Businesses started by entrepreneurs over 55 have highest survival
WASHINGTON–(BUSINESS WIRE)–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
“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
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.
- Women start about 30 percent of firms, compared to 70 percent for
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
- A typical firm founded by a 30-year-old has an 11.1 percent
Across geographies and industries, there is significant variation
in revenues of small businesses owned by women compared to those owned
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
- Firms founded by women were smaller than firms founded by men in
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.
About The JPMorgan Chase Institute
The JPMorgan Chase Institute is a global think tank dedicated to
delivering data-rich analyses and expert insights for the public good.
Its aim is to help decision-makers—policymakers, businesses, and
nonprofit leaders—appreciate the scale, granularity, diversity, and
interconnectedness of the global economic system and use better facts,
timely data, and thoughtful analysis to make smarter decisions to
advance global prosperity. Drawing on JPMorgan Chase & Co.’s unique
proprietary data, expertise, and market access, the Institute develops
analyses and insights on the inner workings of the global economy,
frames critical problems, and convenes stakeholders and leading
thinkers. For more information visit: JPMorganChaseInstitute.com