By Brian Moran
Last month the National Women’s Business Council (NWBC) released an analysis of preliminary Census data, the Survey of Business Owners (from the 2012 Business Census), showing women-owned businesses are on the rise. In fact between the 2007 and 2012 Business Censuses the number of women-owned businesses (where a woman has at least 51 percent ownership) increased 27.5 percent, nearing the 10 million businesses mark. Remarkably, that growth rate is four times that of male-owned businesses. Most women business owners (nearly 90 percent) however, are sole proprietorships. According to Carla Harris, chair of the NWBC, “It’s the perfect storm of opportunity…there cannot be a better time for women to start and to scale their businesses.”
This optimistic view is echoed by the Global Entrepreneurship Monitor (GEM) report just released by Babson College. According to GEM, American women business owners have the “highest rates of activity (11 percent) in the developed world.” Millennial women (ages 25-34) have an even higher rate of activity (17 percent). This mirrors the results of the Hiscox American Courage Index, which reported Millennial were more likely than other generations to proactively grow their businesses.
GEM’s numbers are from 2104 and slightly differ from the Census report. It shows women owned 9.1 million businesses, about one-third of the 28 million businesses in the U.S. These businesses employ nearly 8 million workers and boast revenues of more than $1.4 trillion. GEM also shows women’s businesses are mostly in the consumer sector, and that women are more innovative than men (41 percent versus 34 percent).
But all is not as it should be either. Although GEM reports women’s startup rates are “consistently lower than that of men,” they are “increasingly seeing good opportunities for starting businesses.” In fact almost half of women “have positive opportunity perceptions, [which is up] more than 20 percentage points from 2001 to 2014.”
But what’s really interesting is GEM says a “key contributor” to startup activity is how much you believe in yourself to “carry out these efforts.” Apparently, this is where the gender gap comes into play—its averaged 17 percentage points over time. The GEM researchers say self-confidence plays a big role in deciding to become an entrepreneur—and “it plays a larger role for women than for men.”
Another deciding factor is fear of failure, which both men and women suffer from. However in 2014, women feared failure more (by 9 percentage points) than men. The researchers theorize it’s likely women, since they start businesses with less money than men, fear economic failure. And since women think they have more to lose if their startups fail, they fear social failure as well.
If a lack of confidence and fear is what’s holding women entrepreneurs back, what can be done about it? GEM suggests we need to “build women’s self-image as entrepreneurs.” Plus their research shows only 25 percent of American women personally know an entrepreneur. So they believe it’s important for women, particularly Millennials, to meet more entrepreneurial women.
Most of us know the typical characteristics of an entrepreneur: confident, optimistic, willing to take (smart) risks, innovative, comfortable with change and curious. Women need to nurture the traits they have (including being more collaborative and empathetic than men) and acquire those they don’t.
The GEM researchers suggest that entrepreneurship thrives when people “believe there are good opportunities” and have the confidence (or courage) to pursue them.
Do you have the courage to start and grow a small business? Find out here.
As the Founder & CEO of Brian Moran & Associates, Brian Moran is dedicated to helping entrepreneurs run better businesses. In 2012 and 2013 Brian was named one of the top 100 SMB Influencers in the country by Small Business Trends & Small Biz Technology. For more information, visit his company website www.SmallBusinessEdge.com.