Since the United States economy has begun to recover from the Great Recession, the gender gap between men and women business owners has begun to close. The number of women-owned businesses have rapidly increased in the U.S. in recent years, but even positive trends do not mean that the important work of creating equality in the field of entrepreneurship is done. Looking at the 2016 State of Women-Owned Businesses report offers some valuable insights.
Women are opening new businesses at an incredible rate
Prior to the Recession, men and women opened new businesses at approximately the same rate. In the past decade, however, women have opened businesses at a rate five times that of their male counterparts. While the rate of businesses opened overall has seen a sharp decline – from 18 percent before the recession to 9 percent afterwards – businesses opened specifically by women have seen a 45 percent increase in the past ten years.
One important detail: while businesses owned by women are increasing as a section of the economy, their generated revenue and percentage of employees have remained relatively constant. Only the very largest women-owned businesses are adding employees to their companies. This may reflect how women struggle to access capital and mentorship which would allow them to scale their businesses over time, or it may tie more to women choosing business opportunities within service sectors, which are often lower revenue companies overall.
Businesses owned by minority women are driving the entrepreneurial surge
While it is accurate to say that women-owned businesses have increased in the past ten years, when one drills down into the data, it is very clear that businesses owned specifically by minority women are the ones pushing the entrepreneurial envelope closer to parity.
Since 2007, businesses owned by women of color have seen an increase of more than 125 percent, and their businesses have better revenue and employee numbers than the overall numbers of businesses owned by women. Looking at racial data, Asian-American women tend to have businesses with the highest revenues, while African-American and Latina women are seeing the largest numbers of businesses opened.
Companies that want to see big growth in minority and women-owned businesses in their communities will do well to note that these entrepreneurs face unique challenges from businesses that are owned by non-minority women, or by men who are also people of color. At the intersection of racial minority and women are serious concerns about adequate capital, mentorship, and other community resources.
To support women of color who are opening their own businesses, communities could make sure that there are systems which connect new entrepreneurs with those who are more established to mentor them through the difficult times. Communities could also work with Small Business Administration and the local Chamber of Commerce to make sure that adequate funding is available for their needs.
South leads entrepreneurial growth for women
While major urban centers like New York and San Jose may still be top priorities for the average entrepreneur, it’s actually states in the American South that are at the top tier for a growth of women-owned businesses. Texas, Florida, Georgia, and Mississippi are amongst the states that are showing the most growth. This may be in part because these areas, which are economically less well off than many of the more northern and coastal states, have more opportunity for growth in their populations. It may also be because these states have a higher concentration of women of color, which would cause them to have a higher representation of women of color entrepreneurs.
Other states looking to boost their entrepreneurial opportunities would do well to look at these regions and consider what they can do to ease restrictions and regulations that inhibit business formation, as well as consider how to build mentorship programs to help women get their businesses started.
Around the world, countries are pushing to develop entrepreneurial spheres for women. In many countries, greater economic stability leads to improved political and social stability. Women are more likely, for various reasons, to spend their earned dollars within their communities and on staple goods, whereas men are more likely to spend items on luxury goods that are less likely to have been produced within their own country.
Both inside and outside of the United States, supporting the efforts of women to build entrepreneurial communities is good for the country as a whole, as well as for the good of women as an oppressed class. Communities can, as has been stated, support women’s entrepreneurial efforts by making sure funding is available to businesses owned by women of color, and creating mentorship communities as women grow and develop as business owners.
What efforts do you see to help support women in the business world?
This post is part of our contributor series. It is written and published independently of TNW.