Women: It's Time To Start Your Own Business!

There are a variety of reasons more women are now starting their own business, but for many reasons, only 37% of all small businesses are owned by women. Women-owned businesses are also more likely to be successful than those owned by men. Women who run their own businesses generate 10% more revenue in five years than men do, according to Boston Consulting Group analysis—a boon for the economy. And yet, right now, there are more male entrepreneurs than female entrepreneurs. By gaining support from investors and supporting each other, women can conquer the barriers to entrepreneurial success.

Where to Find the Rising Number of Female Entrepreneurs

Almost one-third of working adults in the United States have their own businesses, which explains to 54.5 million people who are independently employed. Business owners are all over the country. While most small business owners function in the neighborhood, women are not as likely than men to be found working beyond their area on a national or international scale.

Women operate predominantly in wholesale and retail businesses, but to a lesser extent, their businesses provide health, education, government, and social services, as well as administrative services. The Mastercard Index of Women Entrepreneurs lists just 3 in 10 entrepreneurs as women. On one hand, that’s good news: the gender gap between female and male entrepreneurs is at an all-time low of 1.7%. But there’s still plenty of room to grow.

How Female Entrepreneurs Build Business

Women run nearly 13 million U.S. businesses, providing jobs for nearly 10 million people and raking in $1.9 million in revenue. Their ranks have been steadily growing. According to the Mastercard Index, the female entrepreneurial rate increased by more than 10% in 2018, more than 13% in 2019, and more than 16% in 2020. Still, female entrepreneurs could do so much more. Analysis from Boston Consulting Group suggests that if the number of women entrepreneurs matched the number of men, the United States could add between $2.5 and $5 trillion to its economy.

The Barriers Female Entrepreneurs Face

Increasing the number of female entrepreneurs in the United States isn’t just a matter of more women making the decision to open their own businesses. Boston Consulting Group’s analysis found that women tend to receive more than $1 million less in investment capital than men on average. That’s despite the fact that female-run startups earn 78 cents for every dollar of funding—more than double what male-run startups earn.

Removing Roadblocks for Female Entrepreneurs

Research shows women pursue entrepreneurship because it gives them much-needed work-life flexibility—but it’s not without roadblocks. And while the entrepreneurial gender gap is decreasing, there’s one age group where it isn’t: ages 25 to 34.

How Can Investors Help?

There are plenty of ways investors can help remove roadblocks for women. First, they can diversify their own boardrooms. Research published in?Harvard Business Review?shows investors are primarily white men, even though venture capital firms with more women on staff showed an average increase in returns. Second, they can help grow women’s support networks because women need more than just startup capital. Female entrepreneurs tend to struggle more with a fear of failure owing to their lack of strong support networks. So, they would greatly benefit from access to accelerators, crowdfunding ventures, and new business models that specifically seek to accommodate them.

Finally, investors can change how they listen to women’s pitches. They should be mindful about assuming women lack basic technical knowledge and be aware that women are often more reticent than men to say “you’re wrong.” In addition to encouraging conversations in which women feel comfortable critiquing investors, they should also remember that women tend to be more conservative than men when they approach investors. In other words? Watch for the undersell.

Why Investors Should Support Female Entrepreneurs

Women make great entrepreneurs—and not just because they encourage diversity within their own companies. They’re flexible, savvy, and tapped into products that people want and need. With the right support, women-owned businesses have the power to add trillions to the U.S. economy.

It's time for women to start their own businesses. The benefits are many, and the opportunities are endless.

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https://onlinemba.wsu.edu/blog/women-in-business/