Today, the JPMorgan Chase Institute released a new report examining the difference in small business outcomes based on the age and gender of small business owners. The research, "Gender, Age, and Small Business Financial Outcomes,” reveals that conservative cash management strategies, including the ability to hold larger cash buffers, may play a key role in the survival of businesses owned by women and entrepreneurs older than 55, despite experiencing lower revenues and slower growth than their younger and male counterparts.

“Cash management strategies and cash buffers are key to the survival of small businesses, and this new research shows that is true, especially when a business is experiencing lower revenues or slower growth,” said Diana Farrell, President and CEO, JPMorgan Chase Institute. "While women and older entrepreneurs may have lower revenues or slower growth, their conservative approaches to cash management appear to be paying off. Our hope is that this report can better inform policies that allow small businesses owned by women or people of all ages to make more substantial contributions to overall economic growth."

The report leverages JPMorgan Chase’s unique transaction-level data to shed light on daily revenues, expenses, and financing flows to focus on the financial outcomes of a cohort of 138,000 firms founded in 2013 to observe their performance in their critical early years.

The report explores differences among small business outcomes by owner gender, owner age and geography. Key findings include:

• Women-owned businesses have lower revenues, experience slower growth and are less likely to receive external financing than their male counterparts. Despite these disparities, women-owned businesses have the same survival rates as businesses owned by men.
  • Women start about 30 percent of firms, compared to 70 percent for men.
  • Women-owned small businesses have 34 percent lower first-year revenues than male-owned small businesses and experience slower growth—the median first-year revenue was about $50,000 for women-owned small businesses, while male-owned small businesses generated $75,000 in first-year revenue. In the fourth year, median revenue for a women-owned firm was about $68,000, compared to $104,000 for male-owned firms.
  • Women-owned small businesses are underrepresented among firms that leverage external financing to drive growth—they represent only 18 percent of small businesses that experience financed growth.

• Firms with older founders (55+) have the highest survival rates but are the least likely to have employees. They also have the largest cash buffer, a key factor in firm survival.
  • A typical firm founded by a 30-year-old has an 11.1 percent predicted probability of exiting the marketplace after its first year, whereas one founded by a 60-year-old has an 8.2 percent probability of doing so.
  • Firms founded by owners 55+ have the most cash buffer days—a measure of small businesses’ ability to withstand emergencies using cash balances. Firms with older owners held 17 cash buffer days, compared to 12 days held by owners younger than 35.
  • Only six percent of firms with older owners were employers, which is nearly two percentage points lower than the overall share of employer firms.

• Across geographies and industries, there is significant variation in revenues of small businesses owned by women compared to those owned by men.
  • Firms founded by women were smaller than firms founded by men in every metropolitan area tracked, though the size varied by location. In San Antonio, new women-owned small businesses had 46 percent of the revenues of new male-owned businesses, whereas women-owned small businesses in Miami had 85 percent of the revenues of their male-owned counterparts.
  • While women were more likely to start businesses in the personal services, healthcare services, retail and real estate industries, they still experienced smaller revenues than male-owned businesses in those same industries.
  • In three male-dominated industries (high-tech manufacturing, construction and metal and machinery), the relatively few women-owned businesses had larger first-year revenues than male-owned firms.

The new research follows up on the Institute’s July 2018 report, "Growth, Vitality, and Cash Flows: High-Frequency Evidence from 1 Million Small Businesses," a first-of-its-kind insight into the lifecycle of U.S. small businesses, including the factors that lead to growth and failure among different kinds of small businesses. By analyzing the revenues and cash flows of 1.3 million small businesses, the research revealed that although small businesses in the U.S. are often treated as a uniform sector, they are not; they vary in terms of growth, employees, and cash flow management.