Women-Owned S~ua11 Businesses" in
solicitations and contracts when the contract amount is expected to exceed
the small purchase limitation, with certain exceptions which are described
in FAL~ 19.902. These revisions were made to assist women-owned businesses
in obtaining Federal contracts and subcontracts by Federal. prime
contractors. Federal Acquisition Circulars are issued by the GSA, Office
of Acquisition Policy.
Question 2(a)
Fiscal Awards to Women-Owned 8(a). Contract
Year Business Concerns Awards
Woof $ Woof $
Contracts (000) % Contracts (000) %
1984 642 50,992 1,1 422 74,800 1.6
1985 739 58,755 1.0 286 66,200 1.1
1986 857 61,315 1.1 394 89,936 1.6
1987 982 51,140 1.0 258 66,728 1.3
Question 2(b)
Participants at the various workshops and procurement conferences are
instructed on how to complete the "Bidders Mailing List Application" so
that they can receive notices of proposed procurements for the iteths and/or
services they wish to. sell to the Government. We also emphasize the
importance of making personal contact with the procuring activity so that
their firm can be contacted for small and/or emergency purchases.
Question 2(c)
1) Total dollar amount of subcontracting commitments made by large prime
contractors:
Fiscal Total Subcontract Small Small
Year Commitments ~i~Tiess Business ~Th~d-
(In total dollars) vantaged
Business
1984 4,888,083,819 1,160,945,774 3,727,138,135 87,261,524
(100%) (23.8%) (76.2%) (1.8%)
1985 844,608,473 209,777,222 634,831,251 12,149,160
(100%) (24.8%) (75.2%) (1.4%)
1986 846,442,782 276,170,949 570,271,833 15,266,183
(100%) (32.6%) (67.4%) (1.8%)
331,055,739 647,189,656 19,851,035
(33.8%) (66.2%) (2.0%)
1987 978,245,395
(100%)
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-3-
2) GSA does not collect nor maintain any data on subcontract
awam~ds to women-owned 1~usiness concerns. However~s in the
subcontracting plans, the geals før subcor~tracting with s~~~ll and
small disadvantaged business Include women-owned small ~nd small
disadvantaged business concerns.
guest ion 3
GSA does not make any grants or loans to individuals or
businesses.
Questiôn4
GSA does not have any programs relating to, or regulatory
authority over the provision of commercial credit.
Question 5
The~Federal Procurement Data Center (FPDC) operates an automated
data system of Federal Government ptocurement inf~vrn~tj~on, The
F'PDC master file contains detailed information o~ ~hè goods ~nd
services, including research and development activities p~mrchased
by ever 60 Federal agencies. The Office of -Small and
Disadvantaged Business Utilization uses this data to eSta}~-iis1~
goals andmonjtor the agency's. achievements under the procurement
preference prc~gram whi.~h includes contracts awarded t~women-
owned business concerns. The data is only as accurate as that
received from responding Federal departments and agencies. We
plan to continue to use this data to estabiia1~ and mon~tox goals.
under the procurement preference program,
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THE SECRETARY OF HEALTH AFFO HUMAN SERVICES
WASHINGTON D.C. 20201
MA? 1 0 ig~a MAY 111988
The Honorable John J. LaFalce
Chairman, House Committee
on Small Business
House of Representatives
WaCh4rigtOi'I~, D.C'~ 20515
Dear Mr1 Chairman:
Thank you ~for your lettet of April l9,~ 1988 in which.you
requested me to supply the Committee with answers to a number
of quections relating to the Department's Women's Bu~siness
Enterprise Progrars. . - -
Our response is -enclosed.
Sincerely,
~ /~*
Otis R. Bowen, M.D.
Secretary
Enclosure
RECE~V~D
MAY 1 2 1988
Commitice on 3ra~ 8ri:os~n
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091
RESPONSE TO THE APRIL 19, 1388 REOUEST PROM THE
qIAIRs*~q or THE flØUSE CO$MLTTEE ON$$A~J~, BUSINESS
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692
ANSWER I
In accord with the requiremen~s of Executive Order 12138 the
Department of Health and Human Services has undertaken a
number of significant initiatives to ensure full
participation by women-owned businesses in all programs
conducted by this Department. The following initiatives,
which are managed and coordinated by our Office of Small and
Disadvantaged Business Utilization, have had a tremendous
impact on increasing the volume and amount of awards to
women-owned businesses:
-- Establishment of an Inter-Departmental Women-Owned
Business Committee
-- Each major procurement activity within the
Department sponsored procurement seminars for
women-owned businesses
-- Actively participated in procurement seminars
sponsored by various public and private sector
organizations
-- Forged working relationships with various trade
associations of women-owned businesses
-- Revised the Departmental Grants Administration
Manual to provide procedures for enhancing the
participation of women-owned businesses in
departmental grant and assistance programs.
Awards to women-owned businesses have steadily increased from
$22 million in FY-83 to approximately $60 million in FY-87.
This growth pattern is directly attributable to the
initiatives implemented in support of the President's
Executive Order 12138.
ANSWER 2.(a)
(See Attachment A)
ANSWER 2. (b)
Departmental small business and contracting officials have
participated in a significant number of outreach activities
in an effort to identify women business owners capable of
participating in departmental procurement programs. In
addition, each of our major procurement off ices has hosted a
workshop or seminar for women-owned businesses to inform them
of procurement practices and procedures and to get them
registered on all appropriate bidder's mailing lists. We
have worked with trade associations of women business owners
and briefed their members on departmental procurement
procedures. Special efforts have also been made to forward
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RFQ's and RFP's to women business owners, Finally~ our
Office of Small and Disadvantaged Business Utilization has
disseminated Directories of Women Business Owners, published
by trade associations an~ other private sector organizations,
to all ~epartmenta1 procurement offices,
ANSWER 2.(c)
In accord with the Federal Acquisit~ion Regulations, the
Women-Owned Business Subcontracting clause has been included
in. the contracts of Departmental prime contractors. We
suspect that this clause has generated substantial
subcontracting opportunities for women-owned businesses.
However, the absence of a federally approved data collection
form has prevented us from collecting data on the volume of
subcontracts awarded to women-owned businesses by
departmental prime contractors. Subcontracting commitments
by large prime contractors for the past four years are as
follows:
FY-84 $186,451,000
FY-85 $193,145,000
FY-86 $279,4O4~000
FY-87 $154,187,000
ANSWER 3(a)
In December 1982, the Department's Grants Administration
Manual was revised to include procedures to be followed by
departmental officials to enhance the participation of
women-owned businesses in departmental grant programs. The
revisions included procedures for the review of all grant
announcements for which for-profit organizations are eligible
to apply, to determine those which may be of interest to
women-owned business organizations. Such firms are
automai~ically mailed copies of the grant announcements. In
addition, all departmental components which administer a
grant program are required to maintain a source list of
women-owned businesses. Departmental grant applications
have been revised to include a woman-owned business
certification clause. This revision has enabled us to
capture data on awards to women-owned businesses and to
improve our overall management of the participation of women-
owned businesses in our grant an~ assistance programs.
ANSWER 4
Not applicable to tb~e Department b~ ~4ealth and Human
Services.
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694
ANSWER 5
The Department maintains a contract information system and a
grants information system to provide departmental contract
and grant managers. with adequate data to manaqe these
programs. Data on the characteristics of awards to women-
owned businesses is retrieved from these systems to manage
the women business program. In addition, we maintain
separate data on the Small Busine~ss Innovation Research
Program. All of this data is accurate and reliable since it
is obtained from actual contract and grant documents at the
time of award.
- 3% -
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ATTACHMENT A
Answer 2.a
~695
DEPARFMUN~ CF HEALTh AND HUMAN SERVICES
ANARDS 10 b~J~1~G~]) BUSINESSES
Toal JAIES
Fiscal Procurement
Year Dollars
Awards to
Nu~er
I~SsSem of ~ds
Percent of A~~rds to
~uen-Owned BusuEsses
1:0 Total Procuremetit
8(A) AWARDS 10 ~M~O~Ji~3) B~ESSI~S
Total
Fiscal LIUIS
Years 8(a) Awards
8(a) Awards
to ~*men-~
BU5]resses
Percent of 8(a) Awards
to b*men~d Businesses
to Total 8(a) Awards
1984
1985
1896
1987
$1,337,414
1,309,450
1,576,088
1,791,250
$45,379
35,096
35,547
59,772
5,519
6,779
9,315
10,139
3.4
2.5
2.4
3.3
1984
1985
1876
1987
$ 68,789
72,519
93,343
123,624
$11,176
10,801
10,048
15,681
L6.2
14.9
10.8
12.9
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ATTACHMENT B
Answer 3 .a
696
~CTRAMURAL GRANT A~RDS
WJME~I'S BUSINESS PBUGRAM
FISCAL YRARS 1984 `UIRU 1987
(to the dollar)
Fiscal
Years
1984
1985
1986
1987
NunEer of
LIIHS
Extran~ial
Grants
31,004
24,569
23,868
26,269
Total Nunber
of Grants A~rds
to Nunen-CX~n(~
Businesses
15
49
34
41
Total
11105 Grants
Dollars
4~214,O37,8OO
4,162,300,700
3,093,304,554
4,565,045,103
Total Grants
Dollars to
Nun~n-Owned
Businesses
$ 747,535
3,616,371
2,958,753
4,601,847
%
0.018
0.1
0.1
0.1
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MAY 031988
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
THE SECRETARY
WASHINGTON. D.C. 20410-00th
MAY 3 !~S.
Honorable'John G. LaFalce
Chairman
Committee on Small Business
U. S. House of Representati~eS~
2361 Rayburfl House Of ftce~ Bull ding
Washington, DC 20515
Dear Mr, LaFC1Ce:
Thank you foryourletterof April19 req.uest4ng information on the
Department's policiesa~d. programs ~iichaffect~women business owners.
The Department ha~s undertaken several initiatives to ensure that women
business owners were given an equitable oppoetunity to participate in all
HUD programs and activities Our response follows
1. :Initiattves~
~o A~omØendium Of women business ownei~s4n thé~housing Industry
was developed for utilization internally to serve as a quick
data source to extract such firms for consideration of HUD
proc~)rement opportunities
o The Department~ hacor~Sistent1y pr~ovided~outreach assistance~
to women bUSin~ss owners. For exáfflpie~a~Reg1onal1eminar
was held for minority women business owners The purpose of
this seminar was to Increase the awareness of, and provide
women business owners with infomat'tpn kfl "now to" access
opportunities through HUD programs
o A ser'les bi' District workshops were held around the country
for women-owned busiflesses to discuss HUD's procurement process
In an effort to continue our outreach to women efltrepreneurs
HUDhas&1so participated in conferénce~and seminars sponsored
by other agencies and Departments.
o ~The Department devel$~d ~&~UidePoing4usiñBss with HUD,
exclusively for minority, women-owned a%16 small Thusinesses
PAGENO="0704"
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2
o The Department maintains a working relationship with trade
organizations which represent the interest of women business
owners.
o The Department also serves as a member of the President's
Interagency Committee for Women's Business Enterprise (IACWBE).
Data are provided to the Committee on HIJD's procurement policies
and programs affecting women business owners.
o The Department establishes and negotiates goals with the
Small Business Administration on behaifof~women~owned
businesses on an annual basis.
o The Department has led all Federal agencies in encouraging
minority banks to participate in HUD's Minority Bank Deposit
Program Women are included as minorities for the purpose of
this program. From 1984 through 1987, H related funds
(average daily balances) exceeded $659,136,219 in minority
banks around thecuntry.
o The Department developed and implemented an International
program for women business owners IA the housing Industry.
As a result of these initjatlves,~many women busine~. owners have
been better able, to .par~icipate effectively in. HUD programs.
The Department's Office of BusinessRelations Is responsible for the
women business enterprise program. Even though the Department program
forwomen business owners has been successful,' we are continuously seeking
ways to enhance their partIcipation in the Department's programs and
activities~
2. Women Buslne~s 0~ners Particlpat.ion In Dograms from Fiscal
Year 1984 through 1987
a. From FIscal Year 1984 through Fiscal Year 1981,, HUD awarded
169 contracts (direct) to women business owners. In 1984:
$2,729,l2~; 1985: $3,017,000; 1986: $2,455,209; and In 1987:
$5,227,663. These contracts represented a cumulative total
of $13,429,010.
The total val ue of 8(a) contracts for, women business owners
let by HOD for this period was $2 092 993 or 2 5 percent of
all 8(a)cofltract awards which totaled $83,251,019.
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3
b. The Departments guide, Doing Business with HUD includes a
letter from the Director, Office of P'ocu~rement~ and Contracts
encouraging women and other business owners to submit the
Solicitation Mailing List Application in order to be included
on HUDs bidders mailing list. This guide is circulated at
conferences and seminars for women business owners around the
country.
c. We are unable to provide statistical data on subcontracts
awarded to women business owners. Contractors with
subcontracting plans are required to submit subcontracting
procurement data on Standard Form 294, (Subcontracting Report
for Individual Contracts); and Standard Form 295 (Summary
Subcontract Report). These reports provide aggregate data
for large business., small business, small disadvantaged
business and businesses in labor surplus areas.
3. Grant-Making and Loan Authority on Behalf of Women. Business Owners
The Department does have grant-making and loan authority for
some HUD programs such as the Urban Development Action Grant
(UDAG) Program; Community Development Block Grant/Technical
Assistance (CDBG/TA), Program; the Housing Development Grant
Program; and Section 202 Direct Loan Program for Elderly and
Handicapped citizens.
a. Under the Urban Development Action Grant Program, women business
owners received four (4) grants in 1986, totaling $3,718,000.
From this period to the present, 487 UDAG projects have been
approved, totalling $810 million. Women developers are encouraged
to participate in this program competitively along with other
devel opers.
Under the Community Development Block Grant/Technical Assistance
Program, the Department made two (2) awards in 1984, totalling
$702,827 or 3.6 percent of total CDBG/TA awards; in 1985, three
(3) awards were made to women business owners, totaling
$413,444,000 or 3.8 percent of total CDBG/TA award; there
were no CDBG/TA awards made to women business owners in
1986; one (1) award was made in 1987, totalling $238,809,000
or 1 .8 percent of all CDBG/TA awards.
In 1984, the Department awarded a total of $288 million in
Housing Development Grants to fund 141 projects. $86,400,000
or 30 percent of the total projects selected were owned by
women and minority businesses; there were no Housing Development
Grants made to women business owners in 1985; in 1986, four
(4) grants were awarded to women businesses, totaling $5,183,572
or 6.0 percent out of a total budget of $80,428,191; 1987,
one (1) Housing Development Grant was awarded to a woman
sponsored project, totalling $2,233,635 or 2.1 percent out
of a total budget of $100,054,915.
88~-199 0 88 - 23
PAGENO="0706"
700
4
Women business owners are not included in the Department's
data base to track their participation in the Section 202
Direct Loan Program.
b. HUD has sponsored seminars for women~-owned businesses, focusing
on how to prepare application to the Urban Development Action
Grant Program; Community Development Block Grant Program!
Technical Assistance Program; the Housing Development Grant
Program; and the Section 202 Direct Loan Program for Elderly
and Handicapped citizens.
4. Regulatory Authority for Commercial Credit
HUD does not have programs relating to the provision of commercial
credit or have regulatory authority over the provision of commercial
credit for women~.owned businesses. However, the Department does
adhere to the Equal Credit Opportunity Act, U.S. Code, 1987
Title 15, Section 1691 et seq.
5. HUD's Management Information System
As previously discussed under Item 1, the Department maintains
a compendium of women owned businesses which is utilized by the
Department as a data source for consideration of potential HUD
procurement opportunities; serves as a source for mass mailing
of information to women business owners about HUD programs; and
is used as a reference to extract names of women business owners
to extend invitation to HUD conferences and seminars. Additionally,
our Office of Procurement and Contracts maintains a computerized
list of businesses in its Management Information System which includes
women business owners.
This data base has been useful for Departmental needs, and is reliable
based on the current data collection instruments used for tracking such
information.
We hope this information will be of use to your Committee.
Samuel R. Pierce, Jr.
PAGENO="0707"
701
United States Department of the Interior
OFFICE OF THE SECRETARY
3 WASHINGTON, D.C. 20240
RE: OSDBtJ 300.34
W~Y 9 198~
Honorable John J. LaFalce
Chairman, Committee on Small Business
House of Representatives
2361 Rayburn House Office Building
Washingto~i, DC 20515
Dear Mr. Chairmaii:
Thank you for your letter of April 19, 1988, to Secretary
Hodel in which you requested information concerning the
Department of the Interior's implementation of policies and
programs which affect women business owners.
The Department of the Interior actively supports `the Women's
Business Enterprise program. Since there are no set-asides
or preference awards for women-owned businesses, most of
Interior's sustained progress in this area is the result of
increased and improved access to acquisition information and
success in competing. We shall continue in our endeavors as
we seek to achieve the objective of Executive Order 12138
that Women's Business Enterprises be givet~ an opportunity to
compete effectively in the economic maiAstream.
The information you requested is provided in the `enclosure
to this letter, in the same numerical sequence as the
questions are set forth in your letter of April 19, 1988.
Should you need further assistance or additional
information, please contact me on (202) 343-8493. Please be
assured that Interior will continue its aggressive support
of its Women's Business Enterprise program.
Sincerely,
Charlotte Brooks `Spann, Director
Office of Small and Disadvantaged
Business Utilization
Enclosure
PAGENO="0708"
702
Department of the Interior
Office of Small and Disadvantaged
Business Utilization (OSDBU)
Response to questions from the House Small Business
Committee regarding Interior's Women's Business Program.
(Letter of 4/19/88 from Chrm. LaFalce RE: WBE Activities)
R.~sn~n~e tc~_Queatiffik~rJ~:
The Women's Business Enterprise (WBE) Program began with the
issuance of Executive Order 12138 (Order) on May 18, 1979.
The Order created a National Women's Business Enterprise
Policy, and prescribed arrangements for developing,
coordinating and implementing a national program for Women's
Business Enterprise. In response to that Order, Interior
took the following initiatives:
* In 1979 and 1980, the Director, OSDBU, served as
Interior's representative on the Interagency Task Force for
Women's Business Enterprise.
