Female Entrepreneurs Are Changing The Way We Look At Business
It is often said that “behind every man is a good woman.” It can also be said that “behind many, many great businesses are female entrepreneurs.” In a recent interview, Cheril Clarke, founder of Phenomenal Writing, LLC said, “It’s vital to me to be an entrepreneur because it allows me to control my future. Though much more challenging than working for someone else, the rewards are greater. Entrepreneurship allows me to design the life I want and serve the types of clients I prefer on my terms.”
Cheril’s midset is a typical one. According to the report “The Megaphone of Main Street: Women’s Entrepreneurship, Spring 2018,” issued by the Service Corps of Retired Executives, or SCORE, women own 4 out of every 10 businesses in the U.S. As of that year, there were 12.3 million women-owned businesses in the U.S. compared to 1972, when there were only 402,000. In the past 20 years, the number of women-owned firms in the US has increased 114 percent! Women entrepreneurship is certainly on the rise.
But why are so many women turning to self-employment? There are many reasons. Women want more control over their lives, more flexibility in where and when they work, and to pursue work they are passionate about. Research shows that many women start businesses because it just feels like a better alternative to the demands of corporate life. In the traditional workplace, women often face gender discrimination and have a hard time balancing work and child-rearing. They are often passed over for promotions and are paid less.
But, it seems that women really just want the freedom to do something they love or that matters to them. In a study done by Guidant Financial, they found that women’s number one motivation for starting a business is wanting to pursue their passions. This was followed by wanting to be her own boss, an opportunity presented itself, dissatisfaction with corporate America, and finally being laid off or having her job outsourced.
Some of this rise in women’s entrepreneurship began from financial need after the housing crisis of 2008. But it has grown every year since. Last year, 1,821 new women-owned businesses were launched every day. And in this area, minorities are gaining traction. Women of color founded 64 percent of those new businesses and account for 4 percent of all women-owned businesses. Overall, women are slightly more likely to start a business than men, according to the SCORE report.
None of this is to say that entrepreneurship is easy. Seventy-three percent of women business owners cite lack of capital and cash flow as their top challenge. But only 25 percent of women entrepreneurs seek business financing. Why? Because there is still a gender gap in business investment. Enterprises founded or co-founded by women receive about $935,000 in investments on average, while those founded by men receive an average of about $2.1 million. The U.S. Senate Committee on Small Business and Entrepreneurship, found that in 2014, female small business owners received only 16 percent of all conventional small business loans. This funding challenge often results in many women, 53 percent, using their own cash or money from family and friends to start their businesses.
Despite the financial challenges, the long hours, and a lack of mentorship, women entrepreneurs are making an economic impact. Women-owned businesses employ 9.2 million people and generate $1.8 trillion in revenue. From 2007 to 2018, total employment by women-owned businesses rose 21 percent, while employment for all businesses declined by 0.8 percent.
Even with the challenges that come with owning your own business, women entrepreneurs are reporting higher rates of satisfaction. Women with established businesses rate their well-being 1.7 times as high as their male counterparts and almost 3 times as high as women who are not entrepreneurs! Of all women business owners, 78 percent believe that they’ve achieved work-life balance. Much higher than the 34% of full-time workers that believe the same. As Cheril said, “It’s about flexibility, creative control and no one else dictating the worth of my work.”