Women small business owners are saving America.
The economic recovery has been a long, slow slog. Without women starting businesses, we’d all be in much tougher shape. Here’s why: women start businesses at a rate five times faster than men. In fact, women launch 1000 new businesses every day.
Women would do a whole lot more to save America if only America would return the favor and treat women small business owners equally.
Sunday, April 30 kicks off National Small Business Week, a time to recognize the many contributions of small business owners. This year, let’s focus on the critical role women business owners make in keeping our economy afloat.
Since the recession, new businesses and jobs have grown slowly. Women-owned businesses have been a beacon of hope: they’ve grown five times faster than the national average, according to The Sixth Annual State of Women-Owned Businesses Report, commissioned by American Express OPEN.
Between 2007-2016, all new business formation had a 9% annual growth rate, while women-owned businesses formed at a 45% annual growth rate.
In 2016, there were:
- 11.3 million women-owned businesses.
- 9 million jobs in women-owned businesses.
- $1.6 trillion dollars in revenue. That’s trillion with a “t.”
Minority women start businesses at the fastest rate within all women-owned businesses. Between 2007 and 2016, women of color launched nearly eight out of every 10 women-owned businesses.
The picture is not all rosy. While women now own 38% of the nation’s companies, they only employ 8% of the private sector workforce (up from 6% in 2007) and only contribute 4% of the country’s overall revenues – a figure unchanged in 20 years.
Why? Why with all this entrepreneurial spirit and drive, why aren’t women business owners reaching greater parity in terms of employment and revenues? Part of the reason may be personal choice, but women business owners face substantial external obstacles keeping them from achieving their full potential when they want to grow.
What are some stumbling blocks in women entrepreneurs’ paths?
Lack of affordable, quality childcare. Without affordable, quality child care, it’s not only more difficult for women to run growth-oriented companies, it’s difficult to retain and advance female employees. The founder of Kinko’s, Paul Orfalea, made child care a major initiative of his charitable foundation because he realized lack of childcare was the number one reason valued female employees could not show up for work.
Lack of funding. Women receive a much smaller share of financing from all funding sources. Venture capital levels are almost laughable for women: only 3% of venture dollars went to women in 2016 and 5,839 male-founded companies received VC funding compared to a measly 359 female-founded companies, according to venture tracker Pitchbook. When funded, they get less money: an average of $77 million compared to $100 million for males, according to Bloomberg. Similar disparities exist with angel investors and with lenders from all sources. According to lending site Fundera, women business owners get offered smaller loans for shorter terms at higher interest rates than men.
Persistent negative perceptions of successful women. Even today, a confident and successful woman is often seen as unpleasant – not ‘feminine’ enough. A confident man who promotes his abilities is rarely seen as cocky. The same behavior in a female is seen as bossy, pushy. This negative attitude towards strong women holds women back. Male funders are often less comfortable with overtly capable women than men. Women themselves become more reticent to tout their accomplishments and strengths, afraid to be seen as unlikeable.
Bro culture and sexism. There’s been a lot of high profile sexual harassment cases in the news: Bill O’Reilly, Uber executives, even the President. But that’s just the tip of the iceberg. The business world rewards companies embracing a culture of unrepentent sexism and coddle, even celebrate, men who act like the worst jerks in junior high, making it more difficult for women to get the experience in top startup jobs, get promoted, or funded.
What can entrepreneurs do to help combat these obstacles?
- Support politicians who support women’s issues, including child care.
- Create and support networks of women entrepreneurs.
- Mentor young female entrepreneurs.
- If you’re a successful woman, consider becoming an angel investor.
- Stay positive about other strong, successful women.
Copyright, Rhonda Abrams, 2017
This article originally ran in USA Today on April 26, 2017