October is National Women’s Small Business Month, a time to honor and celebrate women-owned businesses everywhere. From neighborhood nail salons to national tech startups, these scrappy, savvy businesses need our support now more than ever. This year has been challenging for all of us, with small businesses being particularly hard-hit. But prior to pandemic-related closures and stay-at-home policies, women entrepreneurship was flourishing. These 2019 statistics on women in business offer hope as we work toward restoring our economy.
WOMEN ENTREPRENEURS ON THE RISE
women now own 42% of businesses in the US
this amounts to 13 million women-owned businesses nationwide
these businesses generate around $1.9 trillion annually
9.4 million workers are employed by women-owned businesses
from 2018–2019, an average of 1,817 new businesses were started by women every day
women of color are starting businesses at 4.5 times the rate of all businesses
In 2019, women of color accounted for 50% of all women-owned businesses
This is good news for any woman thinking about starting a business. But it’s important to note that the numbers are not evenly distributed across the country, and the gender gap is still sizable. Men own and operate more businesses in every state, and are more likely to receive outside funding (and in higher amounts) for their startups. One reason may be that women are less likely to seek funding in the first place. In a 2018 study comparing women and men entrepreneurs, women were 9% less likely to seek funding for their new businesses. Yet, there is some evidence to show that women-owned businesses may be a better bet for investors. A Boston study of 350 startups revealed that the businesses founded by women earned twice as much money as those founded by men.
Years ago, women often chose self-employment as a way to earn money while also taking care of their families. Home-based or close-to-home businesses with flexibility allowed for the work-life balance many women sought. Over time, women’s motivations have shifted and become more complex. During the last recession, necessity caused many women to go into business for themselves. Today, as the global pandemic continues to generate furloughs and job losses, we may see even more women strike out on their own. But in 2018, absent an economic crisis, women in one study reported that the top reason for starting their small business was “to pursue their passion."
All small-business owners face challenges, even in good economic times. But women entrepreneurs, more so than men, contend with difficulty securing funding, finding mentors, and acquiring support to help them get the work done. As much as 73% of women who own a business say a top challenge is a lack of capital and cash flow. Men are more likely than women to obtain loans or financing and are twice as likely to raise more than 100K in funding. Women also cite a lack of available advisors or mentors as a barrier to starting a business. And studies show that business owners with access to mentors are five times more likely to start a business, and are more likely to remain in business within one year. Women entrepreneurs also tend to go it alone and work longer hours. They are less likely than men to have two or more employees, and more likely to put in a “second shift” at night.
ONWARD AND UPWARD
Still, the outlook for women entrepreneurs is bright. Women-owned businesses in the US include an increasingly diverse group of educated women who are setting high goals and achieving them. One 2019 study shows that businesses owned by women in the US employed 9.4 million people and generated $1.9 trillion. Additionally, women entrepreneurs cite a high level of satisfaction as well. In spite of the challenges, women with established businesses report a higher sense of well-being than both their male counterparts and non-entrepreneurs in general. Perhaps best of all, 78% of women entrepreneurs believe that they have achieved work-life balance.
ENTER THE SIDE HUSTLE
Of all women-owned startups in the past five years, the highest growth has been among part-time entrepreneurs, often referred to as “sidepreneurs.” In fact, side hustles have grown twice as fast as the overall growth of women’s startups. And from 2014–2019, firms owned by women of color grew at more than double the rate of all women-owned businesses. Without a doubt, the shift in work trends toward side hustles and the gig economy offers enterprising women new options to traditional employment. And with so much uncertainty in our economy, sidepreneurship may be an inviting option for many women who have never considered starting their own business.
HONORING OUR OWN
At Jordan Alliance Group, we’re proud to be a black-owned and women-led boutique management consulting firm serving the fashion retail and textile industry. This month, we honor our founder and CEO Ilka Jordan for her courage, compassion, and dedication — not only for starting and sustaining the JAG business but evolving its mission to be at the forefront of corporate social responsibility and the move toward a circular economy.
“Our mission is simple,” says Ilka. “Leading with our core values of honesty and integrity, we build meaningful, personalized partnerships to achieve sustainable success for our clients. Partnerships that revolve around product, profit, people, and the planet.”
If you’d like to learn more about how to make purpose profitable, contact Jordan Alliance Group for a free consultation, and let’s get started.
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