Successful female entrepreneurs are closing the gender gap and making considerable strides in the self-employed landscape.
Yet challenges remain and intensified in 2020. The following statistics dive into women-owned businesses, such as growth rates, funding and diversity, while reviewing the pandemic’s impact.
Highlights: Women in Business Statistics
How many women own businesses in the U.S., and is this number increasing? The latest information from the American Express “2019 State of Women-Owned Businesses Report” reveals:
- In 2019, there were 12,943,400 female-owned companies
- Women of color account for 50% of all women-owned businesses
- From 2014 to 2019, women-owned businesses increased by 21%
- During the same period, part-time female entrepreneurship rose by 39%
- Every day women start up 1,817 new businesses
- 42% of all U.S.-based companies are owned by women
Defining a Women-Owned Business
To qualify as a female-owned business, the company must be 51% owned by one or more women. Moreover, to secure designations as Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged WOSBs (EDWOSBs), entrepreneurs must take an active role in managing daily operations and decision-making.
Women in business statistics also break down the numbers of companies owned equally by men and women. When you add in these numbers, organizations with at least one female business owner make up 49% of all companies and employ 14% of the workforce, according to the “2019 State of Women-Owned Businesses Report.”
With the number of women business owners increasing, rising female entrepreneurs represent the best in their industries.
The Pandemic’s Impact on Female-Owned Businesses
The percentage of women in business has been on the rise since the 1970s. However, women-led companies were disproportionately affected during the pandemic.
The 2020 “Global State of Small Business,” a collaborative effort between Facebook, the Organization for Economic Co-Operation and Development (OECD) and the World Bank Group, finds that female-led businesses in North America were 14 percentage points more likely to close their business than male-led businesses.
According to the U.S. Chamber of Commerce’s “Special Report on Women-Owned Small Businesses During COVID-19“, 60% of women-owned businesses “ranked the overall health of their business as good” in the first quarter of 2020. But this figure dropped to 47% by July.
The Service Corps of Retired Executives (SCORE) reports “62% of women entrepreneurs depend on their business as their primary source of income,” pandemic-related business disruption ultimately impacted earnings.
Other notable pandemic-related women in business statistics from the U.S. Chamber of Commerce include:
- 24% of female entrepreneurs expected to increase staff size in July 2020, compared with 31% in the first quarter
- 49% of women-owned businesses expected revenue to increase in July versus 63% in the first quarter of 2020
- Investment plans remained unchanged, with 32% saying they planned increases in the first quarter of 2020 and July 2020
Factors Affecting Female Entrepreneurs in 2020
Women-owned companies are more likely to be in industries negatively affected by the pandemic, such as hospitality, social services and retail. Plus, when schools and daycares closed, female entrepreneurs bore the burden of caregiving while juggling self-employment.
The “Global State of Small Business” notes, “23% of female business leaders reported spending six or more hours per day on domestic tasks and caring for family members, relative to 11% of male business leaders.”
Furthermore, “Female business leaders were around ten percentage points more likely to say that caring for children, homeschooling and household chores were affecting their work relative to male business leaders.”
Women Starting Businesses During COVID-19
The National Association of Women Business Owners (NAWBO) and Gusto, an online payment and human resources platform, dove into data about women business owners who started a company in 2020. Key statistics about women-owned startups in 2020 include:
- 47% of companies “started by women in the past year are minority-owned”
- Nearly “40% of women that started new businesses shared that they did so as a direct result of the pandemic”
- 51% female-led startups “are either the sole provider for their household or the primary source of household income”
- “66% of women that started their businesses last year are sole proprietors”
- “36% said they intend to hire new employees”
Additionally, minority women in particular were more than twice as likely (35% versus 17% for others) to start a business “because they were laid off or worried about their financial situation.”
Women-Led Companies: Employment
What percentage of women business owners have employees? The 12,943,400 women-owned businesses employ 9.4 million workers. Indeed, between 2014 and 2019, total employment grew by 8% compared with 1.8% for all companies, Amex notes in its report.
However, “women-owned businesses employ 0.7 workers, compared to 1.8 for all privately held businesses and 3.8 for all firms (including publicly traded companies).”