* Established policy that complied with OFPP Policy
Letter 80-4 which prescribed clauses and regulatory coverage
to articulate uniform procedures in support of increased
subcontracting to women-owned firms by Federal prime
contractors.
* Established goals for prime contract awards to
women-owned businesses and proceeded to exceed those goals
each Fiscal Year. Interior has averaged 2.2% of its total
acquisition aS awards to women-owned businesses. Interior
performance against established goals follows:
% of Total
~a1k~Fll A~»=m~L.L$Ii1 ~
1980 $ 5.5 $ 11.8 0.6%
1981 10.8 26.7 2.0%
1982 10.7 22.6 2.0%
1983 14.0 20.5 2.0%
1984 18.2 22.9 2.4%
1985 17.3 27.8 2.6%
1986 19.3 24.9 2.2%
1987 18.0 19.3 1.9%
PAGENO="0709"
703
-2-
Interior's FY 1988 WBE goal is $21.7 million, or 2.0% of its
estimated total acquisition.
* Implemented Federal Acquisition Regulation (FAR)
policy in the Department of the Interior Acquisition
Regulations at Subpart 1419.9 concerning contracting
opportunities for women-owned businesses.
* Each Interior bureau participated in MegaMarket
Place I, held on April 17, 1986, in Washington, DC, to
increase the visibility of women business owners among
government, corporate contractors, the general public and
the media. Interior also participated in MegaMarket Place
II, held in May of 1987, in Washington, DC and in
Los Angeles, California.
The impact of the initiatives cited above has been very
positive as shown by Interior's very successful
accomplishments in awarding an average of 2.2% of its total
acquisition to WBE's since FY 1980. The OSDBU at Interior
has primary responsibility for all of the initiatives listed
above. Our assessment of these initiatives is that each has
been successful towards the collective achievement of the
objective stated in Executive Order 12138, that WBE's be
given an opportunity to, compete effectively in the economic
mainstream.
~rt~; Attachment 1 is provided as our response to this
part of question number 2.
~ In the fall of 1981, Interior developed an
Acquisition Screening and Review form, DI-1886 (see
Attachment 2), which is used to monitor all acquisitions
over $10,000. The DI-1886 was revised in January 1982,
April 1984, and most recently in January 1988, to keep it
current with the ever changing needs of the acquisition
process. Block 11,. line (d), Proposed Bidders/Source List,
ref ers specifically to soliciting WBE's. This information
is reviewed during selected Acquisition Management Reviews
conducted annually by OSDBU and as required by the Office of
Acquisition and Property Management, to ensure that
women-owned businesses have maximum representation on source
lists and are being sent solicitations.
PAGENO="0710"
704
-3-
~ The total subcontracting dollars awarded by
Interior's large prime contractors for the last four years
are shown below:
(Dollars in Millions)
El ~~g_Th~Lisx~
1984 $ 118.0
1985 $ 94.3
1986 $ 130.. 8
1987 $ 126.1
The subcontracting clause at FAR 52.219-13 is included in
every prime contract which exceeds $10,000. Letters sent by
OSDBU to large prime contractors with subcontracting plans
also encourage the use of women-owned firms as
subcontractors.
Rn~~_Q~~tLiOfl N~r.~:
~ The Department of the Interior has no authorized
system of records in place which permits obtaining the
number, total dollars, and relative percentages such figures
represent for all such grants and loans made to women-owned
businesses.
~ The majority of Interior's Grants and Cooperative
Agreements are awarded to State and Local Governments, with
the remaining portion awarded to colleges and universities.
Consequently, no opportunities exist for awards to
women-owned businesses.
~ 4;
The Department of the Interior has no programs relating to,
or authority over, the provision of commercial credit.
PAGENO="0711"
705
-4
The Department of the Interior collects arid maintains data
which indicates whether the recipient of a prime contract
award or a purchase order is a woman-owned business. The
data is collected into the Interior Procurement Data System
(IPDS) and is transmitted quarterly to the Federal
Procurement Data Center (FPDC) for inclusion in the Federal
Procurement Data System (~PDS). Interior uses this data to
monitor bureau progress towards achieving negotiated annual
women-owned business goals. Although FAR 19.902 and FAR
52.219-13 urge prime contractors to provide maximum
subcontracting opportunities to women-owned businesses,
there are no existing instruments to facilitate prime
contractor reporting on the success c~f those efforts.
Inasmuch as the FAR does riot require plans or goals for
subcontracting to women-owned businesses, the reliability of
any reports on such subcontracting would be questionable.
PAGENO="0712"
706
DOLLARS reported In $MiIIionn. (See NOTE below) AT2ACI0~1ENT 1
DEPARTMENTAL TOTALS -cc- WOMEN-OWNED BUSINESS (WBE) TOTALS
::::: FY'84 cc::: ::::~ FY'85 ::::: cc::: FY'86 :;::: ::::: FY'81 :0:::
ACTIONS DOLLARS ACTIONS DOLLARS ACTIONS DOLLARS ACTIONS DOLLARS
TOTALS - 1 13,628 963.6 10,810 1,068.2 11,460 1,151.4 13,663 1,005.4
WBE s's 1 380 22.9 316 21.8 312 24.6 661 19.3
PCT - S 1 2.8% 2.4% 2.9% 2.6% 3.2% 2.2% 4.1% 1.9%
DEPARTMENTAL TOTALS -cc- WOMEN-OWNED BUSINESS 8(a) TOTALS
cc::: FY'84 ::::: cc::: FY'85 :c::: ::::: FY'86 ::::: :::: FY'81 cc:::
ACTIONS DOLLARS ACTIONS DOLLARS ACTIONS DOLLARS ACTIONS DOLLARS
TOTALS - 13,628 983.6 10,810 1,063.2 11,460 1,151.4 13,663 1,005.4
WBE 8(e) 1 21 2.6 24 1.0 39 1.2 60 2.8
PCT - 5 1 0.2% 0.3% 0.2% 0.1% t 0.3% 0.1% 0.4% 0.3%
WOMEN-OWNED BUSINESS TOTALS -vu- WOMEN-OWNED BUSINESS 8(a) TOTALS
FY'84 cc::: ::::: FY'86 ::::: ::::: FY'86 ::::: ::::: FY'81 :::::
ACTIONS DOLLARS ACTIONS DOLLARS ACTIONS DOLLARS ACTIONS DOLLARS
WBE - 1 380 , 22.9 316 21.8 312 24.8 561 19.3
WBE 8(a) 21 2.6 24 1.0 39 1.2 60 2.8
Pci - S 1.1% 11.4% 1.6% 3.6% 10.6% 4.8% 10.6% 14.5%
NOTE: The above dollars EXCLUDE Public Law 93-638 (PL) and Federal
Supply Schedule (F.S.S.) and Other Agency Contracts.
- FY'84 - - FY'85 - - FY'86 - - FY'61 -
DOLLARS DOLLARS DOLLARS DOLLARS
PL 249.7 168.4 194.1 324.9
F.S.S. - 140.4 113.1 168.6 136.6
TOTAL -- 390.1 342.1 1 1 362.1 1 461.6
PAGENO="0713"
707
DEPARTMENT OPiNE INTERIOR
ACQUISITION SCREENING AND REVIEW FORM
($25,000 and over)
AT2~ACHMENT 2
A. ACQUISITION PLAN
1. Date Prepared.
2. Purchasing Office & Address (include Zip Code)
3. Solicitation No.
4. Description of Commodity
or Service, & Quantity (include Product & Service Code):
2. Uompetitive D 6. Proposed Synopsis i. ioss/t-rice u. voucitation 9. Response or Bid
Noncompetitive ~ (a)YES 0 (Estimate) Date (Sstimate) Opening Date
(Attach justification, (b)NQ 0 (Estimate)
unless 8(a)) FAR 5.2
10. Proposed Method of Acquisition:Clfeck one box (a) through (Li)
(a) Section 8(e) Program 0 . (I) NOT SET - ASIDE
(b) Total SB/LSA Set-Aside 0 (g) Buy Indian
(c) Total Small Business Set-Aside 0 Check either (h) or (i)
(d) Partial Small Business Set-Aaide ~ (h) Sealed Bidding 0
(e) Labor Surplus Area Set-Aside ~ (i) Other Negotiated (41 USC 253 (c)) 0
11. Proposed Bidder's/Source List (Attach Copy) PASS USEQ: YES ~ NO 0
(S) No. cit Small Businesses ______________ (d) No. Of Min./Dis. Businesses______________
(b) No. of Large Businesses (e) No. of Women-Owned Businesubs_____________
(c) No. cit Labor Surplus Area Concerns:
Large _________ Small _________
12. Basis for proposed Method of Acquisition
(a) Not Set-Aside for 8(a) because: cl Partial Small Business Set-Aside not Appropriate
(1) Reasons: ~ See: FAR 19 502-3
(dl Not Set-Aside for LSA because:
(1) Services to be petormed are not in LSA 0
(2) Competition would be unduly restricted 0
(b) Not Set-Aside for Small Business because: (3) Other ~Speciiy~:
(I) Non-Competitive 0 (e) Remarks:
(2) Insufficient number of qualified Small
Businesses 0
(3) See Acquisition History below 0
(4) Other (Specify):
?~EREvtOUS ACQUISITION INFQPMATIOJ4
13. Has similar item/service been procured recently? YES 0 NO 0 If yea, indIcate method of acquisition (USE CODES (N
BLOCK tO ABOVE) and place of performance:
14. If competitive indicate number of responses received:
Large . ~-. Small LSA . Min./Dis. . WBE
15, Date of Award: 18: Contract Number: 17.~TotaI Cost/Price: 18: Name of Contractor and Address:
19. Type of Fwm (Check all applicable):
Small 0 M)niDis. 0 Large 0 Women-Owned 0 in LSA 0
Other 0 (Specify)
20. Signature and Ôate:
vumracnrg unicer
IDI'l 886)
(Revised 1/88)
PAGENO="0714"
708
ACQUISITION SCREENING AND REVIEW FORM*
($25,000 and over)
a. Prior to solicitation, the contracting officer to whom an acquisition requirement is assigned for action
shall screen each requirement of $25,000 or more and initiate an "Acquisition Screening and Review
(ASR)* Form (Dl-1 886). The ASR form shall reflect the consideration given to restricting award of the
requirement to a total or partial small business or labor surplus area set-aside, including award to the
Small Business Administration (SBA) for subcontracting in accordance with the provision of Section
8(a) of the Small Business Act.
b. The ASR form shall reflect the contracting officer's selected method of acquisition as enumerated in
block 10 of the form including the circumstances and rationale that support the contracting officer's
decision. If additional space is needed to provide specific information, please use~a separate sheet of
paper and attach it to the ASF~ form.
c. To the extent practicable, the contracting officer shall coordinate, all known facts and circumstances
with the Small Business Representative or the Business Utilization and Development Specialist
(BUDS), as appropriate, prior to completing and signing the form. Conversely,the Small
Business Representative or BUDS shall make available to the contracting officer all small and
minority/disadvantaged busihess source data and any other pertinent information dealing with small
business, Section 8(a), and/or Labor Surplus Area concerns that may aid his/her decision. All
appropriate women's business enterprise sources shall also be provided to the Contracting Officer.
d. The contracting officer shall submit the completed ASR form to the designated Small Business
Representative or BUDS, as appropriate, for review and/or concurrence with the selected method of
acquisition.
e. In the event the final selected method of acquisition involves a rejection of set-aside
recommendations, the matter shall be processed in accordance with applicable procedures as
outlined in FAR 19.505.
f. The original copy of each completed ASR form, including any additional facts and circumstances
supporting the selected method of acquisition, shall be maintained in the contract file of each
contracting activity. A duplicate copy of the ASR form and supporting facts and circumstances shall
be maintained by the designated SBA-PCR (if assigned) and BUDS.
* Copies of this form may be obtained from: Bureau of Land Management, Printed Materials Distribution Section (D-558B),
Building 41, Denver Federal Center, P.O. Box 25047, Denver,Colorado 80225-0047. All requisitionS and req~~ests for
information pertaining to stock should be directed to this office.
PAGENO="0715"
709
U.S. Department of justice
Office of Legislative and Intergovernmental Affairs
Office of the Assistant Attorney General Washington, D C 20530
RECEIVED
May 6, 1988
Honorable John J. LaFalce MA~ 6 1988
Chairman, Committee on Small Business
House of Representatives
2361 Rayburn House Office Building Commillce in S~i~tI 8U~i~'
Washington, DC 20515
Dear Mr. Chairman:
The Department of Justice is especially pleased to report
to the Committee concerning our initiatives supporting the
Women Business Enterprise Program (WBE). This program,
along with other socio-economic programs, is Under the
direct supervision of the Deputy Attorney General; however,
the day-to-day program management is performed by the
Director, Office of Small and Disadvantaged Business
Utilization. The Department also serves as a member on the
Interagency Committee on Women's Business Enterprise.
Through these combined efforts, significant achievements
have been accomplished which enhance the inclusion of women~
owned business firms in our contractinq pro9ram.
As an example, in Fiscal Year 1984, procurement expenditures
with women-owned businesses totaled only $5.2 milljon.
Through various outreach efforts of the Department that
dollar value has increased to over $14.9 million in FY 1987,
an increase of almost 184 percent. As we find additional
WBEs to respond to our contracting opportunities, w~ expect
the dollars and the percentages of participation to
increase.
Enclosed are answers to the questions posed in your letter
dated April 19, 1988.
Sincerel ,
Acting Assistant
Attorney General
Enclosure
PAGENO="0716"
710
Department of Justice
Women Business Enterprise Program
1. Initiatives taken by the Department of Justice in
support of the Women Business Enterprise Program (WBE) are
as follows:
o Established an outreach effort to locate women-owned
business firms. The Department attends Federal Procurement
Conferences, fairs, conventions, and marketplaces seeking
WBE5 to compete for our procurement opportunities.
o Sought out and included women-owned business firms as
invitees to the annual Small Business Fair conducted by the
Department.
o Individually counselled women-owned businesses,
advising them how to do business with the Department and the
best method of marketing with the bureaus.
o Encouraged women~owned business firms to review the
Commerce Business Daily for announcements of contract
opportunities.
o Established a system to provide to women business
organizations announcements of departmental contract
opportunities.
o Encouraged prime contractors to utilize women-owned
businesses as subcontractors.
o Participated in the planning, developing and imple-
mentation of MegaMarketplaces I and II. MegaMarketplace was
a joint project of the Small Business Administration, the
Department of Commerce and the Government of Washington, DC.
The Marketplaces permitted a mutual exchange of information
between Government and industry concerning opportunities and
capabilities of each. The Marketplaces resulted in the
increased use of women entrepreneurs in our contracting
program.
o Encouraged women business firms to submit their names
for placement on our Bidders Mailing List.
o Encouraged contracting officers to include women-
owned business firms in every solicitation opportunity.
PAGENO="0717"
711
Page 2
The impact of the initiatives listed above is that more
women-owned businesses are now aware of our contracting
opportunities; they are responding to our announcements;
and, they are becoming the successful offerors. In the last
four fiscal years there was a 184 percent increase in the
dollars expended with women-owned businesses. We recommend
expansion of the outreach program to further increase the
involvement of women entrepreneurs in the contracting
program.
2. Information for each of the prior four fiscal years is
as follows: (Dollars in thousands)
a. ~isca1 i~otal Procure- Total Dollar Percent~
~ ment Dollars Awards~ to WBE5 Participa-
tion ~y WBE5
1984 $ 519,705 $ 5,219 1.0
1985 $ 636,078 $ 8,808 1.4
1986 $ 652,857 $ 9,716 1.5
1987 $1,052,811 $ 14,873 1.4
Our system does not retain information on the numbers of
awards made to WEEs, nor can we separately identify women-
owned 8(a) firms.
b. Efforts made by the Department to ensure that women-
owned businesses appear on our bidders list are described in
the initiatives cited above.
c. The t~otal dollar amount of subcontracting is as
follows: (Dollars in thousands)
Fiscal Year Tota1su~cpntrpct Dollars
1984 $ 7,420
1985 $ 5,975
1986 $15,330
1987 $ 2,699
PAGENO="0718"
712
Page 3
Our system does not collect the extent of participation by
women-owned businesses in the subcontracting program.
Currently, there are no provisions for prime contractors to
establish goals nor to report upon the utilization of WBE's
as subcontractors.
3. The majority of the Department's grant monies are for
formula grants which involve statutory entitlements for
state or local governments. Limited funding is made
available for discretionary grants to private non-profit
corporations, research organizations and universities.
Seldom is grant money available fo~ awards to private
businesses. Therefore, the percentage of our grants made to
women-owned businesses over the last four fiscal years is
minimal. The total dollars awarded in grants over that
period are as follows: (Dollars in thousands)
Fiscal Yeas Total Grant Dollars
1984 $ 117,451
1985 $ 143,059
1986 $ 245,022
1987 $ 416,794
4. The Department of Justice does not provide commercial
credit to business enterprises.
5. The only data the Department maintains regarding women-
owned business firms is the total. dollars awarded to such
firms through contract actions. The data is utilized to
determine the percent of participation and t~ show the
progress of the Department in awarding contract actions
to women-owned business firms.
PAGENO="0719"
718
US. Department of Justice
Office of Legislative and Intergovernmental Affairs
Office of the Assistant Attorney General Washington, D.C. 20530
May 6, 1988
Honorable John J. LaFalce
Chairman, CommIttee on Small Business
House of Representatives
2361 Rayburn House Office Building
Washington, DC 20515
Dear Mr. Chairman:
The Department of Justice is especially pleased to report
to the Committee concerning our initiatives supporting the
Women Business Enterprise Program (WBE). This program,
along with other socio-economic programs, is under the
direct supervision of the Deputy Attorney General; however,
the day-to--day program management is performed by the
Director, Office of Small and Disadvantaged Business
Utilization. The Department also serves as a member on the
Interagency Committee on Women's Business Enterprise.
Through these combined efforts, significant achievements
have been accomplished which enhance the inclusion of women-
owned business firms in our contracting program.
As an example, in Fiscal Year 1984, procurement expenditures
with women-owned businesses totaled only $5.2 million.
