Women In Small Business: Everything You Need To Know
Women in small businesses still face unique challenges, from gender biases to difficulty accessing commercial funding.
Statistics from the National Women’s Business Council say there are nearly 13 million women-owned businesses in the United States. That’s approximately 42% of all companies in the country, a huge rise from 19.9% in 2018.
This article highlights women small business owners and their biggest challenges (and how to overcome them), funding opportunities, and valuable tips to start and run a thriving business as a female founder.
Women In Business: Numbers And Statistics
Research revealed that companies with females as one-third of the executive board are ten times more profitable than those with an all-male board.
Additionally, more gender-diverse businesses in senior leadership outperform their industry peers.
NWBC’s statistics reveal that women run about 13 million U.S. businesses. As a result, they create jobs for 9.4 million workers and rake in $1.9 trillion in revenue.
These figures would create more money and jobs if there were as many female-owned businesses as male-owned ones.
This is especially true if you consider that, according to Boston Consulting Group analysis, women-owned businesses receive, on average, over $1 million less investment capital than male-founded organizations.
Despite the setback, female-run startups generate 78 cents for every dollar of funding, while their male counterparts only earn 31 cents. For this reason, they can generate up to 10% more revenue in five years than men.
Fortunately, the percentage of female business owners is rising steadily in America. And if the number of women entrepreneurs matched that of men, it could inject between $2.5 and $5 trillion into the country’s economy.
- There are an estimated 12.4 million women-owned businesses in the United States, representing 42% of all companies. These businesses generate $1.8 trillion in revenue and employ 9.2 million people. (Source: 2021 State of Women-Owned Businesses Report)
- Women of color represent the fastest-growing group of entrepreneurs in the United States. There was a 43% increase in businesses owned between 2014 and 2019. (Source: American Express, 2020)
- Women-owned businesses generated $1.9 trillion in revenue in 2020. (Source: American Express, 2020)
- Women hold 29% of senior management roles globally. (Source: Grant Thornton International, 2021)
- Women make up 47% of the labor force in the United States. (Source: Bureau of Labor Statistics)
- In 2023, women hold more than 10% of CEO positions in Fortune 500 companies. (Source: Fortune)
Strengths Of Women-Led Businesses
In entrepreneurship, female leadership is not just good for women—it’s excellent for business. In terms of profitability, organizations with more women leaders thrive more.
They Promote Growth-Boosting Diversity
Gender diversity inspires fresh ideas and promotes innovation. Because men and women have different life experiences, they typically handle matters differently.
So instead of an all-male workforce, having women brings different perspectives. This can help a business tap into growth potential.
Both genders working together fosters creativity. This can lead to forward-driving innovations and take businesses to the next level.
They Bring Soft Skills That Are Essential in Business Leadership
Experience and technical skills are critical for career success. But
soft skills are some of a business leader’s most essential professional traits.
Skills that give women a competitive advantage in business are:
- good communication
- emotional intelligence
That’s because soft skills strengthen their character.
According to a study linking business performance and character strength, business leaders who score highly on traits like integrity and compassion can earn over 9% return on assets in just over two years.
Hay Group’s research revealed that females outperform males in soft skills. Specifically, they are better than men in nearly all emotional intelligence competencies. Some examples are:
- emotional self-awareness
- conflict management
Business Challenges Women Face
The prevailing gender gap means women continue to face challenges of unequal number and scale compared to their male counterparts.
The female workforce is growing steadily in various industries. But the STEM sector, such as engineering, finance, technology, and math, is still strongly male-dominated.
EEOC statistics say women comprise only 29.3% of the U.S. federal STEM workforce.
Female under-representation could boil down to society’s unfortunate mindset of treating certain occupations as unfeminine.
Gender Bias In The Workplace
Male-dominated workplaces operate based on masculine values, norms, and expectations. For this reason, it’s more difficult for women to advance their careers in such workspaces.
Because of gender stereotypes, some organizations prefer to:
- put men in leadership roles
- undervalue female contributions
For instance, society teaches women not to be “bossy” from a young age, while men to be assertive and ambitious.
These stereotypes are typically carried to the workplace. This adversely affects women’s ability to get high-profile leadership positions when competing with men.
Women Are Less Successful In Negotiating A Salary Raise
Women negotiate for high salaries just as often as men, as revealed by joint research by:
- University of Warwick
- Cass Business School
- University of Wisconsin
However, they are 25% less likely to get a raise when they ask compared to men.
How do women go about this challenge?
The only way to eliminate the salary gap and level the playing field for both genders is for women to:
- believe in their value
- demand a salary that matches what they bring to the table
Access to business capital
Societal attitudes can also limit women’s access to capital needed to start and grow businesses. Women are less likely than men to receive venture capital investments, small business loans, and other forms of financing.
According to PitchBook, in 2020, only 2.3% of venture capital funding went to women-led companies.
This can be said about most types of business funding.
