Minority and women-owned businesses have been gradually growing since the Great Recession ended. Even though women still tend to earn less on average than men, their businesses are enjoying significant growth year over year.
In the United States, there were an estimated 11.3 million female-owned businesses that employed close to 9 million people and brought in more than $1.6 trillion (Womanable.com).
The success of women-owned enterprises is skyrocketing as a result of the following factors:
More Mentors
More women are starting businesses and succeeding in them because they have more mentors and role models. The National Women's Business Council claims that having a mentor who has encountered comparable difficulties can predict success.
Having someone to guide them through these waters is essential to their success because firms owned by women (and particularly women of color) suffer a special set of challenges to finance, investment, and entrepreneurship.
More Funding
Traditional banks have a history of only being willing to lend money to people who are not in immediate need of it. In general, women entrepreneurs start with around half the capital of their male counterparts and frequently have lower credit scores than their male counterparts.
As a result, they have a decreased chance of being able to acquire bank financing at lower interest rates. They may have to raise money from non-traditional lenders or use credit cards, which can be detrimental to a company in its early stages.
However, as more companies succeed, banks are becoming more eager to lend to female business owners.
When looking for startup finance, women only obtain 80% of what males do, according to a Fundera analysis, and they only receive 16% of all traditional small business loans given out annually.
Economic Downturn
Businesses that make it through economic hardships frequently become stronger, leaner, and more adaptable. The fact that women-owned firms survived the Great Recession seemed to support this.
Businesses owned by women, on average, lost a smaller percentage of their workforce than those owned by males, and following the recession, they made up a sizable fraction of the companies that started hiring again right away.
Removal of Entry Barriers
Since the millennium, an unprecedented number of women have started their own businesses. Women started enterprises at a rate that was more than 2.5 times higher than the national average in the previous ten years. Women-owned businesses added jobs at a rate that was more than 4.5 times faster than the average.
Women of color were particularly affected by this surge. Ten years later, there were 3.8 million more women of color entrepreneurs than there were in 2002 when there were less than one million non-white women business owners. In the same time frame, the number of firms run by women veterans rose 295% to 383,000.
Marketing Changes
Over the past ten years, there has been a huge change in how businesses promote themselves, interact with consumers, and define their products. Companies have switched from "interruption marketing," where the customer is held captive by a presentation or advertisement, to "connection marketing," where the business and the customer forge a relationship.
Businesses are urged to "share their tales" and explain how their offerings change the world. They are urged to interact with clients on social media, cater to their requirements through various channels, and publish blogs for them to read at their convenience.
Women more frequently socialize by forming connections, so this type of communication and marketing may feel more instinctual and comfortable to them than the more traditional methods of cold calling, marketing letters, and door-to-door sales. Many of these marketing techniques are more closely related to the kind of social training that is frequently considered more "feminine" in nature, rather than "masculine."
Takeaways for Women-Owned Businesses
Despite numerous signs that women are experiencing fresh success in the startup sector, there is still a long way to go. Women-owned businesses, and women of color, in particular, are disproportionately concentrated in industries with low revenue, such as the service and retail sectors. This illustrates a comparable distribution of women in various occupations.
It is crucial to continue to encourage women to enter STEM fields, but it will also be critical to persuade banks and venture capitalists to fund women who want to start businesses in industries where technology is a dominant force or pursue other professions that are among the highest-paying corporations.
Wrapping Up
Mentoring could be a terrific beginning step for a businesswoman trying to make her community more welcoming to female entrepreneurs. Look for existing barriers and discuss them with your local chamber of commerce to gain support from partners in removing them.
It is abundantly obvious from the strength of female entrepreneurship in the national economy that strong women-owned enterprises are advantageous to all of us.
Shellye is committed to helping people from diverse backgrounds to achieve their aspirations in careers and life. The content published above was made in collaboration with our members.
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