Through various outreach efforts of the Department that~
dollar value has increased to over $14.9 million in FY 1987,
an increase of almost 184 percent. As we find additional
WBEs to respond to our contracting opportunities, we expect
the dollars and the percentages of partiàipation to
increase.
Enclosed are answers to the guestions posed in your letter
dated April 19, 1988.
Simcerel
Acting Assistant
Attorney :Gene~a1
Enclosure
PAGENO="0720"
714
Department of Justi~
Wqmen Business. Enterprise Proaram
1. Initiatives taken by the Department of Justice in
support of the Women Business Enterprise Program (WBE) are
as follows:
o Established an outreach effort to locate women-owned
business firms. The Department attends Federal Procurement
Conferences, fairs, conventions, and marketplaces seeking
WBEs to compete for our procurement opportunities.
o Sought out and included women-owned business firms as
invitees to the annual Small Business Pair conducted by the
Department.
o Individually counselled women-owned businesses,
advising them how to do business with the Department and the
best method of marketing with the bureaus.
o Encouraged women-owned business firms to review the
Commerce Business Daily for announcements of contract
opportunities.
o Established a system to provide to women business
organizations announcements of departmental contract.
opportunities.
o Encouraged prime contractors to utilize women-owned
businesses as subcontractors.
o Participated in the planning, developing and imple-
mentation of MegaMarketplaces I and II. MegaMarketplace was
a joint project of the Small Business Administration, the
Department of Commerce and the Government of Washington, DC.
The Marketplaces permitted a mutual exchange of information
between Government and industry concerning opportunities and
capabilities of each. The Marketplaces resulted in the
increased use of women entrepreneurs in our contracting
program.
o Encouraged women business firms to submit their names
for placement on our Bidders Mailing List.
0 Encouraged contracting officers to include women-
owned business firms in every solicitation opportunity.
PAGENO="0721"
715
Page 2
The impact of the initiatives listed above is that mOre
women-owned businesses are now aware of our contracting
opportunities; they are responding to our announcements;
and, they are becoming the successful offerors. In the last
four fiscal years there was a 184 percent increase in the
dollars expended with women-owned businesses. We recommend
expansion of the outreach program to further increase the
involvement of women entrepreheurs in the contracting
program.
2. Information for each of the prior four fiscal years is
as follows: (Dollars in thousands)
a. fiscal Total Procure- Total Dollar P~jcent of
~ ment Dollars ~wa~dStoWBE~ Participa-
tion by. WBEs
1984 $ 519,705 $ 5,219 1.0
1985 $ 636,078 $ 8,808 1.4
1986 $ 652,857 $ 9,716 1.5
1987 $1,052,811 $ 14,873 1.4
Our system does not retain information on the numbers of
awards made to WBE5, nor can we separately identify women-
owned 8(a) firms.
b. Efforts made by the Department to ensure that women-
owned businesses appear on our bidders list are described in
the initiatives cited above.
C. The total dollar amount of subcontracting is as
follows: (Dollars in thousands)
Fiscal Year Total Su~.co~t~act. Dollprs
1984 $ 7,420
1985 $ 5,975
1986 $15,330
1987 $ 2,699
PAGENO="0722"
716
Page 3
Our system does not collect the extent of participation by
woin~n-owned businesses in the subcontracting program.
Currently, there are no provisions for prime contractors to
establish goals nor to report upon the utilization of WBE's
as subcontractors.
3. The majority of the Department's grant monies are for
formula grants which involve statutory entitlements for
state or local governments. Limited funding is made
available for discretionary grants to private non-profit
corporations, research organizations and universities.
Seldom is grant money available for awards to private
businesses. Therefore, the percentage of our grants made to
women-owned businesses over the last four fiscal years is
minimal. The total dollars awarded in grants over that
period are as follows: (Dollars in thousands)
Fiscal Year Total Grant Dollars
1984 $ 117,451
1985 $ 143,059
1986 $ 245,022
1987 $ 416,794
4. The Department of Justice does not provide commercial
credit to business enterprises.
5. The only data the Department maintains regarding women-
owned business firms is the total dollars awarded to such
firms through contract actions. The data is utilized to
determine the percent of participation and to show the
progress of the Department in awarding contract actions
to women-owned business firms.
PAGENO="0723"
717
NASA
National Aeronautics and
Space Administration
Washington, D.C.
20546
Reply to Attn ot XC: B B : mg ~ ~ 988
Chairman John J. LaFalce
Committee of Small Business
House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
This letter is in response to your inquiry of April 19, 1988,&to
Dr. James C. Fletcher requesting information relative to hearings
you are planning to schedule on women business enterprise.
Since the signing of Executive Order 12138, NASA established a
Women's Business Enterprise Program to coOrdinate itt efforts to
ensure equitable procurement opportunities for Women~.owned
business. We have worked to increase employee awareness of our
commitment to Women's business enterprises. The principal
elements of the program included the development of women-owned
business sources, counselingand assistance, and ensuring an
awareness of prime and subcontracting opportunities.
Administrative policies and procedures were established in
support of Women-owned business enterprises. The responsibility
for program management has been placed with NASA's Director of
Small and Disadvantaged Business Utilization. The Deputy
Administrator exercises general oversight of the program's
implementation. This dictates our involvement in every aspect of
the program to ensure the participation, successful performance,
and viabilitly of the female business community.
The following information is providedin response to the
questions asked in your letter:
guestion 1
Executive Order 12138 requires that each Federal department
and Agency "take appropriate action to facilitate, preserve
and strengthen women's business enterprise and to ensure
full participation by women in the free enterprise systems."
Please identify every initiative your Agency has undertaken
pursuant to this Executive Order', the impact of the
initiative, the office responsible for the initiative, your
assessment of the success or failure of each, and your
recommendations for future initiatives.
PAGENO="0724"
718
2.
Answer 1
Assigned the responsibility for the Women's Business
Enterprise Program to the Agency's Small Business Advisor in
the Office of Small and tHsadvantaged Business Utilization
~ Assigned the Small Business Advisor as the
R~7~y's representative to the Interagency Committee on
Women's Enterprises.
Participated in the ~~~~p1ece fer' the White He~e
~i~feç,j~C. for women business owners.
Participated with the Small Business Administration
in the series of one day ~ for
women in 21 cities on how to do business with NASA.
On a continuing basis, target~ed women-owned firms in high
technology to .40M.rce list at each
Placed the names of qualified women-owned businesses on the
d4H*t 1.r .u~ smflcItatt.i~.
Presented to women's groups to acquaint them with
the ~ *~ ~j~j bwsimess~ with NASA.
Cooperated with the Women's Business Enterprise
Program in developing a check-list of requirements
for new businesses owned by women. The check-list is
included as part of a package furnished these businesses.
Established meaningful for the participation
of women-owned businesses in NASA procurement, Have
~ ~as~s since establishment of the
program in NASA in fiscal year 1980.
Participated in the I~~W$s*$~acej activities
sponsored by the Department of Commerce.
Expansion of the Women's Business Enterprise Program
will: (a) require continuation of the present effort to
assist women business owners, and; (b) legislation to create
a preferential program for women-owned businesses.
Question 2a
Please supply the Committee with the following information
for each of the last four years: The number, total dollars,
and relative percentages such figures represent for all
contracts awarded by your Agency to women-owned businesses
identifying separately awards made pursuant to Section 8(a)
of the Small Business Act.
PAGENO="0725"
719
3.
Answer 2a
CONTRACTS OVER $25k TO WOMEN-OWNED SMALL BUSINESS
Amount
Fiscal Year No of Contracts r~u~u~ay~- (000)
1984 126 .40% $23,044
1985 134 .56% $36,543
1986 120 .77% $47,583
1987 114 .80% $50,826
CONTRACTS OVER $25K TO 8(A) WOMEN-OWNED $MALL BUSINESS
1984 14 .12% $7,024
1985 13 .07% $4,858
1986 15 .24% $14,615
1987 17 .16% $10,041
** Percentage of total awards to business
guestion 2b
The efforts made by your Agency to ensure that women-
owned businesses appear on government bidders lists
and are being forwarded solicitation packages for
contracting opportunities.
Answer 2b
Continual efforts are made by NASA to ensure that the
names of qualified women business owners are placed
on the bid list for each solicitation.
Question 2c
Total dollar amount of subcontracting commitments
made by large prime contractors with youth Agency and
efforts to encourage primes to utilize women-owned
small business concerns,
Answer 2c
In answering this question we a~ssume4 your inquiry pertained
to subcontracting commitments to women-owned businesses.
SubcOntracting plans, as required by Public Law 95-507
contain only requirements for s~ibcontracting to small and
disadvantaged firms. ~
for sØ~.mtract &wards to wose*~p~** b~ttPIñs,*1, We are,
however, aware that NASA prime contractors are awarding
subcontracts to women.'Ot~ned businesses. To assist toward
that end, each NASA solicitation in excess of $500,000
~ c+.~..,
PAGENO="0726"
720
4.
Question 3
If you Agency makes grants or loans, please supply the
following information for each of the last four years.
The number, total dollars, and relative percentages
such figures represent for all such grants or loans
made to women-owned business.
Answer 3
This question is not applicable to NASA, since we do
not have a loan program. All NASA grants are issued
to non-profit and educational institutions. There
are no statistics available that track any grants
that may be issued to a non-profit, women-owned
institution, or to an educational institution.
Question 4
If your Agency has programs relating to, or regulatory
authority over, the provision of commercial credit, in
any form, describe any initiatives undertaken by the
Agency, or subject to its programmatic or regulatory
authority, that are directed toward women business
owners or that may be more likely to affect such owners
in any significant way. In your response, please detail
such program or authority and provide such statistical
or other data that may serve to describe the efforts
of your Agency.
Answer 4
This question is not applicable to NASA since we do
not have regulatory authority or the provision for
commercial credit.
Question 5
Please list the types of data within the control of your
Agency regarding women-owned businesses, indicating the
usage that your Agency has for such data, the sufficiency
of the data, its reliability and any improvements In
data collection, retrieval or usage planned or desired
by the Agency to better assist its efforts in this area:
Answer 5
NASA's collection of this information is accomplished
by completion of the Individual Procurement Action
Rep~t, $A*A reNt 5*7. This form is enclosed for your
information. Blocks 17 and 36 are utilized for the
compilation of statistics with regard to women-owned
PAGENO="0727"
721
5.
and 8(a) business, inclusive of women-owned. The information
provides NASA with valuable Information on the economic
impact of the space program, and a means of conducting
in-depth studies of the economic sigificance of the program
to specific sizes and types of business. It also provides
funding Information on specific NASA programs and is utilized
in supporting statements during Congressional hearings. This
data is considered sufficient and reliable, and it Is updated
as requirements dictate. NASA has an automated data retrieval
system in place that ensures the reliability, and easy access of
this data.
Thank you for the opportunity of providing you Info~matlon about
NASA's Women's Business Enterprise Program.
Sincerely,
on . McBride
Assi tant Administrator
or ngressional Relations
Enclosure(s)
cc:
XC (C23719)
AEM (A88-01553)
H/Admiral S. 3. Evans
HM/M. Ridgway
K/E, D. Rosen
PAGENO="0728"
722
Individual Procurement Action Report
7. C1C NUMBER 7s. CICA APPLICABILITY
OSTC
B. CONTRACTOR NAME (Not to exceed 29 positions, including spaces)
9. CONTRACTOR OIVISION (20 positIons)
JO. CONTRACTOR ADDRESS (City - 24 positions) STATO (2 positionsJ
J1I..~ACEOF,.!~R~.9R.MA.NC c~cisy,-24positions~ 12. STArE ~2positIoos1 ZIP CODS
3. CONTRACT/MOD. DATE 14. COMPLETION DATE 15. PROCUREMENT PLACEMENT
(YYMMDD) (YYMMDD) C005060
08 Ilttsnqonssnoteotul 23 0.4w Undw Metdutosy GGA FOS
Lw. Cnottout 06 Gsetn 24 Osdet Usden OptIonsI GSA FSS
21 Cnnpnsstlue Agseestssot
Coottosl 22 Osdes Usdts Ansthes AOROSYs
ConDuct
09 Chntgo Osdes 11 Adollnlntsstlce 13 Tssntlnstlnt tnt Cotnstletus
108/A OoflnltlslngChetgeOsdts 12 Tussnlnetlot ton Detuolo
V V V V V
Nonprofit Instltotlons State/Local Governmoot
Olscdtu000gnd OS Edsuntlotel 00 Edocetlotsl
06 1-fospltel 10 HospItal
07 Rsstuph Footd.4Ion/Lshnretorlus 11 Rossssnh Os04DIRStIGO
08 OWes Nonpsof It 13 Othes Stott/Loonl Ooooromtnt
V
06 Cost Shnslno 11 Rotsoectlce Pyltu Rtdottsttuldutlot
Redstssttlnotloc 07 Cone Pbs Flood Pen 12 Cost Plot Awond Pet
Esueletlot/PrIUt 00 Cost P1cc Itonttloa FeB 13 Plstt P10.4 P11DB, Loanl.ot-Eitott Tnr,o
09 tIttse & Metwleln
10 Lsbos * Hoot
V
V V
Lsbon Susplsss AnsO 2 LeNDs SGsplss Anna - Tie Old Pstfernono 4 T000l LoOts Sosplos OttAsldo
- No Ptefonoson 3 Totsl Lebot Sunplos/SotsIl Busitlonn Psuteseout
Set.Asldns Psettsuone
REQUIREMENTS
Otetototy Reqolsotoetts 2 WoIsh-Heoly Ant, Regulas Daubs 4 Oeuls-Benot Aot
Metofootons 3 Scsulne Cwotsent Act
V~~_
V V V
Colntgmtltln6 Noecompetltive
3 Soosne Exuluetlot Posed S Follow-os Altos Cosopetltloo 7 Unsollnloed Proposal
4 No Snout Exuloetloo 00usd 6 Othes NonxnntpotItIx~ Ns000lEtud
V
SMALL BUSINESS
Smell Business SolicIted
BusIness Sauroe 05 Old Not Ruoelocd 00 Psdpustl Not Anoopted
06 BId Not Low no Cnwpeny Nnn Roepotslble
Aotusde 07 Old/Proposul Non Reepooslxu 10 Othes
PRODUCT ~See Data Tables~
34. . PHYSICALLY COMPLUTE (Yor Blank)
etfosol V_____________________________________________________
wIth "F INto Z tot ethos unsulcosl MOOIP. ORLIGATION5
`ions thso 0950" tot supplIes & eqolp.I ~5. (To neal-tnt doSal-)
SYNOPSIZED ,.. WOMAN-OWNED BUSINESS
I endg y) Y ES
u,s~VVVVV5VV NNO -
1 NOTCERTIFIEO
17. MRRI COST AND PERFORMANCE REPORTING
DELEGATED N Noon bRuIsed 4 NP 033M & 533P
2 SF 533M only S NF 533F & 8330
CONTRACT V V 3 SF t33M & 0330 0 SF S33M, t33P & 5330
V so. MONt PROPERTY AND SPACE HARDWARE REPORTING
CONTRACT N Nono scqulsed
2 SF 1010 wlthuot Spout Hccdwost
STANDARDS CLAUSE - 3 SF SO1B with Spent Hssdwest
V
30. TRADE DATA
V
Ui:i:Ji~Ii( No of BlddeseOtfeslto Fosslut Item 1051
PLAN (Use "W"for Waiver)
V V ~i~J:i::(/~ Busy Aotntlnut Aot Penoent Dlttesonuo(2posltions)
DISTRIBUTION OF NASA
~Ji~~o5n~y of Mutusfoctosos (2 positions)
40. TOTALPRICE OR ESTIMATEDCOST(Tonlnrestdoltar)
2FhaseII)
V 41. TOTAL PROFIT OR FEE (To nearest dollar)
V
DATE
CmpIsNASAFm5O7A S MILe
NASA FORM 807 FEB80 PREVIOUS SDITIONS ARE OBSOLETE. RCS IOPACSOO59O
PAGENO="0729"
723
NATIONAL SCIENCE FOUNDATION
WASHINGTON, DC. 20550
May 2, 1988
Honorable John LaFal~e
Chairman
Committee on Small Business /
House of Representatives
Washington, D. C. 20515
Dear Mr. Chairman:
In your April 19, 1988, letter to Mr. Erich Bloch, Director of
the National Science Foundation, you requested that NSF provide
the Committee with responses to several questions related to the
oversight hearings on women's business enterprises.
NSF has two offices (Office of Slbtiøuethess~~M O~*oof
~ Business UtiIizatio~) whose major
functions are to provide information, guidance and assistance to
small, small and disadvantaged, and women"owned businesses
interested in the Foundation's re~èarch or procurement
opportunities. A former Director of the Office of Small Business
R&D served as the ~no~ r~prs~entative on the Interagengy
on Women's ~i~Thess Enterprise that assisted the
Presidential Task Force with the development of the "Report of
the President's Task Force on Women Business Owners."
NSF's primary program missions focus on support for basic
scientific and engineering research, and science and engineering
education. NSF obligates most of its funds through grants to
support research projects proposed by a variety of performers in
response to both solicited and unsolicited proposals. Formal
proposals are evaluated for scientific or technical merit by
scientists, engineers, or other experts knowledgeable in the
subject matter from the academic, industrial, not-for-profit
communities, and from other Federal and government agencies.
Thus the Foundation does not procure major amounts Qf goods or
services from the general commercial market. Generally, N$F does
not contract for research.
The Foundation doós not make or insure capital loans to
businesses or provide commercial assistance type funding. In
addition NSF does not support projects in business
administration or methods or for the development general
production or marketing of products.
However, there are NSF programs, consistent with our missions,
that relate in the long term to increasing opportunities for
women to succeed as scientists and technologists in business or
academic careers. These programs are identified and described on
page 5.
PAGENO="0730"
724
Honorable John LaFalce 2.
The following responses are provided in the order in which the
questions appeared in your letter.