Women entrepreneurs in the following industries have the highest total employment percentages:
- 21% Health care and social assistance
- 16% Accommodations and food services
- 13% Administrative, support and waste management services
Sectors With Rising Employment Numbers
As women entrepreneurs break into historically male-dominated industries, they’re hiring more employees. The “State of Women-Owned Businesses Report” shows 5 industries experienced higher employment growth rates by women-owned firms from 2014 to 2019:
- Health care and social assistance
- Accommodation and food services
- Professional, scientific and technical services
- Educational services
- Transportation and warehousing
Successful Female Entrepreneurs: Funding and Revenue
In the past, businesses owned by women received less funding and earned less revenue than their male counterparts. According to the “State of Women-Owned Businesses Report,” for every dollar a privately held company generated, “women-owned businesses generated 37 cents in 1997 and 30 cents in 2019.”
Moreover, women receive fewer startup funds even though some venture capital firms, such as First Round Capital, find “companies with a female founder performed 63% better than our investments with all-male founding teams.”
Revenue for Businesses Owned by Women
In 2019, companies owned by women generated $1,850,114,492 in revenue. However, according to JPMorgan Chase Institute’s “Gender, Age, and Small Business Financial Outcomes” report, female-owned firms start with revenue levels “34% lower than male-owned firms and have slower revenue growth.”
This statistic holds true for women starting businesses in real estate, health care, personal services and retail. Yet, female-owned companies in male-dominated sectors, such as construction, high-tech manufacturing and metal and machinery, “had larger first-year median revenue than male-owned firms.”
Funding for Successful Female Entrepreneurs
Although various business grants for women exist, there is a difference in how females finance their companies and raise capital. SCORE data highlights the variations in funding between male and female-owned businesses:
- 25% of women seek business financing over the lifespan of their business versus 34% of men
- 22% of women entrepreneurs ask for funds for a product launch compared to 26% of men
- 31% of female business owners obtained loans or equity financing in 2017 versus 38% of men
Furthermore, in 2020 the Small Business Association (SBA) awarded $2.7 billion in 7(a) loans to women-owned businesses or about 12% of the $22.55 billion total. In comparison, the 504 loan program provided more than $522 million, which is 9% of the total loaned ($5.8 billion).
Similar discrepancies exist when it comes to venture capital funding. In 2020, women founders received “2.3% of the total capital invested in venture-backed startups in the U.S,” according to financial data and software company PitchBook.
It’s also difficult for women entrepreneurs to get business loans for several reasons, including lower revenue, a lack of collateral and lower credit scores.
Women in Business Statistics: Industries
SCORE finds that women are more likely to start companies in the health-care or education industries than men, while men dominate startups in the construction and manufacturing sectors.
The “State of Women-Owned Businesses Report” shows nearly half of all female-owned companies or about 6.3 million businesses fall into 3 sectors:
- Other services, such as hair and nail salons and pet care businesses
- Health care and social assistance, including home health care and child daycare services
- Professional, scientific, and technical services, such as bookkeepers, lawyers and consultants
Growth Sectors for Female Entrepreneurs
As women break into new industries, many inspiring female entrepreneurs pave the way for future owners. The “State of Women-Owned Businesses Report” showcases 5 sectors where women saw gains between 2014 and 2019, including:
- 160% Utilities
- 68% Construction
- 36% Information
- 29% Other services
- 23% Arts, entertainment, and recreation
Female-Owned Businesses: Diversity
According to the “State of Women-Owned Businesses Report, “women of color own an estimated 6,417,400 firms, employ 2,389,500 people and create $422.5 billion in annual revenue. Moreover, the number of companies owned by women of color grew by 43% from 2014 to 2019.
Moreover, “the growth in sidepreneurs was two times as high for minority women-owned businesses (65%) compared to 39% of women sidepreneurs.”
The report broke down minority women-owned companies in 2019:
- 2,681,200 African American/Black women-owned businesses or 21% of all women-owned firms
- 2,346,200 Latina/Hispanic women-owned companies or 18% of all female-owned organizations
- 1,169,300 Asian American female-owned businesses or 9% of all women-owned companies
- 180,300 Native American/Alaska Native women-owned organizations or 1.4% of all women-owned businesses
- 40,400 Native Hawaiian/Pacific Islander women-owned firms or 0.3% of all women-owned companies
Successful Female Entrepreneurs on the Rise
Women start companies for many reasons, ranging from work-life flexibility to a desire to impact the world. Successful female entrepreneurs have cleared hurdles and climbed mountains with considerable effort and perseverance.
However, during the pandemic, many women opened shops out of necessity. With steady growth in female-owned businesses, it’s only a matter of time before they represent 50% or more of all U.S. companies.