In honor of Women’s History Month, Beyond Finance examined female entrepreneurship in the United States. The data paints a picture of progress and persistence in the face of systemic inequality, especially at the intersection of race and gender.
As barriers to entry in the workplace continue for women, many have taken the matter into their own hands by becoming entrepreneurs. Starting a business empowers women to take charge of their careers and pursue money-making opportunities on their terms. However, becoming your own boss isn’t enough to sideline historical inequities.
Passing Through The Glass Ceiling
The glass ceiling is an informal term used to describe social barriers that stop or greatly hinder women from advancing in business. To avoid the glass ceiling, many women turn to entrepreneurship to achieve their financial goals. In truth, social barriers have an impact on entrepreneurs as well as female employees.
While women who start their own businesses circumvent certain obstacles, they are met with others. There are significant gaps in business funding and investment capital between male and female-owned companies and similar revenue gaps.
Despite these challenges, women-owned businesses continue to increase in number, especially among women of color.
Business Funding for Female Entrepreneurs
While women own 40% of all US businesses, they only received 2.7% of all venture capital funding. Black women receive an even smaller slice of this already tiny pie. Of the $424.7 billion raised in venture capital since 2009, only .0006% supported Black-women founders.
Women of Color Are Starting More Businesses
Despite the disparity in funding, women of color are starting businesses faster than white women. In 2018, women of color started 64% of all women-owned businesses, and Latina women-owned businesses grew more than 87%.
As of 2018, there were 12.3 million women-owned businesses, 2959.7% more than there were in 1972 (402,000).
Reaching One-Million in Revenue
Women are catching up to male-owned businesses in revenue, but there is still work to do. Only one-in-five companies that produce over one million in revenue annually are women-owned. And only 4.2% of all women-owned companies have revenues of one million or more.
Nevertheless, this number has increased over the past decade. The number of women-owned businesses generating 1 million or more has increased by 46% since 2008. Compare to a 12% increase in million-dollar companies overall, and you see how quickly women are rising.
The Value of Women-Owned Companies
The average annual revenue for a woman-owned company rose by 68% in 2019, from $228,578 to $384,359. By comparison, male-owned companies made an average of $752,154 in 2019, up from $473,157 in 2018.
According to a report by American Express, there are now 12.9 million women-owned businesses in the U.S. The actual value of this work is the rapid race to equity being run by female entrepreneurs and all the jobs they are creating for others.
As of 2019, women-owned businesses employ 9.4 million people and generate 1.9 trillion in annual revenue.
Why Women Start Businesses
Although women have claimed their place in the workforce in the past 70 years, women have always worked. Unpaid domestic labor like child care and care work are essential for families and households. While this work comes with no paycheck, it contributes value to our society and economy.
Those who study the impact of unpaid labor on society estimate that women’s and girls’ value in the United States is $1.48 trillion annually. That’s more than twice the US defense budget.
Amazingly, as women have started working outside the home, they continue to do all the domestic labor they did before. On average, women spend two hours a day on domestic work. In one year, that adds up to five extra months of work!
Entrepreneurship and business-ownership often give women the power to create the work-life balance they need to manage their career ambitions and families.
The Future of Women-Owned Businesses
Fixing gender pay inequality and breaking down barriers for women in business financing, money management, investing, and product marketing will help women build wealth in the future.
Things like salary reporting and transparency will help women know their worth in the workplace, as will wider acceptance of women’s excellence in business and leadership positions.
The data will continue to track the incredible progress that women have made over the past century and help us focus on the work that is yet to be done to address inequity, especially among minority groups.
Are you interested in more data? Check out 50+ stats about women and wealth, including the gender pay gap, unpaid labor, retirement and more.