In the last 40 years, women entrepreneurs have increased in number from 5 to 42 percent of small business owners. That is a huge leap.
We are driving economic growth in Minnesota and across the country. Research in the 2019 State of Women-Owned Businesses Report shows that women are opening businesses at double the rate of men. Women of color are starting businesses at a faster rate than any other demographic. Across the U.S., women started 1,817 businesses every day in 2019.
Female founders still face significant barriers to success, however. One of the biggest barriers is the inability to access capital. Only four percent of small business loans from banks go to women-owned businesses. Biases in banking algorithms mean that lending to women is seen as a greater risk.
In order to propel women entrepreneurs to profitability, we need to provide equitable access to funding.
I read a Forbes article that suggested woman-owned businesses are just as successful as male-owned businesses, but they must work harder for it.
Around 20 percent of small businesses fail in their first year and 50 percent do not survive past five years.
In the past, WomenVenture focused on the possibility that every woman who came through our doors could become the next Mary Kay if she worked hard enough. However, hard work isn’t always enough. An outstanding business idea, a healthy dose of luck, realistic projections, pragmatism, and dogmatic pursuit of the “hustle” also factor in.
Not all ideas are great ideas. We don’t want anyone to lose her life savings investing in a doomed venture, so we work with women early and look at the potential market, whether there is a need for the product or service, costs, and revenues. Some business ideas are perfect as side jobs.
The rapid influx of women entrepreneurs is having a great effect in our communities. As entrepreneurs, women are more inclined to think about how they can make an impact, not just a profit.
Women-owned businesses tend to employ members of their local communities, they allow mothers to have more flexibility in their workday, they have helped change the law on family leave and insurance for children, and continue to fight for equal rights. They are collaborative, empathetic, and leaders of their communities.
Elaine Wyatt (she/her) is the CEO of WomenVenture, a non-profit economic development agency that started in 1977. Her work is rooted in her passion for helping women and girls realize their full potential by addressing racial and gender disparities.
A recent WomenVenture annual survey found that its clients:
- Pay themselves an average wage of $30/hour
- Pay their employees an average wage of $20/hour
- Generate higher revenue than average women-owned businesses ($347k vs $143k)
- Create more jobs than average women-owned businesses (4.8 vs .7 jobs)
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