Recently, a friend who owns a baby store expanded her business online after the huge success of her brick-and-mortar shop. She reminded me of another friend, Laura, whose own baby store didn’t do as well. It was in the 1990s, and I was a college student working part-time selling little booties and baby strollers for her. But Laura struggled to keep the store afloat. She and her husband started the business together, but she became the sole proprietor when they divorced, shouldering the full financial burden. Laura was just one of a handful of women business owners in the area. The shop required long hours away from her kids, and lots of money to keep up a solid inventory. In the end, it just didn’t work out, and the store closed its doors.
Despite similarities between the shops and their hard-working, whip-smart founders, the two women’s experiences could not be more different. I’m sure numerous factors led to one venture’s demise and the other’s success. But, it made me wonder how things might have been different for Laura today.
A lot has changed in terms of gender equality, but there’s still room to grow when it comes to understanding and supporting companies founded by women.
How Successful are Women-Owned Businesses?
The list of some of the fastest-growing women-owned businesses around shows a tremendous variety that ranges from gyms to staffing companies to financial services. These businesses rake in about 1.3 trillion dollars each year, and have grown considerably since a decade ago. What’s also incredibly encouraging is that minority women are represented in force, accounting for about 47% of women-owned business, and 64% of new businesses in 2018.
Challenges for Women Business Owners
It’s not all sunshine and rainbows, though. Despite the many ventures taken on by women, the majority are in sectors that aren’t high-income generating, and the small 2% of businesses that do reach the million-dollar mark hasn’t changed in a decade.
Women leaving corporate jobs to start businesses often earn much less than their corporate salaries. Some argue that the lost opportunity to assume leadership roles in the corporate world mean women-owned businesses are not always a good thing. Morra Aarons-Mele, founder of Women Online and The Mission List, argues that “the economic impact of most women’s small businesses may not be what’s best for women, their families or the economy in the long run.”
It seems that despite advancements in gender equality, ideas that women are not as capable as men at running a business are still prevalent today. These seemingly archaic ideas and attitudes profoundly influence their experiences as business owners.
Despite some incentives tailored specifically for these businesses, women face hurdles that men do not when it comes to owning a business. Marsha Firestone, president and founder of the Women Presidents’ Organization, notes that female entrepreneurs struggle with securing credit and with gaining clients who tend to “gravitate to male-run competitors”. In addition, women-owned businesses are 20% less likely to receive federal contracts.
Lack of Support
In terms of funding, only 4% of small business loans go to women-owned businesses. That means that most women have to raise their own funds to start businesses. Of the 50 businesses listed as the fastest growing by Forbes, 72% of them were started with the founder’s own funds and a whopping 62% of businesses owned by women represent the primary source of income for their founders. Support is hard to find from the community as well. Minority women business owners report a lack of resources and mentors who truly understand their vision.
These numbers are discouraging. But does that mean that women should just forget about starting their own ventures? Of course not.
The Benefits of Women-Owned Businesses
Studies show that around the world, when women become entrepreneurs, poverty decreases, and the economy as a whole improves. In areas of extreme poverty, women can gain financial freedom and make concrete contributions to society. These women also tend to reinvest as much as 90% of their earnings into their own economies.
Equity and Empowerment
Despite the obstacles women face, starting a business is an incredibly empowering act. It allows greater flexibility and creativity than what’s often offered at a corporation, giving women a level of autonomy that’s key to their success and job satisfaction. Women-owned businesses tend to hire more women, which also means that more women are in the workforce, acquiring valuable skills and contributing to the economy. Supporting their growth will help to close the gender gap.
Positive Role Models
Another benefit is their influence on the next generation of women. As a college student working for Laura, I learned more from her than any of my other (male) bosses. She gave me many opportunities to learn and grow, and the experience was invaluable. Despite its closing, the store was still a success in so many ways, setting the stage for other women-owned businesses in the community and serving as a source of inspiration for young women like me.
How to Support Women-Owned Businesses
Obviously being a customer or client is a fantastic way to show support, but there are other opportunities as well.
- Give a shout out by blogging or posting about the business on social media or through word-of-mouth. Nothing helps any business more than spreading brand awareness.
- Offer your expertise as a mentor to a newbie woman entrepreneur.
- Look to a women-led business as a potential partner when exploring corporate collaborations within your own company or for a business to cater your next event.
- Support organizations who help women who own businesses, including here at Soroptimist International!
- Join your local chapter of the American Business Women’s Association or the U.S. Women’s Chamber of Commerce.
Lynn Ink is a university-level educator, writer, editor, women’s rights advocate and mom to three teens and a Border Collie. She loves Netflix binge-watching, blueberry pancakes and researching everything from historical events to remote places. She squirrels away most of her writing for no one to read, but is happy to share her work with LiveYourDream.org to help women and girls achieve their fullest potential. Currently, she’s working on a novel about a caregiver who chucks it all for an epic road trip and an In-N-Out burger. Maybe she’ll share it one day.