Women Are Hiring Less, Using Credit Cards More

Hiring Less Half of all U.S. female business owners surveyed expect their sales to increase in the next six months, but most have no plans to hire full-time employees, thanks to a "soft patch" that has slowed the U.S. economic recovery. Three out of four don't intend to bring on any full-time employees, while 63 percent expect no change in their number of part-time employees.

These are the findings of the Women Business Owners Outlook survey, from the financial services company PNC, which also shows that most female owners are satisfied with their overall business performance, as six out of 10 say that their companies are currently meeting or exceeding expectations. Still, the women show a reluctance to take on long-term financing or make capital investments in the months ahead.

How much difference could that make? It could be significant because over a recent 10-year period the number of women-owned businesses in the U.S. grew by 44 percent, twice as fast as male-owned firms. Over the same period, women-owned firms added 500,000 new jobs.

Surprisingly, though, PNC also found that most of these women are funding their businesses with credit cards and personal savings in lieu of long-term bank financing. Nearly six out of 10 (59 percent) use a business credit card and almost half (44 percent) rely on personal or family savings to fund their businesses.

That's not necessarily the best option. "While women business owners often describe themselves as being debt-averse, those who rely strictly on savings and credit cards leave few options to weather downturns without cashing in personal assets or taking a hit to their personal credit history," said Beth Marcello, director of Women's Business Development at PNC.

According to PNC's findings, women owners rely on an average of 2.7 sources of money to fund their businesses. Additional sources of capital include a line of credit from a financial institution (38 percent), personal credit card (34 percent) and a business loan from a financial institution (26 percent).

The survey, which attempted to gauge the outlook, mindset and business philosophy of women business owners across the nation, found that they are optimistic about their own companies, but wary about the economy over the next six months. Here's what they had to say on some key topics:

  • Business performance: The women owners are pleased with the current financial performance of their business, as 11 percent say that their business is exceeding expectations and 50 percent say it is meeting expectations.
  • Sales and profits: More than half (51 percent) expect their sales to increase, and 31 percent expect them to remain the same. Only 14 percent expect sales to decrease. Meanwhile, four out of 10 expect to see higher profits, and 32 percent expect them to remain the same. Only 24 percent expect profits to decrease.
  • Big picture - good news, bad news: Eight out of 10 women owners are optimistic about their own businesses, but only 41 percent intend to make a capital investment. Their outlook for the larger economy is gloomy, as almost half are pessimistic about the prospects for the U.S. economy and 37 percent are pessimistic about their local economy.

"Our women's survey findings reinforce that the U.S. economy continues to suffer through this current soft patch, as growth has slowed into the realm of stalled speed," says Stuart Hoffman, chief economist of the PNC Financial Services Group, Inc. But he offers some reassurance: "Even though we are dialing back our expectations for the second half of 2011, we do not expect the economy to slide into a double-dip recession."

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