1. From 1979 to present, NSF's initiatives undertaken to
implement Executive Order 12138 include:
a. Use of the SBA PASS `ist to identify women-owned small
R&D and high technology firms. Each firm on the list wa~
mailed a copy of our Small Buaines~ ~tti~ to Z~ederal R&D
together with a memo from the Director, Office of Small
Business R&D, (OSBRD) inviting the use of that office for
advice and guidance concerning NSF research/procurement
opportunities. Approximately 40-50 contacts to the OSBR~
resulted from that mailing, and contacts to other agencies
may have resulted also from use of the Guide.
b. Use of the total PASS, FPDC, and other SBIR participating
agencies' mailing lists, which include women-owned firms, for
notification of NSF-sponsored small business conferences and
for mailing of NSF Small Business Innovation Research (SBIR)
Program solicitations. Although conference registration data
do not identify women-owned firms, the agency representatives
working the one-on-one counselling sessions report a
significant increase in the number of women business owners
seeking both research and procurement opportunities at the
NSF. In addition, the number of SBIR awards to women-owned
firms has increased steadily over the past four years.
c. Transmittal by the Director, Division of Grants and
Contracts, of procurement instruction to NSF contracting
officials related to the inclusion in NSF contracts of
clauses regarding the utilization of women-owned business
concerns.
d. Increased outreach efforts by NSF small business program
specialists through ~
procurement `airs, au~Ths Me~e~' Me~kmt~ e, targeted to
women-owned businesses. ~ti~*It a h8If dOzen immediate
follow-up conte~ts result from such faits. In a number of
iastances these firms have competed successfully for N~F
procurement awards.
e. Agency procurement preference ~ which
include goals for women-owned business, are monitored by
NSF's OSDBU Director, Competition Advocate and Procurement
Executive. Such monitoring increases the level of awareness
PAGENO="0731"
725
Honorable John LaFalce 3.
~ prOgt~m and contracting officials of such goals and
results in strong efforts to accompliéh and exceed the
established goals.
f. Future recommendations: NSF plahs to continue its out-
reach efforts to identify and encourage the participation of
women-owned business iI~ research and procurement
opportunities. In addition, the day prior to the start of
the annual NSF sponsored small business high tech
conferences, a special seésion is scheduled for small
business firms unclerrepresented in Federal R&D This
session is designed to introduce these firms to the federally
funded R&D arena and will include a seminar on proposal
preparation, as well as provide opportunities to meet with
federal managers of small business R&D grant and procurement
programs.
2. a. NSF contract actions to women-owned businesses for fiscal
years 1984-1987, excluding GSA/FSS, as reported to SBA
pursuant to provisions of P.L. 95-507:
Fiscal Year No. of Contract Total $ % of Agency
Actions Awarded Total Primes
`$ in Millions
1987 329 $2.807 L38%
1986 177 $2.3l3 1.18%
1985 68 $2.392 1.23%
1984 63 $i.230
8(a) award data for women-owned businesses from 1984-1987 is
provided below:
PY l985--2 awards totalling $358,633
b. The Foundation's missions, small size, la~k of field or
regional offices, and use of the GSA Supply' Schedule
contracts limits the overall number and varlet~r of
procurement requirements. Most larger NSF procurement
requirements are met through competitive negotiations of
proposals submitted in response to Requests for Proposals
NSF publicizes these opportUnities in the ~~erce Business
~ In addition, NSF often uses mailing lists of àther
agencies ahd professional organizations to announce research
opportunities. NSF programs also maintain mailing lists for
those interested in receiving program announcements and
solicitations,
Small firms Owned by women and minorities are encouraged to
submit their capabilities and experience statements to the
PAGENO="0732"
726
Honorable John LaFalce 4.
OSDBU for inclusion among their source files and also for
circulation to appropriate NSF offices and divisions for
information and consideration.
c. Subcontracting opportunities are avaIlable under a few
large prime contracts for the management and operation of
major research facilities and related activities. Most of
NSF's major prime contractors are universities or nonprofit
scientific research organizations. Approximately 40 to 50%
of NSF's total subcontract dollars go to a university
which serves as the U.S. science operator, responsible for
drillship operations, for the International Ocean Drilling
Program activity. Consequently, commercial-type
subcontracting opportunities are not that significant. To
implement provisions of P.L. 95-507, NSF prime contractors
were contaàted by NSF contracting officials and advised of
the requirements to establish meaningful goals for subcon-
tracts to small, small and minority, and women-owned
business. NSF contracting officials review annual
subcontracting plans of major prime contractors and encourage
utilization of women and minority-owned firms wherever
feasible.
Total St~bcontract Dollars Awarded by Primes
($ in Millions)
Fiscal Year l987--$4l.590
Fiscal Year l986--$74.85l
Fiscal Year l985--$63.766
Fiscal Year l984--$34.044
3. As noted elsewhere in this submission, NSF obligates most of
its funds through grants to support basic scientific and
engineering research and improvements in science and
engineering education. While NSF does not make loans or have
programs specifically for business development, there are
other activities that relate to the underlying purposes of
Executive Order 12138. These activities are identified
below.
a. Information on grants awarded to women-owned businesses
i8 available only on awards made in rè~pbn~e to the annual
Small Business Innovation Research (SBIR) program
solicitation.
PAGENO="0733"
727
Honorable John LaFalce 5.
SBIR Awards to Women-Owned Businesses
Fiscal Year No, of Awards Total Dollars % of SBIR
Awarded Budget
$ in Millions
1987 $l.77l 11
1986 $l.098 7
1985 $.3l0 3
1984
Information on NSF grants with women principal investigators
is provided below. These data include awards resulting from
unsolicited research proposals and spe0~l program
initiatIves for lomen. These programs include: Research
Opportunities for Women (ROW), Visitiflg Professorships for
Women (VPW), and Career Access Opportunities in Science and
Technology for Women, Minorities, and the DiSabled (ACCESS).
These special initiatives support activities designed to
attract, retain, and broaden the participation of women in
science and engineering, and to increase the number of women
in research funded by NSF.
NSF Support to Women (excluding SBIR awards above)
Fiscal Year NO. of Awards Total $ (in Millions)
1987 1,560 $101
1986 1,391 $ 80
1985 1,169 $ 81
1984 999 $ 60
b. NSF's efforts to encourage par~icipa~i~ of ~omen in
grant programs are identified below:
The National Science Board (the policymakin~ body of the
NSF) and the NSF~Director, are strongly committed to
broadening the participation of underrepresented groups in
NSF's programs and into the mainstream of research and
education. NSF'S commitments are evidenced by the
special initiatives noted below.
The Foundation's policy itatement on affirmative actiOn
addresses composition of the agency's advisory committees,
proposal reviewers and panelists with regard to women,
minorities, and handicapped persons.
PAGENO="0734"
728
Honorable John LaFalce 6.
NSF Assistant Directors established plans to promote full
participation of women, minorities, and the handicapped in
their activities. These plans received distribution within
the agency.
NSF program announcements, RFPs, and information brochures
contain language that encourages women, minorities, and the
handicapped to submit proposals.
NSF has a Committee on Equal Opportunities in Science and
Engineering, appointed by the Director, to provide advice on
activities to encourage full participation in science and
engineering by underrepresented groups.
Also, the NSF Director recently announced the establishment
of an internal Committee on Programs for Women, Minorities
and the Disabled. This Committee will review existing
programs, policies, and initiatives and advise on their
effectiveness.
NSF is actively involved in the Interagency Task Force on
Women, Minorities and the Handicapped in Science and
Technology.
4. NSF does not have programs relating to or authority over'
the provision of commercial credit.
5. Data on women-owned businesses is collected to the extent
necessary to meet statutory reporting requirements.
Organizations are requested to idebtify whether they qualify
as a small, minority, or woman-owned business. This
information is requested on NSF's proposal cover sheet.
Also, NSF collects information on proposal reviewers and
NSF funded project directors in order to' monitor the
operation of its review and award processes. Submission of
these data is not mandatory and is not a precondition of
award. Experience to date indicates that these data are
reliable and reflect a high level of accuracy.
I hope that this information proves helpful to the Committee.
Sin7~l3r~,,,~~7
4~~eich'
Director, Office o~
Small Husiness R&D
PAGENO="0735"
729
UNITED STATES
NUCLEAR REGULATORY COMMISSION
WASHINGTON, D. C. 20555
May 2, 1988
The Honorable John J. LaFalce
Chairman, Coninittee on Small Business
United States House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
This responds to your letter of April 19, 1988, requesting information
regarding actions taken to ensure full participation of women-owned businesses
In our acquisition program.
Answers to your specific questions have been separately addressed and included
as an enclosure to this letter.
I hope this information will assist you during your oversight hearings on
women's business enterprises.
If I can provide further information, please let me know.
Sincerely,
~!~Jr.
Executive Director for Operations
Enclosure:
As stated
PAGENO="0736"
730
Q~ESTION 1. ExecutIve Order 12138 requires that each Federal department
and agency "take appropriate action to facilitate, preserve
and strengthen women's business enterprise and to ensure full
participation by women in the free enterprise system." Please
identify every initiative your agency has undertaken pursuant
to this executive order, the impact of the initiative, the
office responsible for the initiative, your assessment of the
success or failure of each, and your recommendations for
future initiatives.
ANSWER.
The U.S. Nuclear Regulatory Commission has undertaken several initiatives
pursuant to Executive Order 12138. Our Office of Small and Disadvantaged
Business Utilization/Civil Rights 4~~WCR~ is represented on the
Interagency Committee on Women's Business Enterprise (IACWBE) established by
this Executive Order. Harris Coleman, OSDBU/CR, served as Subcommittee
Chairman and actively participated in the drafting of a Model Training Program
for the novice woman business owner who wants to do business with the Federal
Government. This training program is set forth in Appendix D of the
Committee's 1987 Annual Report, a copy of which is enclosed. Further, the
~ conferences~where there is an
opportunity to meet small businesses including women.owned businesses.
Examples of such conferences are: The May Small Business Week Conference, the
Lafalce/SDBU/CR
4/27/88
PAGENO="0737"
`t~31
~ESTTON I. (Conttnued)~
ME~AaMarketp1scSymposlugi for women-owned businesses (for which the NRC gave
financial assistance through the U.S. Department of Commerce), and the October
Minority Enterprise Development Week. Many copies of the above-mentioned Model
Training Program were given to women business oWners who attended these
conferences. We are pleased to note that, this Model. Training Program has been
very successful in acquainting women-owned small businesses with the Federal
procurement process.
Finally, we believe that Congress should appropriate funds. for an annual
national woman-owned business conference like the MEGA4larketplacé
Symposium. In our view, the conference should be held on the East Coast with
a series of training lectures on a variety of procurement topics as part of
the agenda. In addition, the conference would provide an opportunity for
women-owned businesses to meet with repres~ntatives from Federal agencies to
explore areas of mutual `inte~'e~t.
Enclosure: Appendix D of the
1987 Annual RepOrt
Lafalce/SDBU/CR
4/27/88
88-199 0 - 8~ - 24
PAGENO="0738"
732
QUESTION 2. Please supply the Committee with the following information
for each of the last four years:
a. the number, total dollars, and relative percentages such
figures represent for all contracts awarded by your agency
to women-owned businesses identifying separately awards made
pursuant to section.8(a) of the Small Business Act.
ANSWER.
The following chart displays requested information. Please note~that the
totals under columns (6) and (7) are included in columns (2) and (4).
CONTRACTS WITH WONEN-OWNED BUSINESSES (WOB)
U) (2) (3) . (4) (5) (6) (7)
NUNBER TOTAL ALL TOTAL
PERIOD OF WOB NRC OBLIG. NRC SBA 8(a) OBLIG.
COVERED CONTRACTS OBLIG. TO WOB OBLIG. 8(a) TO WOB
FY 88 14 $28,658,112 $1,456,999 L1% 5 $189,000
(To DATE)
FY 87 19 $49,408,217 $1,359,764 2.8% 6 $2~4,453
FY 86 17 ~46,060,490 $1,021,854 2.2% 6 $135,984
FY 85 15 $55,338,709 $1,311,940 2.4% 4 $300,443
FY 84 18 ~6,172,475 $1,114,856 i.~9% 9 $403,473
LaFalce/DC/ARM
4/27/88
PAGENO="0739"
783
~~TION 2. (Continued)
b. The efforts made by your agency to ensure that
women..owned businesses appear on government bidders' lists
and are being forwarded solicitation packages for
contracting opportunities;
ANSWER.
The agency maintains a Bidders Mailing List system which It uses to mail
solicitations on a rotational basis to Interested firms'in the areas of
expertise identified by those firms, representatives at Women~Owned
Business Conferences distribute SF 129~ `SOlicitatiOn Mailing List
ApplI~atlon,' forms advising conference participants to mail these forms
liberally among federal agencies identifying their areas of expertise so
they may receive solicitation dOcuments directly. Once women-owned firms
are identified on NRC's Bidders' Mailing List, each of these firms is
provided cGpies of solicitations within their areas of expertise.
Currently, there are 171 woflsen'owned busines~ses 1nOurSystep~.
LaFalce/DC/ARM
4/27/88.
PAGENO="0740"
734
QUESTION 2. (Continued)
c. total dollar amount of subcontracting commitments made by
large prime contractors with your agency and efforts to
encourage primes to utilize w~omen.'owned small business
concerns.
ANSWER.
TOTAL SUBCONTRACT COMMITMENTS
FY88 (1st Qtr) $ 651,285
FY87 1,698,522
tY86 2,313,403
FY85 . . 2,976,678
FY84 2,049,809
In order to encourage prime contractors to utilize women..owned small
businesses, the NRC complies with the provisions of FAR 19.9 and inserts FAR
Clause 52.219..13, "Utilization of Women~.Owned Small Businesses," in
solicitations and contracts when the contract amount is expected to exceed
the small purchases limitation. Further, the agency reviews all
LaFalce/DC/ARM
4/27/88
PAGENO="0741"
735
QUESTION 2c.. (Continued)
subcontracting plans to determine if subcontracting opportunities exist for
women-owned businesses. If NRC determines that there are not a sufficient
number of women-owned businesses reflected on a prospective contractor's
Subcontracting Plan, NRC initiates contract negotiations with the firm to
encourage the offeror to consider increasing their participation of
women-owned businesses as they finalize their SubcontPacting Plan.
LaFalce/DC/ARM
4/27/88
PAGENO="0742"
736
QUESTION 3. If your agency makes grants or loans, please supply the
following information for each of the last four years:
a. the number, total dollars, and relative percentages such
figures represent for all such grants or loans made to
women.owned businesses;
b. efforts made by, your agency to encourage the
participation of women in grant and loan programs.
ANSWER.
The NRC does not make grants or loans to commercial entities. The
availability of funds for financial assistance to educational institutions,
nonprofit institutions, state and local governments, and professional
societies is published annually in the Federal Register.
PAGENO="0743"
737
Q!~~TION 4. If your agency has programs relating to, or regulatory
authority over, the provision Of commercial credit, in any
form, describe afly Initiatives undertaken by the agency, or
subject to its programmatic or regulatory authOrity, that
are directed toward women business owners or that may be
more likeiyto affect such owners In any significant way.
In your response, please detail such program or authority
and provide such statistical or other data that may serve to
describe the efforts of your agency.
ANSWER.
The NRC does not have programs relating to, or regulatory authority over,
the provision of commercial credit.
Lafalce/DC/ARN
4/27/88
PAGENO="0744"
738
Q~STION 5. Please listall types of data within the control of
your agency regarding women-owned businesses indicating the usage
that your agency has for such data, the sufficiency of the
data,its reliability and any improvements in data collection,
retrieval or usage planned or desired by the agency to better
assist its efforts in this area.
ANSWER.
We maintain the capability statements submitted by women-owned businesses
with their SF 129 SolIcitation Mailing List Application. We also maintain.
data regarding the NRC Annual Goaling Program and the Annual Report setting
forth actual accomplishments achieved through contract awards to women-owned
businesses.
~ a ~epirate list of women-owned businesses who participate
~ contracting `program. We will obtain this info~matlon from the
representations and certifications submitted by women-owned businesses
in response to our solicitations. We plan to Issue solicitations on a
rotational basis to these women-owned firms so that they can compete with
others for our contract awards. We also plan to send this
information to our SDBLJ/CR Oftice.
PAGENO="0745"
`739
u.s. SMALL BUSINESS ADMINISTRATION R E C E I V E `~
WASHIMGTON, DC. 20416
OFYICE OF THE ADM~N~$TRATOR A ~ ~O ~988
6 1988 Cornrnn~e &n C~aii 8u~i .c~-
Honorable John 3. LaFalce -
Chairn~an
Cominittee.on Small Eusiness
House Of Representatives
WashingtOn, D.C. 20515
Dear Mr. Chairman:
This is in response to your letter of April 19, requesting
answers to questions addressing government policies and
programs which affect woaen business owners.
Question #1
IRS figures show that i~n 1980 there were 2.5 million women
non-farm sole proprietorships with receipts of ~36 billion.
The latest IRS figures show that tho~e ar~ a iotal of 3.7
million women non-farm sole proprietorships -Withreceipts of
~65 billion.
One of the responsibilities of the Office of Women's
Business Ownership is to negotiate contract goals for
women-owned businesses on an annual baSis. Negotiation of
prime contracts goals with all Federal agencies began in
1979 with total agency achievements at ~8l.3 million,
Every year since 1979 there has been a dramatic increase in
both goals and achievements. Goals in 1987 reached ~l,496.4
billion and achievements were 1% of the total Federal
procurement dollar or $l,7~l.7 billion~ The result of the
continually increasing Federal procurefflent goals to
women-owned businesses not only translates into business
growth but assists in expanding the size of the firms,
There is no ~ovet~jme~t-wide set-aside program to asspte a
certain perOentage~pf procurement for women. Negotiat~ioOs
with Federal agencies for increased procurement is
accomplished through a process of negotiation which -has been
successful. Continued congressional pressure to increase
minority g~als-oouldhave a negative impact on future
procurement goals ~f or women.
The Off iàe of Women's Business Ownership serves a
constituency of nearly 1/3 of the small business communilzy
~y strengthening and promoting women-owned businesses,
particularly where~the lack of business ethication and
management skills are a fac~tor impeding success.
