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As we celebrate National Women’s Small Business Month this October, it’s important to recognize and applaud the remarkable growth of women entrepreneurs in recent years. The entrepreneurial landscape has seen a steady rise in the number of women-owned businesses, reflecting not only their resilience but also their ability to adapt to changing economic conditions.
In this post, we will explore the trends and factors contributing to the ongoing surge in women entrepreneurship in 2023, drawing insights from a new data study conducted by Gusto, the all-in-one HR platform that helps small + medium businesses to take care of their hardworking teams.
Women Continue to Make Up Almost Half of New Business Owners.
Women have made up nearly half of entrepreneurs since 2020. Of the 1,600 new business owners surveyed, women made up 47% of new business owners, down 2% from 2021. The industry makeup of the women business owners was 33% personal services, 39% professional services, 33% community services (education/healthcare/non-profits), and 12% goods-producing logistics.
While the rates of female entrepreneurship have remained steady since 2020, the reasons driving women to embark on entrepreneurial journeys have evolved in response to the changing economic landscape. According to the Gusto study, in 2022, the need for flexibility emerged as a dominant motivator for business ownership, with 64% of women entrepreneurs selecting flexibility as their primary reason for starting a business. The COVID-19 pandemic altered the way people view work-life balance. Many women desire greater control over their schedules, seized the opportunity to start businesses that allowed them to work on their own terms.
The Benefits of More Women-Owned Businesses
The rise of women entrepreneurs brings with it a multitude of benefits for the business world and society at large. Women-owned businesses contribute significantly to the economy, foster innovation, and create job opportunities. They positively impact the economy by driving growth while promoting diversity, gender equality, and social well-being. They foster a thriving ecosystem of women entrepreneurs often leads to the development of supportive networks, organizations, and initiatives focused on women’s entrepreneurship. These resources can help aspiring women entrepreneurs overcome barriers and succeed.
Moreover, they often introduce unique perspectives and approaches to entrepreneurship. One noteworthy example highlighted in the Gusto study is the inclination of women business owners to offer hybrid work schedules. These schedules, which combine in-office and remote work, have gained popularity since the pandemic. Women are about one-third more likely than men to offer this flexibility to their employees, reflecting their ability to adapt to evolving work preferences and embrace inclusive work environments. The inclusion of hybrid work schedules not only enhances employee satisfaction but also promotes diversity and inclusion within organizations, showcasing the positive impact of women entrepreneurs on shaping the future of work. Encouraging and supporting women entrepreneurs is not just a matter of economic empowerment but also a path to a more inclusive and prosperous society.
Disparities in Capital Access Remain a Barrier to Growth
Despite the remarkable strides made by women entrepreneurs, accessing capital remains a significant barrier to their growth. Initiatives that promote access to funding and resources for women-owned businesses are essential in breaking down the barriers that hinder their growth.
The Gusto study revealed a stark contrast in capital funding between men and women business owners. While both genders relied on savings, private loans, and other funding sources at similar rates, men received capital investments at a rate 2.5 times higher than women. In 2022, 14% of male business owners partially funded their ventures through private capital investments, compared to just 6% of their female counterparts. This glaring discrepancy underscores the persistent challenges that women entrepreneurs face when seeking external funding sources, such as venture capital or angel investments.
Women entrepreneurs face several other barriers that can impede their ability to start and grow successful businesses. Gender bias and stereotypes can also affect how women are perceived in the business world. Stereotypes about leadership, risk-taking, and decision-making can lead to discrimination and unequal opportunities. The scarcity of mentors also makes it challenging for women to find guidance and support. The importance of support and mentorship cannot be overstated. Mentorship programs, networking opportunities, and initiatives aimed at fostering female entrepreneurship play a vital role in nurturing the talents and ambitions of women business owners. And access to networks is a key element of entrepreneurial success. Many women have limited access to the same networks and opportunities as their male counterparts, which can impact their ability to connect with potential partners, customers, and investors. These disparities also contribute to the broader gender wealth gap in entrepreneurship. Addressing this issue is crucial to leveling the playing field and unlocking the full economic potential of women entrepreneurs.
Women Businesses are Innovating.
A group a Black woman in business looking for support created a 501(c)3 organization The BOW Collective, an organization for Black women entrepreneurs who gross over $1MM in revenue. They are advocating for Black women entrepreneurs to access capital and land larger corporate and government contracts. One key factor contributing to the success of women in business is their ability to identify opportunities in changing market conditions. Women entrepreneurs have demonstrated remarkable agility in responding to evolving consumer needs and preferences. This adaptability has allowed them to thrive in diverse industries, from e-commerce and technology to healthcare and sustainability. Moreover, women entrepreneurs bring their distinct perspectives, experiences, and values to the entrepreneurial landscape. They prioritize inclusivity, diversity, and work-life balance, creating businesses that foster positive workplace cultures and drive innovation.
As we celebrate National Women’s Small Business Month it’s evident that the rise of women entrepreneurs continues to shape the future of business. The evolving motivations, innovative approaches, and unwavering determination of women business owners are driving economic growth and transformation. As we recognize the achievements women business leaders, let us also call on corporations to do more to create an environment where women entrepreneurs can continue to rise, innovate, and serve as vendors. Build supplier diversity and development programs and support investment funds that target women with unparalleled determination and ingenuity.
Note: This piece is the opinion of the blog’s author Melinda Emerson.
About Gusto
Gusto is a modern, all-in-one platform that helps small + medium businesses to take care of their hard working teams. On top of full-service payroll, Gusto offers health insurance, 401(k)s, expert HR, and team management tools to hire and engage teams remotely and internationally. Today, Gusto serves more than 300,000 businesses across every industry and every U.S. state.
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