Women face obstacles related to sexism and gender-based discrimination when it comes to building relationships with investors, which can create a barrier to accessing capital.
Fortunately, there are ways women can get the funds they need for their businesses.Small business loans for women
Opportunities For Women Entrepreneurs
Diversity, Equity, And Inclusion Becoming Policy
Businesses that want to thrive are integrating gender equality in the workplace. By discouraging bias in their hiring policies, organizations create equal job opportunities.
A female businesswoman who starts a business becomes her own boss and gets a chance to run a thriving woman-owned business.
It’s an opportunity to decide how much you earn, how you want to work, and the perfect work-life balance that suits your needs.
Sharpening your skills with a degree, master’s, or Ph.D. gives you a competitive edge in the business landscape and job market.
Honing your expertise with education gives you the confidence to:
- negotiate salaries
- explore male-dominated sectors
- competently serve on a board
Advice for Women in Business
Be Authentic To Yourself
Finding the balance between self-authenticity and assertiveness can be challenging for a businesswoman.
Sometimes you bend to someone’s will or play the “female role”—as male-dominated society would call it. Other times, you try to prove yourself to the point that it doesn’t feel right.
When navigating the business landscape, give yourself time to learn the leadership style that suits you best. Don’t try to be someone you’re not. Be yourself.
Define Your Brand Core Values And Stick To Them
Your brand values lay a foundation for making decisions and navigating business challenges. The best part is that they are usable as a marketing tactic to attract new customers.
Be Strategic When Your Business Faces Tests
Challenges will undoubtedly come because that’s part of doing business. When they do, you shouldn’t quit. Instead, remember why you launched your business and overcome obstacles.
It’s best to always prepare for the worst to ensure continuity during bad times.
Helpful Tips To Start A Small Business For Women Entrepreneurs
- Leverage networking. It allows bouncing your ideas off the people you connect with before implementation. This ensures informed decision-making.
- Take advantage of Office of Women’s Business Ownership (OWBO) resources. This government body helps women entrepreneurs connect with training. It also provides counseling and offers loans for women in business.
- Get a Women-Owned Small Business Certification (WOSB). A WOSB certification is an opportunity to get government contracts set aside specifically for women business owners. Check the eligibility requirements, and apply for a certificate if you qualify.
- Believe in yourself, your abilities, and your ideas. Self-confidence is key to success in business.
- Set SMART goals for your business. Setting Specific, Measurable, Achievable, Relevant, and Time-bound goals will help you stay focused and motivated.
- Look for mentors who can guide and advise you on your business journey. Seek out women who have already achieved success in your industry.
- Continuously learn and develop new skills. Take courses, attend workshops, read books, and keep up with industry trends.
- Plan ahead and be strategic in your decisions. Make informed choices that align with your long-term goals.
- Don’t let setbacks or failures deter you. Learn from them and use them as opportunities to grow and improve.
- Don’t be afraid to ask for what you want, whether a promotion, a raise, or a new opportunity. Advocate for yourself and your business.
- Embrace diversity in all forms, including gender, race, ethnicity, and background. Foster a workplace culture that values diversity and inclusion.
- Be true to yourself and your values. Authenticity builds trust and credibility, which are essential for business success.
Funding For Women-Owned Small Businesses
When looking for grants to support your business, Grants.gov is the first place to check out. You access government-sponsored funding for small businesses. Use the site’s search feature to find grants for women-led businesses.
Rocket Loans provides installment loans for small businesses. The loan amount ranges from $2,000 to $45,000, with a repayment term of up to five years.
However, the lender charges an origination fee of 1 to 6 percent.
We offer commercial loans to underserved and underbanked communities, such as women-owned small businesses. With us, you can get from $5,100 and $35,000 with a repayment period of up to 35 months.
What percentage of small businesses are women?
Women-owned businesses represent approximately 42% of all small businesses in the United States as of 2021. This is according to a National Association of Women Business Owners (NAWBO) report.
What is the difference between WBE and WOSB?
WBE, or Women’s Business Enterprise certification, is a designation that private companies and some government agencies recognize. This certification verifies that a business is at least 51% owned, controlled, and operated by women.
WOSB, or Women-Owned Small Business certification, is an SBA designation for federal contracting purposes.
Do women make up 5 percent of all small business owners?
No, women make up more than 5% of all small business owners in the United States.
Why is it difficult for women in business?
It is difficult for women in business due to several reasons, such as:
Women can face discrimination, funding challenges, and difficulty balancing personal and professional lives.
Women may also need more role models and mentors.
Why are women in small business in 2023?
Women’s motivation is that they’re focused more on making an impact. In contrast, men are more income-oriented.
Statistics from Washington State University say over 70% of women want to make a difference in the world, compared to 62% of men.
Another motivator for women entrepreneurs is becoming their own bosses. Owning a business allows them to enter the workforce in a way that suits their lifestyle needs.
The flexibility enables them to pursue their passion, make money, and create enough time for their families.
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