PAGENO="0746"
740
Cont. Question 1
In the last eighteen mOnths major co-sponsored conferences
attracted 29,000 attendees. There is not only educational
value attached to these conferences but also a networking
and marketing value to attendees.
Publications which .provided comprehensive information on
Federal legislation, regulations, data and procurement have
been disseminated to over 4,000 women annually.
The SB~ has consistently provided training and counseling
opportunities for all people interested in owning a small
business. The OWBO, however, is the only office within SBh
to specifically target women. Each office in the agency has
promoted the participation of women in order to mainstream
them. in the general business community.
The OWBO has successfully implemented this agency's
initiatives by providing conferences, training publications
and briefings.
Question 2. a.:
Formal contracts for the following years:
Fiscal Year 1984:
8(a) : Twenty four (24) actions for ~2,089,000.00
Non-8(a) : Ten (10) actions for $171,018.00
Fiscal year 1985:
8(a) : Twenty one (21) actions for ~l,332,474.00
Non-8(a) : Six (6) actions for $373,910.00
Fiscal ~rear 1986:
8(a) : Twenty one (21) actions for ~l,580,524.00
Non-8(a) : One (.1) action for $51, ll7~00
Fiscal year 1987:
8(a) : Eighteen (18) actions for ~3,l30,760.00
Non-8(a) : Five (5) actions for $74,9~0.00
Totals:
8(a) : Eighty Four (84) actions for ~8,l33,338.00
Non-8(a) : Twenty two (22) actions for $471,115.00
PAGENO="0747"
741
Cont. Question 2
Question 2. b.:
The Office of Procurement an~ Grants Maaagemènt maintains a
current bidders list containing names of past Women-owned
businesses awarded SBA contracts. These firms are notified of SBA
contracting opportunities.
Question 2. c.:
The Office of Procurement and Grants Management has never
maintained records pertaining to subcontracting commitments of
large prime contractors.
Question 3. a. and b.:
The Office of Procurement and Grants Management is responsible for
issuing grant awards, for the SBA's Office of Minority Small
Business for some 160 awards totaling over 10 million F'ederal
dollars.
Question #4 .. ,, ,
The Small Business'Admin~iStratiôn pro~idès `loan guarantees anc~
direct loans to small bus ihesses which are otherwise unable to
obtain financing frofli'commercial lenders on reasonable `termS.
SBA, like all lending inst~tutiotis, thas dert&la aredct an6 policy
requirements that all `applicants must meet. Among t~hose
requirements are an adequate equity investment in the business,
evidence of ability to repay the ioan"frOm earnings an~d a,
reasonable amount o'~ collatCra't. While evety effort is 1ñtade
within the scope of our authdr'ity *`o assist women-own,ed thnàil
businesses,, such applican~S most meet the same credit requirements
that all loan applicants mu~S~ meet.
The following information pertains to S~ loan approvals for
Piscal Years 1994 through 1997.
BUSINESS LOAN APP1tOVALS
?isøal Year 1984-1987
(*~s ~h million)
Loans to Women-'Owne4 B~i~ieSs `Lóans,to ~fl M~Slne~See'
NumbCr~' ` % àf'Tótàl `%tal Nuab'er~ `Total
of Loarts ` #~s Am~u~ oa~ ~fl~w3~
1984 2,103 10.7% ` *212.6 19,664 ` 3,104,7
1985 2,131 11.9% *210.6 17,898 2,991.7
1986 1,515 10.0% *199.8 15,197 2,648.2
1987 1,565 10.1% *203.3 15,430 2,834.5
PAGENO="0748"
742
Cont. Question 4
502/503/504 LOANS
APPROVED TO WOMEN-
OWNED BUSINESS
% of Total
Fiscal Year Number Portfolio Amount Portfolio
1984 61 3.7% $9,254 2.7%
1985 83 5.7% 15,136 4.9%
1986 59 3.8% 1.1,912 3.4%
1987 65 3.9% 16,541 4.2%
268 ~52,843
Question #5
The Small Business Administration is not, itself, in the
position to originate basic data about women-owned business,
but the SBA does have an active program of analyzing and
publishing relevant data whIch has been developed by Other
sources. Fo~ example, the Office of Advocacy obtains and
analyzes information on women-owned business from both major
Federal business data sources, the Bureau of the Census and the
Internal Revenue Service.
The Bureau of the Census, at five-year intervals, colLects
information on the number of women business owners, the number
of women business owners with employees, the receipts of women
business,owners, and the location of women-owne~ busInesses.
This summary data is usually published by Census with a
three-year lag, i.e., the 1987 business census data will be
published in 1990.
The Internal Revenue Service collects information on
women-owned sole proprietorships, bu~ does not publish such
data. (Gender identification of partnerships and corporations
is not available). The Office of Advocacy pays *for a special
tabulation from the Internal Revenue Service which provides
up-to-date data on the number of women-owned sole
prøprietorships and their receipts. The. latest, available
Census data are from 1982, while the latest Internal Revenue
Service data covers the year 1985. (This 1985 data is being,
published in the 1988 State of. Small Business).
PAGENO="0749"
743
Cont. Question 5.
As a follow-up to the 1982 Business Census, the Of fice~of
Women's Business Ownership within the SSA and the Min~tity
Business Development Agency of the Department of Commerce
co-funded an in-depth' survey of women-owned and minor ity~~wnCd
businesses. The Bureau of the Census recently published
summary data from this survey in a volume called
Characteristics of. .~Bug~~ess O~ers. There is considerable data
from the survey' which' is available at Census, but has not yet
been published or analyzed. At the present time, the Office of
Advocacy is actively working with Census to accelerate the use
of the data. In fact, the Office of Advocacy has recently
arranged to have one of its professional economists become a
deputized Census agent so that we can access the data in the',
Census office directly. The Office of Mvocacy will,publi'sh
its research in a companion volume to the 88 President's
~,port during the late summer. The sample data'sets dëviloped
by tl~e Bureau of the Census during this project will also be
available to outside researchers at relatively low cost The
Office of Advocacy also maintains data on approximately 5
million business establishments in its Small Business Data
Base. The SBA data is licensed from private sources which
obtain, basic information ,on a voluntary basis. Zn, the licensed
data, businesses are characterized by industry, geographic
location, employment size, age, and, sales, but ~, by race or
gender of ownership. Sampling techniques have been used by SB~
.to develop working samples of women or minority-owned
businesses within the Small Business bata `Base, but expanding
such random sampling to obtain ownership data f or the entire
file is not practical due to significant methodological
limitationS.
SBA collects date from' several sources on procurement from
women-owned firms. The S~ OffIce of Procurement collects data'
from other federal agencies and is dependent `upon cOoperatIon
from the other federal agencies to ensure that the procurement
data collected meetS the definitions and standards established
by the Small Business' Administration. The Office of Ad~~ocacy
produces somewhat more extensive data on procurement from
women-owned businesses, `using information obtained from the
Federal Procurement Data Center (FPDC). The SBa generated data
is available earlier, but is not as detailed as the FPDC data.
PAGENO="0750"
744
We are not aware of any other Federal data collections
specifically related to either women-owned business or
minority-owned business, other than the collections cited
above. The Office of Advocacy, from time to time,. undertakes
surveys of small business in connectthn with studies of applied
policy issues of concern to small business. it is policy
within the Office of Advocacy that these étudies, whenever
possible, be organized to provide information on women-owned
business or minority-owned business.
We appreciate the opportunity to comment on these questions..
incerely,
James Abdnor
Administrator
PAGENO="0751"
745
U.S. SMALL BUSIN~$S ADMINiSTRATION
WASHINGTON, DC. 20416
2 ~988
Committee o~i Smati Li. ~:
April 29, 1988
Honorable John J. LaFalce
Chairman
Committee on Small Business
2367 Rayburn Rouse Office Building
Washington, DC 20515
Dear Congressman LaFalce:
Enclosed please find the information you requested on goals and
achievements ~or women business owners over the past several
years...
I understand I will be asked to testify on ~iay 11 and I am
looking forward to the opportunity.
With every best wish, I remain,
Sincerely,
Carol H. C~Q~kett . .
Director . . ~.. .
Office of Wóinèn'è
Rusiness Ownership . . .~ .
Enclosure ..
PAGENO="0752"
746
WOMEN' S BUSINESS OWNERSHIP PROCUREMENT REPORT
FEDERAL PRIME CONTRACt AWARDS
WOMEN-OWNED BUSINESS GOALS AND ACHIEVEMENTS
(Dollars in Millions)
(1982)
P~d~.r~1 A~i~n~v
Dollar Goal
Prime Contract
Awards to
Women-Owned1
Riis i ~
Actual Prime
Contract
Awards to
Women-Owned2
Business
uerense
Energy
NASA
GSA(Non-FSS)
-- GSA(FSS Only)
TVA
VA
Agriculture
HHS
Interior
Transpor tat ion
EPA
- Labor
Justice
Commerce
AID
HOD
Treasury
NSF
State
FEMA
NRC
Educati~in
-U.S. Info. Agcy.
OPM
S$A
ACTION
PADC
ALL OTHERS
* u
25.0
6.6
21.5
13.8
8.0
20.2
12.0
13.4
11.6
9.1
2.5
14.1
.75
3.4
1.6
6.2
Q. 5
.3
3.0
.27
0.0
1.9
0.3
.07
.1
.06
.0
1.71
4U~ *
78.5
11.8
30.8
9.8
*
*
19.0
18.8
22.6
*
2.2
10.2
2.6
2.9
*
*
4.7.
*
2.4
.530
.216
.282
.461
*
.415
*
TOTALS 482.96 ..,.
1Source: Office of Women's Business Ownership
Small Business Administration
*Agency Reports not yet available
2Source: Individual Agency Reports
3Source: Unofficial from Agency letter
PAGENO="0753"
741
t4OMEN S BUSINESS OWNERSHIP PROCUREMENT REPORT
FEDERAL PRIME CONTRACT GOALS 4ND AWARDS
tJOMEN-OWNED BUSINESS GOALS ANI~ ACHIEVEMENTS
(Dollars in Millions)
(1981)
,~~era1 Agency
~~nse
Energy
NASA
GSA(Non-FSS)
G$A(FSS Only)
-TVA
VA
Agr I cult ur'e
Interior
Transportation
-HHS
EPA
Labor
v-AID
Ed'ucatiQn
-HOD
* Treasury
-Commerce
Justice
NSF
State~
TJ.S.' Info. `Agcy.
NRC S
OPM
SBA
ACTION
PADC
ALL OTHERS
S `~?..U
6.8
21,5
`7.2
10.. 1
11.1
9.8
20,0.
27.2
4.0
14.5
2.3
`1.8
9.1
1.4
`.25.
.2
.34
3.5
.34
.34
.06
.2
.1
.4
:38.0
7s,7
21.3
14,1
4.5
24.0
19.7
26,7
25.0
24.3
2.6
56.1.
1.7
2.4
8.6
.5
4.3
.486
.417
2,4
.022
.185
.564
.126
2.6
~ `63l.5~~
Dollar Goal
Prime: Contract
Awards, to
Women-Owned 1
Actual~"Pri~e'
Contract `Awa~ds
to Womer~-Owned'
1Source: Office of Women's Business Ownership
`Small Busi'ness Administration
2Sour~e: Individual Aget~cy Reports
PAGENO="0754"
wocazzox>000moDxc-4
C
C~',tC ~
~ - a- > -i
-~ ~-)0)(\J) ~ 0>
~ ~
00)0.. >~ ~fl
~0) II
~
-~ -40 U) (00) U) -~ C) (0 C.) 00) UCC) - 0)0)0) (0)0)0000 4) (4) w
0)0)40)0) (00) C.) C.) CC C.) C.) C.) -`(C) U) C.) C) (00(C) C.) -
0)0)00)04)00)0)0)00) -~ 0)0)0)0)0)0-' 0)004)0-4-4
0)
p
-`-`
C) C.) -~ 0)0)0040) C.) 0)0) -4 (00)0) .4 (0(0 -` (000 00~
~) 0) 0) fU-'U ~))~-~C).'0)~' 0
z
~1 U)
~(4.~0)030)* ~ ~--~`
(0~~* ~* ~ 0) 0) 0 >
~ F
PAGENO="0755"
749
313A
TRENDS IN FEDERAL fINE CONTRACT AWARD ACTIVITY
TO WOMEN OWNED SMALL BUSINESSES
FY Goals Achievements
(iiis.) (mils.)
1979 ~181.3
1980 ~2l1.3 388.4
1981 407.9 631.5
1982 480.4 683.3
1983 640.0 863.4
1984 865.7 1,146.6
1985 1,066.3 1,283.3
1986 1,330.2 1,613.7
1987 1,496.4 ~ 1,731.7
Percentage of Prime Contract Award Achievements
to Wornezr-owned Small Businesses to Total Procurement
1979
1980 .37
1981 .56
1982 .52
1983 .57
1984 .71
1985 .74
1986 .9
1987 1.0
PAGENO="0756"
750
TRENDS IN FEDERAL PRIME CONTRACT AWARD ACTIVITY
TO WOMEN OWNED SMALL BUSINESSES
F? Goals Achievemen~
~mils.) (thils.)
1979 ~i81.3
1980 *211.3 388.4
1981 407.9 631.5
1982 480.4 683.3
1983 640.0 863.4
1984 865.7 1,146.6
1985 1,066.3 1,283.3
1986 1,330.2 1,613.7
1987 i,496.4 1,731.7
Percentage o~ Prime Contract Award Achievements
to Wonien~owned Small Businesses to Total Procurement
FY
1979 .22
1980 .37
1981 . 56
1982 .52
1983 .57
1984 .71
1985 .74
1986. .9
1987 1.0
PAGENO="0757"
WOMEN LOAN APPROVALS/DISBURSED
45 OF 4/30/88
I
5126188
~
1-V
ETHNIC
CATEGORY
LOANS
TOTAL AMOUNT
584 AMOUNT
.84
MINORITy
381
*
$33,925,450
$30,411,748
8~4
NON/MINORITy
1532
$162,990,229
$143,479,773
1913
$IQ&, 915,679
$113,951,521
85
MINORITY
398
$36,449,288
$32,897,339
85
NON/MNORJTY
1509
$161,754,284
$141,871,016
1907
$198,203,572
$174,768,355
86
MINORITY
231
$31,213,498
$26,441,309
.
NON/MINORITY
1145
$1~3,3I4,04].
~-1?9,639,O55
~.
*
1376
$184,527,539
U56r080,364
87
87
MINORITY
NON/MINORITY
216
1151
$26,151,438
$149,785,254
$22,444,639
$125,366,739
13o7
~175,93a,692
$1~?,8l1,378
TOTAL
LOANS:
6563
0'
PAGENO="0758"
WOMEN LOAN APPROVALS
1
5126188
FY
E INN IC
CATEGORY
LOANS
TOTAL AMOUNT
SBA AMOUNT
84
MINORITY
430
$37,613,217
s33,870,355
84
NON/4INURITY
1734
$184,376,465
$162,557,661
2164
S221,989~,b82
$I~96,428,O16
85
MINORITY
475
$43,091,641
$38,931,716
85
NON/MINORITY
1739
*
$183,365,866
$160,791,252
2214
$226,457,507
$199,722,968
86
MINORITY
266
.
$34,906,998
$29,76O,7~6
86
NON/MINORITY
1308
$177,279,841
¶150,454,332
1574
$212,186,839
S180',~215,118
87
MiNORITY
270
$34,444,738
$29,747,709
87
NON/MINORITY
1360
$185,879,663
*
$156,153,589
1630
¶220,324,401
$185,901,296
TOTAL
LOANS
7582
¶880,958,429
*762,267,400
PAGENO="0759"
753
U.$.Departmentof 400 Seventh St.. SW
transportation Washington, 0 C 20590
Office of the Secretary
Of Transportation
MAY 9 1988
The Hon'orable John J~ LaFalce
Chairman, Committee of Small Business
House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
Thank you for your letter requesting information on the Department of
Transportation's (DOT) policies and programs which affect Women-owned.
Business Enterprises (WBEs).
Since 1980, the Department has implemeiited various successful initiatives
to ensure continued high level involvement of Women in DOT direct and
federally-assisted procurements. The initiatives are sun~narized below
and include efforts such as establishing and monitoring procurement
goals, providing marketing assistance, loan and bonding assistance,
attending WBE procurement cc~nferences and recognizing outstandingWBE
contributions to the~ DOT, a&well as other fnitiatlves.
The Office of Small and Disadvantaged Business Utilization (OSUBU),
Direct Contracting and Financial Assistance Division negotiates WBE
goals with all DOTprocW~ement offices and the Small Business
Admini5t~ation (SBA). ThiS is done prior to the beginning of each
fiscal year (FY)~ The result of the annual goal has been' `to
assure that women receive an equitable part of the contracts/
procurements awarded by the Department. Further, the data are
compiled and totaledat the end of the FY and reported to the SBA
and Minority Business Development Agency (MBDA). The data are
regarded as an accurate reflection of DOT procurement activities.
They also provide guidance to the DOT Operating Administ~'ations
fo.rfuture year procurement planning purposes, This divlsionalso.
monitors the Disadvantaged Business Enterprise (DBE) (includes WBE)
goal setting practices of federally-assisted State and local
transportation agencies. Enclosure Aprovides a history of WBE
act(levements in the DOT direct contfact'lng p.rOgrsem. Enclosure B
provides information on WBE achievements in federally-assisted
procurements of DOT recipients.
PAGENO="0760"
754
-2-
The OSDBU and the DOT Operating `Administrations Offices of Civil, Rights
provide capability statentents for WBEs to all offices within the. agency
where contracting opportunities appear to exist. These capability
statements are used by the appropriate offices in an effort to assure
that WBEs have every opportunity to participate in the Department's
contract/procurement process. In addition to this procedure, there are
Small and Disadvantaged Business Utilization liaison personnel located
in each DOT Operating Administration. The liaison personnel have the
responsibility to identify contracting opportunities throughout the
agency and to promote the maximum utilization of WBEs.
The OSDBU has developed and implemented a Marketing Presentation
Program to assist the women and minority business communities in
marketing their firms in the Department. This program is designed to
assist firms located outside the Washington Metropolitan Area, whose
representatives have limited time during their marketing Visits.
