Famous names like Mark Zuckerberg, Richard Branson, Bill Gates, and Steve Jobs often spring to mind in discourse about entrepreneurial achievement. They all happen to be men. But as the business and civic community gears up to celebrate Women’s Entrepreneurship Day this year on November 19, female entrepreneurs are taking center stage.
Consider a few statistics:
Over the past 20 years, the number of women-owned businesses has grown 114 percent compared to the overall national growth rate of 44 percent for all businesses.
Women now make up 40 percent of new entrepreneurs in the U.S.
In 2017, more than 11.6 million firms were owned by women generating $1.7 trillion in sales.
Women of color have turned to entrepreneurship at an extraordinary rate. Firms owned by women of color grew at more than four times the rate of other women-owned businesses (467 percent).
What factors affect women’s rise in business ownership? Changing cultural norms in the workplace, expanding financial options, and stronger support networks all play a part. Here’s how:
Women Seek to Take Control of their Careers
Women are increasingly frustrated with gender inequality and a lack of advancement opportunity in the workplace. According to a Leaders and Daughters Survey by EgonZehnder, almost half (49 percent) of women surveyed expressed the belief that it is more challenging for them to reach senior management positions than it is for men in their organization.
Once women rise to middle management levels and above, this number rises to 60 percent who reported feeling that they would struggle more than their male counterparts in getting a promotion.
Seeking to shape their own futures, starting a business brings new opportunity for women to take control of their careers and break through the glass ceiling.
Greater Access to Mentors and Role Models
Starting and growing a business involves wearing many hats. Small business owners must be salespeople, marketers, recruiters, and managers. They must also manage their books, abide by the law, and make decisions that steer the business on the right course. It can feel impossible to do it all without the support of others. Yet women often struggle to connect with the counseling and guidance resources they need. When surveyed just a few years ago, 48 percent of women expressed that a lack of available mentors held them back from entrepreneurial success.
But the times are changing. Today, there’s a growing list of “women-helping-women” organizations that offer much-needed mentorship, concrete advice, sponsorships, and connections to funding resources.
Organizations such as Women’s Business Centers, an SBA-sponsored and nonprofit-based network of more than 100 centers that offer one-on-one counseling, training, networking, workshops, technical assistance and mentoring to women entrepreneurs. In 2017, the Women’s Business Center program counseled and trained nearly 150,000 entrepreneurs nationwide and added nine new centers earlier this year.
Other organizations include SCORE (which provides online and in-person one-on-one mentoring), the National Association of Women Business Owners, as well as local business accelerators and incubators. And let’s not forget initiatives like Women’s Entrepreneurship Day, backed by a foundation dedicated to empowering and educating women business owners year-round.
Finally, there is a growing movement of professional women creating online support networks, such as Ladies Get Paid and Women 2.0. Increasingly, more tech-savvy women are using these networks, chat groups, and social media forums to swap stories, advice, and referrals and help each other grow their careers.
The Funding Gap Between Men and Women is Closing
A lack of access to funding has long held women back from the same business opportunities as men. On average, women entrepreneurs get 50 percent less funding than their male counterparts. Women also tend to receive a tiny proportion of venture capital funds: according to Fortune, female founders only got 2 percent of venture capital dollars in 2017.
Several initiatives such as federally-sponsored funding and grant programs have been established to help bridge the funding gap, including the Cartier Women’s Initiative Award, the Amber Grant Foundation, and the Eileen Fisher Women-Owned Business Grant Program, to name a few.
Technology is also changing the lending landscape in favor of women, with online lenders advancing fair and equal access to credit than previously possible.
Read more in our new report, What If: Designing fair and equal access to credit for women.
The Work Continues
Despite the positives, there’s still work to be done. For example, women lag their male counterparts in scaling their business and often start small and stay small.
According to American Express OPEN, only 4.2 percent of all women-owned firms have revenues of $1 million or more and only employ 8 percent of the total private sector workforce. But things are heading in the right direction, if the current growth trajectory continues and access to support and funding broadens, more and more women will start and grow their businesses, adding their names to the ledger of great American entrepreneurs.
Don’t forget to check out Women’s Entrepreneurship Day on November 19. This powerful movement convenes business leaders and others to share solutions that empower women in business. The event is held in New York City, but sessions and events are livestreamed online.
Want to learn more about women’s access to capital and how fintech is changing the game for female entrepreneurs? Download our free report, WHAT IF.