After years of growth, women entrepreneurs are pulling back. Here’s why.

It started with severe abdominal pain and a trip to the emergency room. The doctors ruled out appendicitis. Then came the tests and trips to specialists. Crohn’s disease? No. Allergies? Definitely not. Anxiety? Negative.

A year and a half later, the 19-year-old son of a Pennsylvania event manager was finally diagnosed with a rare, incurable autoimmune disease that requires a change in diet and several medications to keep under control. It’s a work in progress and a diagnosis the family is still trying to navigate.

“We’re managing symptoms. That’s where we’re at,” said Tracy, who asked to use a pseudonym because of career sensitivities.

Already a huge lifestyle change for her son, the diagnosis would alter the course of Tracy’s professional life.?

For years, the mother of two thought about going into business for herself. That seed of an idea turned into a full-fledged passion after one of her colleagues struck out on her own during the pandemic, launching a successful PR consulting firm.?

Tracy wanted to do something similar, using her two decades of event management experience in eastern Pennsylvania to become her own boss.

She started networking, putting out feelers to potential future clients and connecting with other entrepreneurs to put together a business plan. Then reality kicked in, bringing her dreams to a halt. Her son’s treatment — and the necessary health insurance — was too costly for her to manage as a small business owner.

She’s not alone. After years of growth, women’s entrepreneurial moment has been cut short. While the number of new male entrepreneurs climbed by over 7% between 2021 and 2022, women saw a 5% decline during that period.?

As the U.S. grapples with the long-standing social and economic effects of the pandemic and the growing threat of a recession, women are increasingly putting their business plans on hold in lieu of stability, health care and a steady income.

In recent years, women in the U.S. took to entrepreneurship in growing numbers. The number of new women entrepreneurs grew by 21% in 2019, compared to the previous year, according to LinkedIn data. Male entrepreneurship grew by 17% during that period. And in 2020, during the height of the pandemic, women saw a 24% uptick in new entrepreneurship. This startup growth marked a reversal from decades of declining entrepreneurship in the U.S.

Even as women were pushed out of the workforce to care for children and family members or furloughed from their companies during the pandemic, many saw a moment of opportunity to build on a percolating idea, turning the she-cession into a small business launch pad.

Women’s entrepreneurial decline stands in contrast to other findings on the state of entrepreneurship and small business gathered by LinkedIn’s Economic Graph team. Overall, the number of new business founders grew by 4% between 2021 and 2022, with the tech and healthcare industries accounting for the largest growth in small business activity.

And despite recent economic headwinds, small businesses are continuing to hire in regions large and small. Among the larger cities, Houston and San Francisco saw the most hiring growth among small firms in 2022, led by the manufacturing and oil sectors in Houston and tech in San Francisco. And smaller metro areas also saw small business hiring growth, with the greater Palm Bay area in Florida and Little Rock, Ark. leading the pack in 2022.

If small business as a whole continues to grow despite the challenges, what’s holding women entrepreneurs back? Three likely culprits: The looming threat of recession, a persistent economic penalty that women continue to face as primary caregivers and sheer bias.

“Some of the older trends are reemerging that were not as prominent during the very unusual period of the pandemic,” said Lavea Brachman , a visiting fellow at the Brookings Institution’s Metropolitan Policy Program. “The inequality we see for women and minorities is still there.”

One large component of that inequality is access to capital, whether it be in the form of a traditional bank loan or venture funding. A 2017 study found that women receive close to 50% less in funding than their male counterparts — a trend that only worsened in the pandemic when banks tightened their belts.

One exception to the rule? The Paycheck Protection Program, a federal pandemic-era fund that dedicated billions to support struggling small businesses. The program helped keep many operations afloat during shutdowns and stay-at-home orders.

The federal government, however, is unlikely to push that kind of stimulus back into an economy struggling with record-high inflation.

“That potential safety net isn’t there. There is definitely a fear around what’s going to happen over the next one to two years,” said Cate Luzio , founder of Luminary, a professional education and networking platform for women. “A lot of businesses are unfortunately shutting down.”

After two years of struggling to keep their heads above water, some pandemic-era entrepreneurs are going back to their corporate jobs.

Karina Dixon is one of those entrepreneurs. Her father died of COVID in April 2020 during the initial wave that devastated New York; she was thrust into caring for his estate after discovering he did not have a will. Dixon left her Los Angeles-based corporate entertainment job in 2021 to start Diverse Dollar, a business aimed at educating people about estate planning.

“It felt weird to stay at a job when something so traumatic happened,” she said. “When I left [my job], I had had the idea for a few months and was starting to draw it out. There was no business plan or anything like that. It was a risky decision and an emotional one.”

Dixon and her husband knew money would be tight raising two girls and caring for Dixon’s mom, who suffers from long COVID and lives with the family. But they agreed she had to give it a shot.

As she put together her strategy and learned the ins and outs of managing a business, Dixon connected with other women who were also taking the entrepreneurial leap.?

“It gave me the validation that I’m not the only one who wants to completely change their lives to follow a passion,” she said.

The finances, however, have been hard to manage. After taking on debt trying to get Diverse Dollars off the ground, Dixon is returning to the corporate world, starting a new full-time job in entertainment analytics at the end of October.?

Solopreneurs, in particular, are choosing to put their small business ambitions aside, Luzio said. They are leveraging the experience they gained from starting their business as a foothold back to full-time employee status.?

“I see the way the economy is going and know things are going to get even worse,” Dixon said. “So, it seems like the most responsible decision for myself and my family is to go back to work and start saving money again.”

Dixon may be returning to her old field, with one noticeable change: She won’t be in an office. Her role is 100% remote, giving her the kind of flexibility she valued as a small business owner, along with a steady income to pay off her debts.

And Dixon is not ready to give up on Diverse Dollars, either. After she gets herself established in her new job, she plans to join the growing ranks of side hustlers and dedicate evening hours to her business venture.

Tracy, too, isn’t giving up just yet. She says she aims to pick back up on her event planning business after her son finishes college and has his own health insurance.?

For these women, their entrepreneurial journeys may have hit a pause, but they are far from over.?

METHODOLOGY: Entrepreneurs are LinkedIn members that have self-identified as having a founding, owner or C-level role in a company and have started that role within 12 months of a company's founding date. Small businesses are defined as small private companies with no more than 500 employees. Gender identity isn’t binary and we recognize that some LinkedIn members identify beyond the traditional gender constructs of “male” and “female.” If not explicitly self-identified, we have inferred the gender of members included in this analysis by classifying their first names as either male or female or by examining pronouns used on their LinkedIn profiles. Members whose gender could not be inferred as either male or female were excluded from this analysis. Company info is taken from a firm’s LinkedIn company page or founder and employee reported info. To measure hiring, we used the average of the monthly LinkedIn Hiring Rate (LHR) between the January to September periods in 2021 and 2022. LHR is the number of LinkedIn members who added a new employer to their profile in the same month the new job began divided by the total number of LinkedIn members in that country.