Approximately every six. weeks, the OSDBU schedules presentations for
two (2) firms to present their capabilities to procurement and program
staff from all DOT. Operating Administrations. As a result of the
presentations, some firms have been able to identify specific procure-
ment opportunities on which to sUbmit bids.
The OSDBU/Minority Business Resource Center (MBRC) has undertaken
several initiatives to strengthen WBE achievements from FY 1982 to'
FY 1988 (Enclosure C). Moreover, all OSDBU/MBRC financial assistance
programs are available to WBEs in support of transportation-related
contracts. `
The OSDBU/MBRC has contracted with a WBE firm'iocated in New Orleans,
Louisiana, to increase the level of participation of WBEs in DOT direct
and federally-assisted procurements. The firm will conduct a series of
seminars in conjunction with national WBE trade association conferences
as a means of providing an impetus to WBEs in transportation-related
contracts and services,. This is a one year effort with an option for a
second year.
The DOT/OSDBU/MBRC Short-Term Lending Program enables WBE5/DBEs to
obtai,n short-term working capital at prime interest rates. The purpise
is to increase the number of WBEs/DBE5 that enter into transportation-
related contracts and to strengthen the competitive and productive
capabilities of the WBEs/DBE5 that currently do business with DOT, i~t5
grantees, recipients, their contractors and subcontractors. Also, `it
serves as a vehicle to.enable WBEs/DBEs to establish creditworthiness
and banking relationships for future independent transactions.
PAGENO="0761"
7~55
-3-
The DOT/OSDBU/MBRC Bonding Assistance Program enables WBEs~/DBEs to
obtain bid, payment., and performance bonds for trans'portat4on-related
contracts emanating from the DOT, its grantees, recipients, their
contractors and subcontractors. The program ~l~o provides an opportitnity
for WBEs/DB~s to establish a positive performance record'anl.enabl.esi
them to obtain bonds incjependently within the standard surety bond
industry. The MBRC `administers the, program with participating surettes
and a Managing General Agent (MGA). The current. sureties. of record ar~e
the Fidelity and Deposit. Company of `Maryland aiid the~ Indiana Lupbermens
Mutual Insurance Compahy' thr~ough the Midwest Indemnity Corporation, MGA.
The DOT performs preliminary un'derwrl'tin.g on all bond packages receiv~e~d
from W~Es/DBEs prior to submission to sureties. Zn addition4 for the OOT~.
Bond Readiness activity, bond packages will. be reviewed in advance of
obtaining a transportation-related contract. DOT provides an 80% guaranty
of all bonds issued un~der the program. ,During the years 1982 .tlwough. 1986
there were five (5) WBE final bonds, and to date forFy 1988 there is one
(1) bid and performaflce bond application..
Traditionally, D~1 `participates inSBA, MBDA and Congressional iy".
Sponsored procurement workshops/conferences to increase the under-
standing of WBgs/PBEs of the procedures for contracting with the
Government for supplIes and services through competitive negotia-
tions. in FV 1987., the DOT personnel attended~an East/West conference,
specificai~1y. for women:, Mega Marketplace (Washington, D.C./Lps Angeles~
CA). Further, the Qep.ar~ment participates in procurement fairs/con.-
ferences/workshops. throughout the ~country to provide inf~it'mation. to..
WBEs. . . , .
The Department's OSDBU Liaison Officers regularly meet ~lth marketlng
representati~es fromwomen-~wne.d. firn~s and, as procurement pi~ns ~re made.,
try to match WBE, qua1ificat.~ons'~,it~ prQcurement~ reques~s to. enhance
their opportunities to compete for Departmental co.ptr~ctir~g opportunities..
The DOT makes every effort to. include WBI~5 in the bep'~r~ent'.'s pr~ocurerient
process. The'SF-12~ `Bidders List Application" is us~Ø, ~ep~rtment-wide
to insure that .WB~s areon bidäer's ~iists. and that, sol~i&itation ackages
are for~warded as the o~pportu~.Ity. becomes~ ay~iiable. .~ `
PAGENO="0762"
756
-4
The DOT also promotes the involvement of WBEs and small businesses
through its subcontracting program. The program requIres the prime
contractor to maximize small and disadvantaged business subcontracting
opportunities in large DOT prime contracts in accordance with Public
Law 95-507. To enhance the contracting opportunities, small and
disadvantaged business firms may identify their capabilfties to major
prime contractors using the DOT Subcontracting Directory. Enclosure D
provides information on small and disadvantaged business subcontracting
awards in the direct contracting program from FY 1984, to FY 1988.
The DOT Minority Enterprise Development (MED) Week Awards Ceremony
involves the OSDBU in cooperation with the DOT Operating AdministratiOns
to organize and implement an Annual MED Week Awards Ceremony that
recognizes the outstanding contributions and accomplisments of women and
minority business owners to the Department's programs. At the same
time, DOT recognizes its program and procurement officials (some of whom
are women) for their outstanding contributions to the DOT Women and
Minority Business Programs. These awards serve as an incentive to
increase awards to small and disadvantaged businesses.
Since 1980, the DGT minority business enterprise regu~ation (49 CFR 23)
has required grant recipients to establish a goal for the utilization
of WBEs. The DOT recipients have total responsibility for certifying
firms as WBEsIDBEs. However, the Departmental Office of Civil Rights
has total responsibility for appeals of denial of WBE/DBE certification
and third-party complaints. This office has been thoroughly reviewing
the appeals to make sure that WBEs are treated fairly by DOT recipients
in their determinations of eligibility for WBE certification.
With the passage of the Surface Transportation and Uniform Relocation
Assistance Act (STURAA) of l9~7, women are now presumed to be socially
and economically dIsadvantaged. Therefore, recipients are required to
include projected WBE participation, in a single OBE goal.
The Federal Highway Administration (FHWA) also funds the DBE~Supportive
Services Program which provides training and assistance to WBE5/DBE5.
The ultimate goal of the DBE Supportive Services Program is to increase
the level of WBE/DBE participation in Federal-aid contract work.
FHWA is attempting to achieve this goal by providing assistance that
accomplishes two objectives: 1) to increase the total number of WBE5/DBE5
active in highway construction and 2) to contribute to the growth and
eventual self-sufficiency of individual minority, disadvantaged and
women firms. The DBE Supportive Services Program has been successful in
providing assistance to WBE5/DBEs.
PAGENO="0763"
757
In FHWA's Office of Direct Federal Programs, which contracts primarily for
construction. work on Federal lands highways, listings of WBE firms are
included in solicitation packages whenever available. The listings are
intended to assist prime contractors in identifying potential subc~ntractors
for the proposed work.
Section 20 (Human Resource Programs) of the Urban Mass Transportation
Act of 1964, as amended, provides for limited funding for projects
designed to address human resource needs in the transit industry.
A significant portion of these funds ha~s been devoted to projects
designed to enhancetheparticipation of DBEs in all phases of the
transit industry, Several" projectS have provided training to DBEs
in various areas of business development and other projects have
provided technical assistance for purposes of enhancing the
managerial skills of DBEs. Notable~~~~projects which have been targeted
to WBEs include assisting'WBEs to enter.the rapidly~~expanding transit
vehicle manufacturing industry and a project designed to encourage
women to enter the transit marketplace as entrepreneurs., Both
projects are designed to enhance the WBE participation level in all
phases of the transit industry and to develop the overall'competitive
capacity of the WBE community.
Through the Urban Mass Transportation Administration (UMIA) Section 20
program, three projects provide loans for OBEs (including WBEs). These
projects are located in Milwaukee, Wisconsin; and Harrisburg and
Philadelphia, Pennsylvania. The loans are to provide capital assistance
so these firms can fully participate on UMTA~.assisted projects.
The UMTA's Section 6 (Research, Development, and Demonstration Projects),
also has benefitted WBEs through various grants and contracts let by
the agency. Program managers and officers are encouraged to utilize to
the fullest extent possible the services of WBEs.
The FHWA, Federal Aviation Administration (FAA), Federal Railroad
Administration (FRA) and UMTA collect WBE achievement data on a quarterly
basis. This information is compiled by the agencies' Offices of Civil
Rights, and national quarterly and Summary reports are Issued to the
OSDBU. The information is. used to monitor DBE participation in federally-
assisted procurements to assure attainment Of recipients' annual DBE
goals. It is also used to track the relative levels of participation
of ethnic minority and WBEs in these procurements. The reporting
system took considerable time and effort to develop and implement,
and in some instances, is computerized both at the field offices and
Washington Headquarters Experience indicates that we have an accurate,
timely, and reliable data collection system for DBE/WBE achievements of
DOT recipients. .
PAGENO="0764"
758
-6-
The overall DOT/WBE program has been most successful in increasing both the
number and dollar value of DOT direct and federally-assisted awards to WBEs.
The DOT remains fully commftted toward expanding opportunities for greater
participation by WBEs in our marketplace.
jf additional information is required, please contact Will Terry Moore,
at 366-1902. Thank you for the opportunity to comment.
Sincerely,
Amp~4B. Bouchey
Acting Director
Office of Small and Disadvantaged
Business Utilization
Enclosures
PAGENO="0765"
759
ENCLOSURE A
WBE Achievements in DOT Direct Contracting Program FY 1982 thru FY 198$
Fiscal WBE 8(a)
Year Awards (fl* Percent WBE* Aw~rdsj$)** Percent 8j~**
1982 14,Th1,000 ~ 1.20 9~,199,OOO 7.90
1983 26,482,000 1.60 149,965,000 9.50
1984 32,374,000 2.20 174,247,000 10.50
1985 26,938,000 1.10 226,484,000 9.70
1986 25,100,000 1,20 256,322,000 12.00
~987 27,443,000 1.26 2B3,936,000 11.63
1988 (6 mo.) 11,975,000 1.16 138,382,000 13.41
* These awards reflect the ability of WBEs to successfully compete for DOT funded
procurements, There is no set-aside' or other program strictly for WBE,
except sole-.source,
** These awards include WBE as well as other socially and economically disadvantaged
individuals,
PAGENO="0766"
760
ENCLOSURE B
WBE Achievements of DOT Recipients by Operating Administration
FY 1981 and FY 1988
Years & Operating Number of
Administrations WBE Awards ($) Percent WBE Contracts
1981
FHWA 164,900,000 1.90 1881
UMIA 22,288,680 1.60
1982
FHWA 237,608,312 , 3.00 3074
UMTA 16,353,363 1.30
1983
FHWA 254,95O,O~O 3.13 3962
UMTA 47,419,115 2.28 1448
1984
FHWA 295,221,344 3.20 4870,
UMTA 72,799,247 3.71 6622
1985
FHWA 306,818,000 2.75 6268
UMTA 64,457,857 3.49 7815
FAA 25,604,237 3.30
1986
FHWA 327,425,000 3.00 6520
UMTA 59,814,610 3.70 1979
FAA 22,706,723 4.00
1987
FHWA 339,207,000 3.26 6033
UMTA 45,583,771 3.45
FAA 33,016,975 4.60
1988
FHWA (3 mo.) 76,300,000 3.07 1206
UMTA
FAA
PAGENO="0767"
761
ENCLOSURE C
MINORITY BUSINESS RESOURCE CENTER
WOMEN BUSINESS ENTERPRISE ACHIEVEMENTS
CONTRACTS/GRANTS
1988 - Plannc'd WBE elfort $250,00b
Public Information &
Awareness Project $220,000
1987 Nationwide Women Business $233,739
Enterprise Outreach Project
City Of Cleveland, 0h~o, $100,000
Professional Women-outreach
Project
OSDBU Program Survey $ 50,000
1986 - Nationwide Women-Business
Enterprise Outreach Project j225,220
1985 - Women Business Enterprise $275,00o
Outreach Project
Publication Development $ 11,000
Certification Review $ 10,000
1984 - 1986
0perator~ Program Management $375,580
Center
OTHER ACTIVITIES
1982 - 1988 DOT Short-Term Ler1din~irQ~rarn
$881,803, 6.5% participation rate
1982 - 1986 DOTBondinLAs$istaflcePro~ram
5 Final Bonds for$518,345
1988 1 Bid and Performance Bond application
NOTE: All MBRC financial assistance programs are available to WBEs
in support of transportation-related contr~acts.
PAGENO="0768"
ENCLOSURE D
Small and Disadvantaged Business Awards in DOT Direct Contracting Program
- (Dollars in thousands)
FY 1984 FY 1985 FY1986 FY 1987 FY 1988
- --
Total Subcontracts Awarded by Prime S
Prime Contractors 313,715 245,526 188,648 203,935 33,360
Subcontracts Awarded to Small Business -
concerns 127,347~41%) 98,270(40%) 99,080(53%) 113,097(56%) 29,479(88%)
Subcontracts Awarded to Small Business S -
Concerns Owned arid Controlled by S
Socially and Economically Disadvantaged
Individuals 29,905(10%) 29,010(12%) 19,892(11%) 50,491(25%) 15,727(47%)
PAGENO="0769"
763
Q DEPARTMENT OF 1~HE TREASURY R E C E I V E D
ASSISTANTSECRETARY June 1, 1988 JUN 6 1988
C~mnHttee on Sniall Bosi~~~~
Dear Mr. Chairman:
This responds to your letter dated April 19, 1988 which requested
information on the Department of the Treasury's programs to support
women-owned businesses.
In order to fulfill the requirements of Executive Order 12138, the
Department has undertaken a number of initiatives on behalf of
women business owners in its procurement, cash management, and bank
oversight programs. These initiatives, some of which pre-date the
Executive Order, are described in detail in Enclosure (1). That
enclosure also includes plans for future initiatives.
The overall success of the procurement initiatives is reflected in
the procurement statistics provided in Enclosure (2), which show a
steady increase in the number and dollar value of purchase order
and prime contract awards to women-owned businesses. We are unable
to provide the amount of subcontracting commitments made by large
prime contractors, as the Standard Forms 294 and 295, used for
reporting subcontract awards, do not require submission of data on
subcontract awards to women-owned businesses. While some of the
large prime contractors report their women-owned business subcon-
tract awards separately, they are too small a sample to draw any
conclusions about the percentage of subcontracts awarded to women-
owned firms.
Treasury does not make grax~ts or provide financial assistance or
loans. Our cash management programs and programs which relate to
providing commercial credit are described in Enclosure (1).
Treasury has a variety of goals and objectives for its programs in
law enforcement, taxation and fiscal management. Most of these
programs maintain databases which may include information on women-
owned businesses. However, the primary purposes of the databases
are not related to women's business issues. The databases are used
to monitor mission performance and identify areas where new pro-
grams should be targeted; therefore, they are constantly being
updated and improved.
One of our principal administrative databases is the Treasury PrO-
curement Data System (TOPS), used for monitoring the procurement
activities of our bureaus and reportiag to the Federal Procurement
Data System. This database is the source for our statistics on
procurement awards to women-owned businesses. Although the TPDS is
adequate, it is being improved to provide more accurate data to the
Department and the bureaus.
S8-199 0 -*
PAGENO="0770"
764
While we believe that the Department of the Treasury has accom-
plished much for women~ownsd businesses since Executive Order 12138
was signed, we recognize that there is always room for improvement
in any program. We look forward to the results of your hearings on
women's business enterprise.
Sincerely
~>+-~ `k~~
\)John K. l4eagher
Assistant Secretary
(Legislative Affairs)
The Honorable John J. LaFalce
Chairman
Committee on Small Business
House of Representatives
Washington, D.C. 20515
Enclosures
PAGENO="0771"
765
Department of the Treasury
Initiatives to Promote Women's Business Enterprise
In order to respond to Executive Order 12138, the Department of the
Treasury has defined a number of initiatives in its procurement,
cash management, and bank oversight programs, which are described
below, The success of the procurement initiatives is demonstrated
in the consistently increasing percentage of procurement awards to
women-owned businesses. Treasury does notoperate a grants program
or provide financial assistance or loans.
Procurement Initiatives
Procurement
Since fiscal year (FY) 1979, procurement goals for awards to women-
owned businesses have been established for the Department an4 each
Treasury bureau. In FY 1979, 0.5* of the Department's total pro-
curements were awarded to women-owned businesses; in FY 1987, 5.9*
of the totalprocurements were awarded to these firms. The goal-
setting process has been carried out by the Departmental Office of
Procurement and the Office of Small and Disadvantaged Business
Utilization (OSDBU) in coordination with the Small Business
Administration (SEA).
Contractor Identification
Treasury's Departmental Procurement staff began working with the
SEA in 1979 to identify women-owned businesses capable of supplying
needed products and services to the Department. This was done
through SEA's Procurement Automated Source System (PASS). The
Department also provided a list of its women-owned business con-
tractors to the Department of Energy for inclusion in their
database.
In FY 1981, Treasury's Office of Procurement used the PASS list of
vendors to forward copies of our informational booklet, "Selling to
the Department of the Treasury" to known metropolitan Washington
women-owned businesses in the commodity and service Cress in which
Treasury contracts. This provided the local community with infor-
mation on what and bow Treasury and its bureaus purchase commer-
cially. The OSDBU mailed similar information packages to women-
owned businesses in the Atlanta, Georgia; San Fra~cisco and Los
Angeles, California;Houston, Texas; and Chicago, Illinois areas to
help Treasury field offices in those areaS identify additional
women-owned business sources.
In January 1982, the OSDBU developed a booWleton known women-owned
business sources and issued it to all Treasury procurement offices.
The rapid improvement of women-owned contractor identification
under the PASS database made updating the booklet unnecessary.
Enclosure (1), page 1
PAGENO="0772"
766
In FY 1984, Treasury's OSDBU again obtained SBA's assistance to
identify additional women-owned businesses in PASS. This informa-
tion was provided to Treasury procurement offices and appropriate
program officers.
Beginning in FY 1985, Treasury's OSDBU has made a concerted effort
to identify women-owned businesses in the SBA 8(a) program. Those
firms were, and continue to be, referred to appropriate Treasury
bureau procurement and program offices. The OSDBU and Departmental
Office ,of Procurement also have worked closely with Treasury's
Office of Information Resources Management to identify qualified
8(a) suppliers of automatic data processing equipment and services.
