Dina Segal, Fast Company (TNS)
We are in the midst of a post-pandemic small business revival: Americans started more new businesses last year than ever before since data collection began.
Female entrepreneurs are a huge driver of that growth: According to new data from my company Gusto, half of new businesses were launched by women in 2023, compared to just 29% in 2019. Women-led businesses have proven uniquely resilient to tough economic conditions, including persistently high inflation and interest rates, and generated $2.7 trillion in revenue last year.
It’s a remarkable comeback for women entrepreneurs, who have been disproportionately hit during the pandemic. Here’s why women entrepreneurs are launching businesses at a record pace.
Flexibility in your approach to work
According to a Gusto survey, 70% of women who start new businesses in 2023 cite flexibility as their primary reason for starting a business. Several other reasons are cited, including supplementing household income, building financial assets, and unemployment in the household. Women value the freedom to decide how they work more than men.
Flexibility is important for women seeking a proper work-life balance, given that women shoulder a disproportionate share of childcare responsibilities. And childcare is now more expensive than rent for the average American family. More than half (57%) of mothers say they would have to reduce their work hours without flexibility. Overall, we found that women are most likely to consider leaving their jobs if companies mandate employees return to the office. Not only are women better able to manage their childcare responsibilities, but they also experience less burnout and fatigue when they have work flexibility.
Increase your earning potential
As of 2024, women in the United States will earn an average of 71 cents less than men, and while women and men are roughly equally interested in getting promoted, women are 15% less likely to get promoted than men.
When women start their own businesses, they combat systemic gender bias in the workplace and realize their greater potential. Studies have shown that women-founded businesses generate significantly higher revenues than men-founded businesses. Not only do women-owned businesses generate more revenue, they also create more jobs than other businesses, further stimulating and growing the economy.
A strong desire to do meaningful work
For women, the interest in becoming a business owner goes beyond financial gain. About 71% of female founders in the U.S. say they are motivated by a desire to make a difference. In 2023, one-third of women-owned businesses were involved in community service, compared with 19% of male-owned businesses. These businesses contribute to solving pressing challenges in the communities in which they operate. And 40% of U.S. B Corporations, a certification given to for-profit businesses based on their “social and environmental performance,” are run by women.
A sustained increase in female entrepreneurs
The reasons why women turn to entrepreneurship have changed over the years as the economic climate has shifted. With mass layoffs during the pandemic, immediate financial concerns were the primary motivator for women starting businesses in 2020. In 2022 and beyond, women are citing flexibility as a reason for starting their own businesses.
This shift in motivation is a positive trend. It indicates that this increase is sustainable — women-founded businesses aren’t just seeing a temporary surge due to the pandemic or dire financial circumstances — but systemic changes need to be made to continue thriving in the future.
Women continue to face deep barriers, including unequal access to private capital and skyrocketing child care costs. Recent Gusto data shows that among entrepreneurs who sought private capital investment, male entrepreneurs were nearly twice as likely to receive it as female entrepreneurs (54%), compared with 28%. Banks should build relationships with more female entrepreneurs, corporate leaders should advocate for universal paid family leave, and policymakers should increase funding for women’s business centers.
Women’s entrepreneurial spirit shows no signs of slowing. Women will continue to leverage their advantages as business owners to drive significant economic growth. We need to ensure that we have the right policies and practices in place to ensure their continued success.
About the author:
Dina Segal is Gusto’s Chief Legal Officer.
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