As the economy has slowly begun to solidify and improve since the Great Recession ended, small businesses have been driving that growth. New businesses formed by women, especially women of color, have been a huge driving force between the economic recovery of the last few years. Let's look at five reasons that businesses owned by women are thriving.
More (and better) mentorship
When you speak to experts on women-owned businesses, such as the National Women's Business Council, one of the most important indicators for a woman entrepreneur's success is the quality of the mentorship she receives. While women can certainly have many mentors, it is particularly helpful for women to have mentors who have faced the same challenges they have.
Businesses owned by women have different challenges than their male-owned counterparts; they are more likely to have under $1 million in annual revenue, they struggle more to access traditional small business funding through banks and venture capitalists, and they have particular difficulty finding a foothold in some of the most financially successful industries.
Having a mentor who has been through these challenges gives a young business owner direct assistance from someone who has been there. This is considered key to building a successful business and hiring more remote employees.
Less capital necessary to launch a business
One factor that has benefited businesses owned by women, businesses owned by minorities, and particularly benefited businesses owned by those who are at an intersection of these two groups, is the lower cost of starting a business.
The rise of digital marketing, the decrease in costs for web hosting, and the increase in gig freelancers looking to design quick logos through companies like UpWork and Fiver means that anyone with a few hundred dollars, a laptop, and a good idea, can get a business off the ground.
This has been particularly significant for women who have benefited from the increase in direct sales companies. From essential oils to beauty items to clothing, women have begun hosting parties on social media, instead of in living rooms, and creating their own small businesses through MLM companies. These sorts of businesses also offer a way to provide empowerment for women, letting women work when they are free, not when a boss needs them in the office.
Increased experience, confidence, and education
More women than men now attend college. While women are still very under-represented in the C-suites of major corporations (only 21 of the CEOs in the S&P 500 are women), gains are being made. Women like Sharon Sandberg, COO at Facebook, and Marissa Mayer, CEO of Yahoo, are changing young women's ideas of what they can achieve. The historic achievement in Hillary Rodham Clinton in becoming the presumed Presidential candidate for the Democratic Party is likely to continue that change.
As women have begun to believe that running a company is not something that is somehow exclusively the province of men, more and more women are choosing careers in the world of business. Although currently women are not necessarily creating corporate culture for their employees where there is a high need to have a degree to be successful, many experts say that will change as women push harder into the top companies of the country.
Better credit scores and longer business lives
Women have been running their businesses longer, which gives them better credit scores, which makes it easier to access traditional funding through banks. This is key, because most banks offer the best interest rates. While businesses owned by women can and often do access capital through alternative lenders, the interest rates are higher, which has the potential to handicap the business over the long run.
Increased interest in challenges faced by women business owners, particularly women of color
Simply put, there wasn't as much interest twenty years ago in why women weren't achieving the highest levels of success in business at a national level. Since it has become incredibly clear that women entrepreneurs drive economic growth and stability, both in the United States and abroad, many countries are pushing to educate women and make sure they have comparable opportunities to create strong, healthy, vibrant businesses.
Many organizations, including the National Women's Business Council, believe that the success of businesses owned by women is just starting to speed up. They believe that over the next few years, American women will continue to see big gains, achieve higher rates of success, and begin to break down barriers in terms of lending and capital, which will help the next generation of women entrepreneurs find even greater success.