How female business owners will save America
Since the recession, businesses owned by women grew 5 times faster than U.S. average
Female 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 1,000 new businesses every day.
Women would do a whole lot more to save America if only America would return the favor and treat female small-business owners equally.
Sunday kicked 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 female business owners make in keeping our economy afloat.
Since the recession, new businesses and jobs have grown slowly. Female-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.
From 2007 to 2016, all new business formation had a 9% annual growth rate, while femaleowned businesses formed at a 45% annual growth rate. In 2016:
11.3 million women owned businesses.
Those businesses provided nearly 9 million jobs.
Those businesses generated $1.6 trillion in revenue — that’s trillion, with a “T.”
Minority women start businesses at the fastest rate within all female-owned businesses. Between 2007 and 2016, women of color launched nearly eight of every 10 female-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% nine years ago) and contribute only 4% of the country’s overall revenues — a figure unchanged in 20 years. Why?
With all this entrepreneurial spirit and drive, why aren’t female business owners reaching greater parity in terms of employment and revenues?
Part of the reason may be personal choice, but female business owners face substantial external obstacles keeping them from achieving their full potential when they want to grow.
Some of the stumbling blocks in female entrepreneurs’ paths:
Lack of affordable, quality child care. Without affordable, quality child care, it’s not only more difficult for women to run growth-oriented companies, its difficult to retain and advance female employees.
Paul Orfalea, the founder of Kinko’s, made child care a major initiative of his charitable foundation because he realized lack of child care was the No. 1 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 al- most laughable for women: Less than 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, as reported by Fortune.
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, female business owners get offered smaller loans for shorter terms at higher interest rates than men.
Persistent negative perceptions of successful wom
en. Even today, a confident and successful woman often is 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 toward 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 unlikable. Bro culture and sexism. There has been a lot of high-profile sexual-harassment claims in the news: Bill OReilly, Uber executives, even the president. But that’s just the tip of the iceberg.
The business world rewards companies that embrace a culture of unrepentant 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 start-up jobs, get promoted or funded.