The OSDBU has also compiled a list of national and regional direc-
tories of women-owned companies for use by Treasury's Small Busi-
ness Specialists and procurement offices, and provided copies of
numerous directories of women-owned businesses to these offices.
Counsel and Assistance
Treasury's OSDBU, Departmental Office of Procurement, and bureau
Small Business Specialists provide advice and assistance to women-
owned business firms needing information on doing business with the
Department and its bureaus. The information provided includes
copies of "Selling to the Department of the Treasury," and the
brochures described below.
Treasury's Departmental Office of Procurement and OSDBU have issued
several brochures to assilt small, minority and women-owned busi-
nesses in their marketing efforts. These include "Marketing
Resources," a directory of general information including the names
and addresses of Treasury's Small Business Specialists, first pub-
lished in 1984 and updated at least'semi-annually; "What Treasury
Buys," a summary of the products and services purchased by the
Department during the past five years, first published in 1985 and
updated annually; and the "Small Business Subcontracting Direc-
tory," a listing of Treasury's major prime contractors with subcon-
tracting programs, first published this year.
Contractor Outreaoh
In the past, Treasury has mailed copies of its pamphlet "Selling to
the Department of the Treasury" to various women-owned businesses,
either as a result of a special mailir~g or as requested by the
individual businesses.
Periodically. Treasury's QSDBU meets with and/oraddresses various
women-owned business trade associations. These have included the
Association for Black Women Entrepreneurs and the National Associa-
tion of Women BusinessOwners.
Enclosure (1), page 2
PAGENO="0773"
767
The OSDBU included a representative from SBA'S Office of Women
Business Enterprise in open houses and workshops held during Small
Business Week and Minority Enterprise Development Week in 1981,
1982, 1983 and 1984. These workshops were designed to acquaint
both Treasury procurement/program officers and vendors on the
women-owned business program.
Treasury was an active participant in the planning and conduct of
the three MegaMarketplace conferences for women business owners
held in 1986 and 1987. Over twenty-five representatives from
Treasury's OSDBTJ, program, and procurement offices served as coun-
selors at the 1986 conference in Washington, D.C.; over thirty
representatives from the Department cor~nseled attendees at the
Washington, D.C. and Los Angeles, California conferences in 1987.
Advocacy
o Training. Since 1984, the Department's OSDBU has conducted a
series of briefings for all procurement officers to emphasize
the Department's commitment to increase awards to women-owned
businesses and answer questions on the women-owned business
program. In 1986, the briefing material was incorporated into
a two-day training course on the Department's small business
program. This course is required for all Treasury contracting
personnel as part of our procurement career development pro-
gram, and is offered on at least a quarterly basis. The
training stresses that at a minimum, a representative number of
women-owned businesses should be included in each procurement
solicitation list, and that any automated systems should ensure
that women-owned businesses can be easily identified.
o PASS Access~ Beginning in 1980, the Departmental Office of
Procurement and OSOSU used PASS to identify women-owned busi-
ness sources, and encouraged the Treasury bureaus to obtain
direct access to PASS. This effort was largely unsuccessful
until 1984, when the first Treasury bureau established a PASS
subscription. At the suggestion of Treasury's OSDBU, eight of
Treasury's twelve bureaus received training on use of PASS in
1986, Later that year, the OSDBU issued a reportto the bureau
procurement officers which analyzed various databases for iden-
tifying small) disadvantaged and women-owned business sources
and recommended that. each Treasury bureau subscribe to PASS.
Since that time, two more bureaus have subscribed to PASS.
We anticIpate that this number will increase, as Treasury's
Justification for Other Than Full and Open Competition,
required for all procurements over $25,000 that are planned as
non-competitive acquisitions, reciuires the Bureau Small Busi-
ness SpecIalist to search the PASS database to identify poten-
tial small, minority and women-ownedbusiness competitors for
the procurement. This search requirement was established in
~epteinber, 1987.
Enclosure (1), page 3
PAGENO="0774"
768
o Small and Disadvantaged Business Awards Program. the OSDBU, in
conjunction with Treasury's Incentive Awards Committee, devel~-
oped an annual Small and Disadvantaged Business Utilization
Achievement Awards Program. The award, established in1983,
recognizes outstanding efforts by Treasury organizations to
support the Department's Small Business Program. One of the
criteria for recognition is the organization's performance in
achieving women-owned business goals.
o Interagency Committee on Women's Business Enterprise (IACWBE).
The Department has participated in the IACWBE since its incep-
tion in 1979. This Committee's numerous accomplishments are
being summarized in a separate letter from the Executive Direc-
tor of the IACWBE. treasury has been represented by senior
officials including~ the Director of the Office of Revenue
Sharing, the Fiscal Assistant Secretary, and the Deputy Assis-
tant Secretary for Departmental Finance and Management. Our
current representative is the Acting Assistant Secretary for
Management.
Procurement Policy
The Department of the Treasury's policy to ensure that women-owned
businesses are provided opportunities to compete for and receive a
fair proportion of our procurement awards was first articulated in
Treasury Directive 70-06.E, "Socioeconomic Procurement Programs,"
dated August 1980 and updated in July 1984. The policy was incor-
porated into Part 1019 of the Treasury Acquisition/Procutement
Regulation in March 1986.
During 1985 and 1986, the OSDBU conducted a management review of
each Treasury bureau's Small Business Program to ensure that the
bureau had establiShed the required internal staffing and proce-
dures to be able to carry out the program. The bureau's women-
owned businesses program and awards Were analyzed as a part of the
review.
The Departmental Office of Procurement, throegh its ongoing Staff
Assistance Visit (SAY) Pr~ogram, reviews the operatiàns of each
bureau procurement office on a biafrnual cycle to e~flsure that pro-
curements are being awar~Ied in conformance with established laws,
regulations and policieè. The bureau's Small Business Program
activities are reviewed and analyzed during each SAY.
Cash Management Initiatives
o Minority Bank Deposit Program (MBDPL Women-owned commercial
banks and savings and loan associations are eligible to parti-
cipate in the MBDP. Under this program established by the
Department of the Treasury in 1970, Treasury assists individual
MBDP participants to become familiar with Federal agencies'
collection and disbursement needs, and to negotiate provision
Enclosure (1), page 4
PAGENO="0775"
769
of the banking services necessary to satisfy those needs.
Federal agencies are encouraged to develop banking relation-
ships with participating banks. The primary responsibility for
developing MBDP policy rests with the Under Secretary of the
Treasury for Finance and the Fiscal Assistant Secretary. Day-
to-day operations of the MBDP are handled by the Department's
Financial Management Service.
Large prime contractors are also encouraged to place their
accounts in minority and women-owned financial institutions.
Deposits in these institutions may be included in subcontract
activity reported on the Standard Form 295.
The number of women-owned banks has declined recently, as
women's banks have not been immune from the general problems in
the banking industry during the past few years. As a result,
the opportunities for placing deposits in women-owned banks
have decreased.
o Prompt Payment. Timely payment of vendors is one of the most
important ~ngredients for a mutually beneficial contracting
relationship. Treasury has taken a number of actions to ensure
that vendors are paid as quickly as possible, consistent with
proper cash management practices. The Treasury Financial
Manual and the Treasury Acquisition/Procurement Regulation
allow contracting officers to negotiate more lenient payment
terms for small businesses, including women-owned businesses.
In addition, Prompt Payment Officers have been designated in
each bureau to assist vendors in resolving payment problems.
Oversight of Financial Institutions
The Comptroller of the Currency (0CC), as the Administrator of
National Banks, is responsible for the execution of laws relating
to national banks and promulgating rules and regulations governing
the operations of approximately 4,900 national and District of
Columbia banks. Under the supervision of the Deputy Comptroller
for Compliance, OCC's bank examiners conduct compliance reviews of
national banks. Since the Equal Credit Opportunity Act (ECOA) and
Regulation B, which implements the Act, became effective in 1975,
one portion of that review has been to determine banks' compliance
with the ECOA. Using a stratified random sampling method, 0CC
reviews approximately 800 of the national banks annually. If any
violations are found, the banks are required to provide 0CC with
plans for correcting the violation within a specified time period.
0CC also conducts outreach programs through its Office of Customer
and Industry Affairs. These programs are geared toward monitoring
and outreach to small businesses and small business trade associa-
tions, including the National Association of Women Business Owners
(NAWBO). The Office has conducted several seminars and routinely
Enclosure (1), page 5
PAGENO="0776"
770
attends conferences where banking or other financial issues are the
principal topic. The most recent seminar was a Roundtable on
Banking Issues in March 1988, which included panel members from
NAWBO and the Women's Economic Development Corporation. The pro-
gram, geared toward financial institutions, included presentations
on bank programs that have been successful in meeting the needs of
women-owned businesses for credit and capital, A summary of the
conference will be published later thin year.
Future Initiatives
The Department of the Treasury has planned several activities to
ptomote the women's business enterprise program in the future.
These include:
o Participation by the Internal Revenue Service Chicago Regional
Office and the U.S. Customs Service National Logistics Center
in Indianapolis in the next MegaMarketplace Conference,
scheduled for October 1988 in Chicago.
o Expanding the Department's Small and Disadvantaged Business
incentive awards program to include separate recognition of the
Treasury bureau that awards the highest percentage of contracts
and purchase orders to women-owned businesses.
o Revising the Department's Procurement Register form to simplify
the process for collecting and retrieving information on busi-
ness ownership of vendors, including women-owned businesses.
o Reviewing automated Solicitation Mailing Lists to ensure that
women-owned businesses can be easily identified for appropriate
procurement opportunities.
o Continuing our participation in the Interagency Committee on
Women's Business Enterprise.
Enclosure (1), page 6
PAGENO="0777"
DEPARTMENT OF THE TREASURY
WOMEN-OWNED SMALL BUSINESS PROGRAM PERFORMANCE
Women-Owned Women-Owned Total Percent
8(a) Awards Total Awards Procurement Women-Owned
Fiscal Year Actions $000 Actions $000 $000 Awards
1984 3 $7,680 2,164 $13,021 $243,633 5.3*
1985 48 9,275 3,239 18,187 417,705 4.4%
1986 63 12,050 4,922 20,107 388,445 5.2%
1987 243 22,287 6,590 34,082 574,354 5.9%
= = = = == = = = = = = == = = = = = = =,= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =.=
May 1988
Enclosure (2)
PAGENO="0778"
DEPARTMENT OF THE TREASURY
WOMEN-OWNED SMALL BUSINESS PROGRAM PERFORMANCE
SMALL PURCHASE VERSUS CONTRACT AWARDS
Women-Owned Total Percent Women-Owned Total Percent
Fiscal Small Purchase Awards Small Purchase Women-Owned Contract Awards Contract Women-Owned
Year Actions $000 $000 Awards Actions $000 $000 Awards
1984 2,133 $2,585 $72,432 3.6k 31 $10,436 $171,201 6.1%
1985 3,153 2,789 72,861 3.8% 86 15,398 344,844 4.5%
1986 4,828 4,296 108j,201 4.0% 94 15,811 280,244 5.6%
1987 6,298 6,655~ 144,729 4.6% 292 21,427 429,625 6.4%
May 1988
Enclosure (2)
PAGENO="0779"
773
Office of the Washington DC 20420
Administrator
of Veterans Affairs
~ Veterans
Administration
JUN 10 1988
Honorable john j. LaFalce
Chairman, Comitlittee onSmall business
House of ReprasentatiVes
Washington, DC 20515
Dear M~. Chairman:
Enclosed please find the Agency's responses to the questions
which you submitted for the April 26, 1988, hearing by the
House Committee on Small Business. Thank you for the
opportunity to provide this additional information for the
record.
Sincerely,
THOMAS K. TURNAGE
Administrator
Enclosure
"America is #1-Thanks to our Veterans"
PAGENO="0780"
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QUESTIONS OF THE HONORABLE JOHN J. LAFALCE TO THE
HONORABLE THOMAS K. TURNAGE, VETERANS ADMINISTRATION
COMMITTEE ON SMALL BUSINESS
APRIL 26, 1988
QUESTION 1: executive Order 12138 requires that each Federal
department and agency stake appropriate action to facilitate,
preserve and strengthen women's business enterprise and to
ensure full participation by women in the free. enterprise
system. Please identify every initiative your agency has
undertaken pursuant to this executive order, the impact of
the initiative, the office re~ponsible for the initiative,
your assessment of the success or failure of each, and your
recommendations for future initiatives.
RESPONSE: TheVeterans Administration, Office of Small and
Disadvantaged Business Utilization, in accordance with Sec-
tions 8 and 15 of Public ~aw 95-507, promotes increased
utilization of small and small disadvantaged businesses
throughout VA, including women-owned businesses. The Director
of this office, actively participates on the Interagency
Committee for Women's Business Enterprise. We also attend
women-owned business conferences and distribute pamphlets and
information concerning VA acquisition opportunities. In June
1987, information packets were sent to national associations
with significant women-owned business memberships. We have
also developed an outreach letter specifically directed to
women in business.
Contract awards to women-owned businesses, most of which were
competitive, rose from $15.7 million in Fiscal Year 1980 to
$42.9 million in Fiscal Year 1987. The increase in terms of
percentage of total procurement has been equally dramatic--
from .7 percent in Fiscal Year 1980 to 1.4 percent in Fiscal
Year 1987. Since 1980, approximately $238 million worth of
contracts have been awarded to women-owned businesses. The
Office of Small and Disadvantaged Business Utilization has
established a socioeconomic incentive awards program, through
which procurement activities will be recognized for special
achievements in the small and disadvantaged business program,
including the women-owned business program. This initiative
and an increased awareness of the effectiveness ana success
of women-owned businesses should result in increased partici-
pation. To further significantly increase awards to women-
owned businesses, authority to set aside procurements for
these businesses would be required.
QUESTION 2: Please supply the Committee with the following
information for each of the last four years:
a. the number, total dollars, and relative percentages such
figures represent to all contracts awarded by your agency to
women-owned businesses identifying separately awards made
pursuant to section 8(a) of the Small Business Act;
b. the efforts made by your agency to ensure that
women-owned businesses appear on government bidders iists and
are being forwarded solicitation packages for contracting
opportunities;
c. total dollar amount of subcontracting commitments made by
large prime contractors with your agency and efforts to
encourage primes to utilize women-owned small business
concerns.
PAGENO="0781"
775
2.
RESPONSE:
a.
TOTAL DOLLARS P~RCENTAGED OF
FISCAL AWARDED WOMEN- NUMBER OF TOTAL
~`EAR OWNED BUSINESSES ACTIONS PROCUREMENT
1987 $42,994,000 32,315 1.4
1986 39,018,000 30,315 1.4
1985 52,123,000 31,391 2.1
1984 37,591,000 25,916 1.5
The Veterans Administration has made awards to women-owned
business under Section 8(a) of the Small Business Act,
however, we do not maintain the statistics requested.
b. Socioeconomic goals for women-owned businesses are
established and monitored for each acquisition activity
throughout the Veterans Administration. Bowever, the
women-owned business program is a best effort initiative.
Legally we can not set aside contracts for women-owned
businesses. women-owned businesses are placed on bidd.ers
lists, solicited and encouraged to compete.
c. The Veterans Administration does not accumulate data on
subcontracting commitments for women-owned businesses. ¶1~he
Veterans Administration, in compliance with the Federal
Acquisition Regulation, inserts the clause at 52.219-13,
Utilization of Women-Owned Small Business, in solicitations
and Contracts when the contract amount is expected to exceed
the small purchase limitation. This clause encourages the
use of women-owned businesses in subcontracting.
QUESTION 3: If your agency makes grants or loans, please
supply the following ir~formation for each of the last four
years:
a. the number, total dollars, and relative percentages such
figures represent for all grants and loans made to
women~-owned businesses;
b. efforts made by your agency to encourage the participation
of women in grant and loan programs.
RESPONSE: The Veterans Administration is not authorized to
make grints ot loans to private industry.
QUESTION 4: If your agency has programs relatinq to, or
regulatory authority over, the provisions of commercial
credit, in any form, describe any initiatives undertaken by
the agency, or subject to its programmatic or regulatory
authority, that are directed toward women business owners or
that may be more likely to affect such owners in any signifi-
cant way. In your response, please detail such program or
authority and provide such statistical or other data that may
serve to describe the effo~rts of your agency.
RESPONSE: The VA does not have a credit assistance program
directed toward small or women-owned business concerns.
Women-owned businesses requesting credit and loan assistance
are instructed to contact the Office of Women's Business
Ownership, U.S. Small Business Administration.
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3.
QUESTION 5: Please list all types of data within the cort~rol
of your agency regarding women-owned businesses indicating
the usage that your agency has for such data, the sufficiency
of the data, its reliability and any improvements jn data
collection, retrieval or usage planned or desired by the
agency to better assist its efforts in this area.
RESPONSE: Acquisition data regarding women-owned businesses
are collected and reported on the Federal Procurement Data
System, which is mandatory upon all agencies. This
information is used to monitor socioeconomic goal attainment
and identify acquisition activities eligible for the
socioeconomic incentive awards program. We believe this
information is reliable and no improvements in data
collection for women-owned business information is planned.
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nj~ THE ROBERT MORRIS ASSOCIATES
1 4 4 4 1816 PHILADELPHIA NATIONAL BANK BUILDING * PHILADELPHIA. PA.. 19107 * (215) 685-2950
ESTABLISHED 1914 * THE NATIONAL ASSOCIATION OF BANK LOAN AND CREDIT OFFICERS
NATIONAL OFFICE
May 5, 1988
The Honorable ~ohn J. LaFalce
Chairman, Committee on Small Business
U.S. House of Representatives
2361 Rayburn House Office Bui1din~
Washington, DC 20515
Dear Mr. Chairman:
Enclosed is a statement on behalf of the members of Robert Morris
Associates. We request it be made part of the record of the hearings
on women's business issues being held by the Committee on Small
Husiness. The statement concerns access to credit and, more
specifically, certain proposed amendments in pending bills. These
amendments would require the Federal Reserve to reconsider its
treatment of business credit under the Equal Credit Opportunity Act in
accordance with the procedures specified in the bills.
