There are currently an estimated 252 million female entrepreneurs running their own businesses in the world, and 153 million of them operate well-established businesses. Over the last 20 years, the percentage of female entrepreneurs has increased by an impressive 114%. Yet, despite the number of female entrepreneurs growing each day, these figures remain behind those of their male counterparts.
Last year, Chile had the highest share of female entrepreneurs among all OECD (Organisation for Economic Co-operation and Development) countries in 2020, with 32.4% of females having started their own business. In second place was the United States with a share of 16.6% female entrepreneurs. Women-owned businesses make up 40% of all US businesses and generate up to $1.8 trillion a year.
Since 2014, the number of women-owned businesses in the US grew by 21% to nearly 13 million in 2019, according to American Express. That means that in 42% of all US-owned companies, at least 51% are owned, controlled, and managed by one or more females.
Importantly, the number of part-time female entrepreneurs increased by 39% between 2014 and 2019, and the pandemic that has threatened the female workforce has contributed to these figures rising exponentially.
How COVID-19 impacted the female workforce
According to the National Women’s Law Center, “275,000 women left the labour force last month [Dec 2020], meaning they are no longer working or looking for work. They made up nearly 80% of those 20 and over who dropped out of the labour force in January. There were more than 2.3 million fewer women in the labour force in January 2021 than there were in February 2020. Before the pandemic, women’s labour force participation rate had not been this low since 1988.” But why are women bearing the brunt of pandemic-induced cutbacks? It lies in the predominance of women in the informal sector
The World Bank’s Female Entrepreneurship Resource Point states that at least 30% of women worldwide in the non-agricultural labour force are self-employed in the informal sector. In certain countries in Africa, for example, this figure reaches close to 63%. Many female-owned businesses ‘tend to be informal, home-based, and concentrated in the areas of small-scale entrepreneurship and traditional sectors, which primarily include retail and service’.
Traditionally, women have dominated the garment, food, healthcare, education, and retail industries (among others) which have been the most adversely affected by the pandemic. Many of these job hours have been cut or eradicated entirely due to lockdown and social distancing restrictions which have disproportionately affected women in the global labour force.
However, according to Cornerstone Capital Group, “minority and women-owned businesses were massive job creators and stabilisers of the economy following the 2008-2009 recession, adding 1.8 million jobs to the US labour force between 2007 and 2012”. This shows that the female entrepreneurial spirit is able to overcome adverse conditions and help rebuild the economy during times of crisis.
This is why female entrepreneurship is vital in developing a robust and diverse global economy that is future- and -crisis-proof.
Where we can improve
We have certainly come a long way in the last 50 years when it comes to female representation in the global workforce, and in female entrepreneurship in particular. But there is still a lot more we can do to achieve gender equality in business.
- Improved funding
A large obstacle we must overcome is that female entrepreneurs receive less venture capitalist (VC) funding compared to their male counterparts. According to Visa’s State of Female Entrepreneurship Report released in March 2021, female entrepreneurs do not receive the necessary financial support from investors or VCs needed to get their business off the ground. A 2019 Columbia Business School study found that female-led ventures are 63% less likely to receive VC funding.
- Support networks
There is a need for the development of more female-centric business support networks that assist budding female entrepreneurs to get their businesses up and running. We need dedicated startup incubators designed specifically to help female-owned startups thrive in the economy, including easier access to funding and marketing. A greater worldwide representation of women in leadership is crucial in fostering new generations of young women to aspire to entrepreneurial greatness.
Although female representation and gender diversity in the global startup space has improved over the past 10-20 years, we still have some way to go to reach ultimate equality. Our collective push toward exposing the benefits of entrepreneurship to younger generations of females will no doubt inspire a new age of progress.
We must support our female entrepreneurs by providing them with the necessary tools, networks, and support needed to not only fly the flag of gender diversity proudly, but also to ensure that our future is bright with entrepreneurs of both genders operating on equal terms.