Sincerely,
William H. Sayre
President, Robert Morris P~ssociates
/dcl
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Statement
Submitted by
THE ROBERT MORRIS ASSOCIATES*
to the
Committee on Small Business
oftbe
House of Representatives
on
Women's Business Issues--Access to Credit
May 10, 1988
* Founded in 1914, RMA has grown to more than 3,000 commercial
banks and thrift-institutions, which account~for 85% of the C&I
lending done by these types of U.S. financial institutions. These
institutions are represented in the association by almost 15,000
commercial loan and credit officers and related personnel in all 50
states, Puerto Rico, Canada, and several offshore cities.
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The battle for access to credit is ancient in origin and is
likely to go on indefinitely. Credit is essential for economic
activity. And bankers learned hundreds of years ago that, if given
a choice, most people prefer to put someone else's money at risk
rather than their own. So there is never enough credit.
That is why there are over 35,000 credit-~granting financial
institutions. That is why there are hundreds of federal and state
credit agencies and credit guarantee programs and that is why there
are endless disputes over the appropriate growth in the money
supply Politicians have always been aware of the importance of
credit to their constituents and have used their political skills
and power to try to obtain a "fair advantage' for them in the credit
markets. -
Constituent Credit
Regional
Those seeking accessto credit join a long line of groups and
individuals who similarly have pleaded for special treatment in the
past The dual chartering system for financial institutions is an
outgrowth of battles for access to and control of credit Regions
and states were competing with one another for economic development
and the credit needed to fuel that development. Reflecting state
concern about credit availability, bank charters granted by state
legislators often required credit to be allocated by counties within
the state.
In like fashion, when the national banking system was
established during the Civil War, the law required the Comptroller
of the Currency to distr~bute national banknotes among the states
in accQrdance with economic activity and population When the
Federal Reserve System was created, concern over the availability
and -distribution of credit and the fear of centralized, credit
control dictated its structure of 12 banks, not 1, and a Federal
Reserve Board with severely limited powers.
Sectors -
Guaranteeing access to credit has been done for various sectors
of the economy as well as for regions. Agriculture and housing are
two primary examples. We have created a massive farm credit and
housing infrastructure consisting of government guarantees and
subsidies, government agencies and private institutions such as
production credit assocIations and savings and loan associations.
In this regard, Special Analysis' F of the Budget of the U.S.
for Fiscal Year 1989 prepared by 0MB, and the February 1988 U.S.
1
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Government Accounting Office Report to the Congress on Loan Asset
Sales offered some startling findings:
The Federal Government is the Nation's largest
financial intermediary. At the end Of 1987, it
held loans with a face value of $234 billion in
its direct loan po~rtfoliô, which was 75 percent
larger than the loan assets of the largest
commercial bank in the United States. The
Federal Government also had guaranteed loans with
ati outstai~ding baianc~e of $507 billion at the end
of 1987. Government-sponsored enterprises had an
additional $581 billion of loans outstanding at
the end of the year. Thus, directly or
indirectly, the Federal Government had influenced
the allocation of $1.3 trillion of outstanding
credit to farmers, homeowners, small businesses,
exporters, utilities, shipbuilders, and State,
local, and foreign governments.
The $234 billion in direct loans was held by 29 agencies under more
than 110 federal direct loan programs. In addition, the more than
$500 billion of guaranteed loan balances were managed through about
35 loan guarantee programs under the supervision of 21 of the
agencies. Thus, a vast array of credit facilities exists to
guarantee access to credit by various sectors of the American
economy.
Individuals
Access to credit for individuals has been made easier or has
been guaranteed in many ways. The chartering of credit unions with
an exemption from taxes encouraged the growth of consumer credit.
VA and FHA insurance programs made it possible for individuals to
get housing credit. And various programs such as SBA direct and
guaranteed loans have been enacted to help individuals start and
operate businesses.
One of the major efforts to assure access to credit by
individuals was the enactment of the Equal Credit Opportunity Act.
The Equal Credit Opportunity Act
The purpose of the Equal Credit Opportunity Act is to promote
availability of credit to all creditworthy applicants without regard
to race, color, religion, national origin, sex, marital status, age,
or public assistance use. Creditor practices that discriminate on
the basis of any of these factors are prohibited.
2
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781
Business Credit
Business credit and loans are covered by ECOA and Regulation B
to the same extent as consumer loans with ~ust three limited
exceptions that recognize crucial basic differences between the two
Lenders are subject to all the limitations having to do with an
evaluation of an ~ppl1~~tTh~ ~&itwottbiness 1~o class ~T
transactionsTséiempt from ECOA or Regulation B..
The limited exceptions that have .been made for business credit
are directly related to practicaL distinctions between consumer and
business credit. The differences deal with notification when credit
is denied, record retention, and inquiries about marital status.
Notificatiofl. Undeç Regulation B, a consumer appUcant has the
right to be giyen notice of a denial of an application for credit
So does a business appl~cant A consumer applicant has the right
also to receive a statement of the reasons foz~ denial So does a
business applicant A consumer applicant has the right, upon
request, to receive a written statement of the rehsons for denial.
So does a business applicant.
The one minor difference is that a consumer receives a written
statement of the reasons, or of the right to request the. reasons,
automatically. A business applicant does not. .A business applicant
must make. a request for the reasons withi.n 30 days after receiving
oral or written notification of a denial of credit.
The difference is based on sound principles. Close personal
contact between the business applicant and the loan, officer is a
crucial part of the business credit process. Loan officers often
advise and assist the applicant in preparing the necessary papers
including business plans Loan officers are trained to work with
the ~applica.nt to find a way of making, not declining, a loan and
structuring the loan package properly. Problems, concerns, and
alternatives are normally discussed during the evaluation, not after
a decision has been made. So, in most cases,, the applicant has a
fairly clear perception of where the decisLon is headed. In a
business credit transaction, an applicant invariably learns the
reason for a denial. The process for a business cjedit application
is more comple.x than that for a consumer credit application. This
very process obviates the need .for the automatic statement given to
consumer applicants.
Record Retention. Lenders are required to retain business
records ~or only ~O~da~rs! not for 25 months as required in consumer
credit transactions If requested in writing, however, the lender
is required to retain the records for the full 25 months. Record -
retention for the longer period is not, automatically required
because the documentation for business credi.t applications can be
voluminous The docmmentation may include business projections
financial statements, copies of income tax returns, itemizations and
descriptions . of collateral, certificates .. of i'tirorporation,
partnership agreements, and invoices, ` among `others. Since this
3
PAGENO="0788"
782
documentation is costly for the applicant to produce, it is often
returned to the applicant.
The storage and handling costs involved with retaining all such
materials for 25 months would certainly add to the cost of the loan.
Not only might the borrowers end up paying a higher. interest rate
because of the additional costs to the bank, but also the borrower's
own costs of trying to get a loan would be increased. Usually
applicants apply to more than one bank when seeking a loan. If
banks are required to keep the documentation, the borrower will not
be able to use the same materials elsewhere.
Marital Status. In consumer credit transactions, creditors are
prohibited by Regulation B from asking about marital status in
applications for unsecured credit but may ask about marital status
for secured credit to determine the interestof a spouse under state
law. Most business credit is secured by either business or personal
asgets vhich are usually in the name of both spouses. Thus,
business credit applicants may be asked about marital status whether
the credit is secured or unsecured.
The credit and lending market of the financial services industry
and-the credit and lending culture of commercial banking
have changed drastically since ECOA was enacted,
thereby making discrimination a self-defeating practice
The market for business credit has changed drastically since
ECOA was enacted. Foreign banks have captured a significant share
of the big business market, and commercial paper has become widely
used as a substitute for commercial loans. Domestic banks that had
concentrated or preferred making loans to major businesses adjusted
by turning to the-middle market where medium and small businesses
are served. Quite a few began specializing in loans to small
businesses.
In addition to competition from foreign banks, commercial banks
are now facing competition from thrift institutions, which were
granted commercial lending powers by Congress. Moreover, credit
unions are getting into the act. The point is that the number of
lenders granting business credit has increased substantially and
competition for quality business applicants has never been keener.
The number of sources of business cretht is greater than ever.
While there may be vestiges of shortsighted discrimination within a
few individual -institutions, the system as a whole has become very
sensitive to the goals of ECOA. Competition has added its force to
regulation.
The fundamental p~roblem facing banks today is not so much
ratioiiTi~ a short supp~~y ~f credit to borrowers ~ut of meeU~
competition [ñ ôredit mar~ts' wherehere is an oversupP~ o
Ioánable fun5~ and when tfiiprCssure ~for earnin~g~g d'émands gre~t
vigilance Thb~ the ~ of ]c~!~ to av~Th taking ex~iSsive ~TSk~
4
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783
Bankers today are searching for ~ credits whether ~y are large
or small, regi?dless of where ä~business is locatid~~,ft1fln the
market area and without regardto the sex of ElTe borrowers.
Evidence of these changes is found in the fact that 3.2 million
businesses in the country today are owned by women and two out of
three businesses are sarted by women, according to a study made by
the Department of Commerce. These women are getting business
credit.
Commercial Banking Culture
The changes within the credit-granting culture of commercial
banks have been just as drastic as those in the financial services
market. ECOA and competition have combined to beat down whatever
discrimination might have once existed.
Women in Banking. The changes in the banking culture have been
dramatic, according to data reported to the Equal Employment
Opportunity Commission and released by the American Bankers
Association. During 1985, more than 44% of all officials and
managers and approximately 53% of all professionals in the top 50
banks were women. In 1975, women comprised 26% of officials and
managers and 31.7% of professional jobs in the top 50 banks. Many
of these women are involved with the lending function. It seems
unlikely that they would condone business credit practices that
discriminated on the basis of sex. Moreover, it would be incredibly
inconsistent for banks to make such great strides in eliminating
employment discrimination against women, while maintaining a policy
of credit discrimination.
Anecdotal Testimony
Despite the changes mentioned above, women witnesses continue
to give anecdotal testimony of credit discrimination based on sex.
Differences in philosophy among lenders may be a source for
such anecdotal testimony. A former president of Robert Morris
Associates, Patrick L. Flinn, has pointed out that "there are
bankers who are not comfortable unless they have hard assets as
collateral.' In addition to a concern with collateral value and
cash flow as sources of repayment, bankers look for management
experience and depth, a proven track record, and adequate
capitalization of the given business. Anyone starting a new
business naturally has a more difficult burden establishing
creditworthiness. They generally have no track record, and the rate
of failures among new businesses is high. The business may be
undercapitalized, and the owners may lack management ability.
The fact that two out of three new businesses are started by
women may be relevant to the continued flow of anecdotal testimony
given by women witnesses of credit discrimination based on sex.
Most of the businesses formed and operated by women are service
5
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784
businesses in which there are few hard assets. A lack of collateral
support combined with the weaknesses demonstrated by many new
businesses may more correctly be the basis for the turndown of the
loan request.
Lack of familiarity with the commercial loan process may be
another reason for perceived discrimination. Commercial borrowers
are required to provide more extensive documentation for a loan
request than consumer credit applicants. Sometimes this is seen as
being discriminatory when it is actually a realistic recognition of
the difference between the two types of loans.
Women witnesses who give anecdotal testimony of credit
discrimination based on sex appear not to be aware of the. rights and
remedies already available under the Equal Credit Opportunity Act to
those denied business credit. In the case of denial or other
adverse action, the applicant may request in writing the reasons for
denial within 30 days. Rather than conclude discrimination on the
basis of sex, a request for the reasons behind the denial would
clearly reveal the basis for the decision that was made.
Venture Capital
Women are new entrants into the business loan market. They are
forming businesses at a hectic pace. If they don't hawe savings,
the~j need capital from elsewhere. But banks are not in the business
of supplying venture capital. Indeed, appropriate standards of
creditworthiness preclude banks from providing venture capital in
the guise of a commercial loan.
Psychological Factors
Like most entrepreneurs, women who start businesses are highly
motivated. They are out to prove something other than that they can
make money. Their dreams and hopes are involved. There are many
obstacles to overcome. It is understandable that, like others, they
get irritated for being denied credit. It is an affront to them.
It is a blow to them personally. Good loan officers understand
this Contrary to popular belief they do not enjoy turning down a
loan applicatiOn. Perhaps there is more that bankers can do to help
their women customers and some of the women's advocacy groups better
understand the commercial lending function. But given the
complexity of the commercial loan decision process, any necessary
one-on-one explanations about a rejected loan application should be
left to the customer and the loan officer.
Education
Many of the erroneous perceptions can be changed by educating
women and minority borrowers of their rights. The Federal Reserve
has made a major effort to do this with the publication and
6
PAGENO="0791"
785
distribution of a pamphlet entitled "A Guide to Business Credit and
the Equal Credit Opportunity Act The pamphlet explains the rights
of business borrowers and provides advice on how to apply for a
business loan..
Pending Bills
While these hearings are not concerned specifically with the
pending bills that would amend the Equal Credit Opportunity Act to
require the E'ederal Reserve to reconsider the business credit
exceptions, it is appropriate that we address those bills since they
have been proposed as remedies for problems women allegedly have in
gaining access to credit Among the bills are H R 1897 and H R
2577.
There' are' three major provisions in' the bills:
(1) The Board of Governors of the F'ederai Reserv~e System is
directed to hold public hearings in accordance with the
Administrative Procedure Act (AM) as a precondition to
determining whether any exception in the business credit
area would be granted or continued. Under existing law,
the Board makes such determinations within the rulemaking
requirements of the APA, which vests the Board (and all
other government agencies) with discretion on whether
public hearings will be held'.
(2) Any exception granted by the Board for business credit
would terminate after five years and cotild be extended only
after a Second public hearing. There is no comparable
"sunset" provision in the current law.
(3) The Board would be limited to~Making exceptions only in the
area of business or commercial' tr~nsactions. At present,
there are exceptions for securities credit, public utility
credit,.a5d incidental credit.
Public Hearings ` ` `
It has beeh our experience iii dealing with~proposed"aiendments
to Regulation B, Equal Credit Opportunity, that the process used by
the Board is a fair and efficient method of gathering i~iformation
and opinions. Proposed tule changes'are pu,b1i'~hed in t~ P~ederal
Register for written comments from anyone. The s'ame Opportunity i~
available to everyone at the least cost. Public hearings are
valuable and often necessary But they usually involve travel and
subsistence expenses not involved ii~'the written comment process.
The less formal process of Written comments may provide a better
opportunity for more people to express opinions than would public
hearings.
7
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786
Sunset
The section of the bill that would terminate any business
credit exceptions after five years forces the Federal Reserve to
reevaluate such exceptions every five years. That is a procedure
currently followed under the Board's Regulatory Improvement Project,
a program calling for the review of regulations every five years.
Moreover, the Regulatory Flexibility Act already requires federal
agencies to make a periodic review of all regulations.
Limits on Exceptions
While the bill would continue to authorize the Board to make
exceptions for business credit, it appears to take away the Board's
authority to grant exceptions for other types of purpose credit.
While we believe the Board has demonstrated responsibility and
responsiveness in creating exceptions, we have no comment to make on
the other types of purpose credit.
Opposition
Robert Morris Associates is opposed to the bills for the
following reasons:
* Business credit and loans are covered by ECOA and Regulation
B to the same extent as consumer loans with just three
limited exceptions that recognize crucial, basic differences
between business and consumer loans.
* The credit and lending market of the financial services
industry and the credit and lending culture of commercial
banking have changed drastically since ECOA was enacted,
thereby making discrimination a self-defeating practice.
* In practice, the Federal Reserve is already doing basically
what the bill would require it to do, so enactment would be
redundant and unnecessary. The issues raised in this area
often are complex and the modest amount of flexibility the
Federal Reserve currently enjoys in administering existing
law is important for effective regulation.
* The proposed bills would do absolutely nothing to mak.e more
credit available to women.
The fixs~ two reasons have been discussed more fully earlier so
further discussion will be limited to the last two concerns.
8
PAGENO="0793"
787
Zn practice, the Federal Reserve is already doing basically
what the bill would require it to do,
so enactment would be redundant and unnecessary*
The Board has demonstrated its sensitivity and responsiveness
to complaints about the exceptions for business credit by
reconsidering the exceptions more often than the bill would require,
In 1975 when Regulation B was, adopted and~ in 1976 when it was
revised, the rules applicable to business credit received extensive
consideration Again in 1978, changes in the business credit
exceptions were reviewed at the request of the President's
Interagency Task Force on Women Business Owners. And in 1983 and
1985, the exceptions were reconsidered once more. Public comment
was received on each occasion. Each time the Board noted that
little or no evidence of discrinination had been presented and that
the exceptions `...continued to appropriately recognize differences
between the manner in which business credit and consumer credit
dealings are conducted."
It would be wasteful to require -the Board to once again
reconsider the business credit exceptions since it undertook a
detailed investigation of the issue in 1985 and reconsidered the
matter within the last 18 nonths. It would mean the Federal Reserve
would once again have to devote resources to a task it h-as
considered many tines. It would mean we would have to devote
resources to following and participating in the process to recognize
the concerns of our members--a task we have performed each time the
Fed has considered the exceptions.
The bills will do absolutely nothing to make
- more credit available to women
Even if advocates of the proposed amendments could provide
evidence to support the `need for the amendments, their enactment
would not achieve the goal of naking more credit available. It
would simply take credit away from someone else, or, a more probabl~
outcome would be to increase the cost and decrease the supply o
credit to the marginal borrower.
We believe women's business credit needs are being met
satisfactorily by the banks. Banks should-. not be -asked to change
their credit standards to allocate credit to a special group.
Furthermore it should be recognized that although a turndown of a
credit request may be painful in the short run, it may be quite
beneficial- to the applicant in the long run. Granting a loan
request for an activity which the banker, based on a careful
assessment of the proposal, feels is doomed to failure surely is not
doing the applicant a favor.
PAGENO="0794"
788
Conclusion
Before closing we want to repeat that business credit lenders
are subject to all the limitations having to do with an evaluation
of an applicant's creditworthiness. There is no substantial
evidence that women are being discriminated against. Quite the
contrary. We feel banks are serving their women customers very
well. Legislation is not needed. It would be duplicative and
wasteful and ultimately could prove, to be detrimental to the very
interests it seeks to promote.
0
10
88-199 (800)
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