Women-owned businesses are an important and growing part of the U.S. economy. The latest data available from the Small Business Administration (SBA) shows that women-owned businesses made up 42 percent of U.S. businesses in 2019 and were collectively responsible for generating some $1.9 trillion in revenue.
What’s more, over the past two decades, there has been a 114 percent increase in the number of female business owners, according to the career site Zippia.
There are certainly still areas where women entrepreneurs continue to face inequality or an uphill climb. This includes when it comes to landing venture capital funding. In 2020, just 2.3 percent of all venture capital went toward supporting female-owned start-ups—and that figure represented a decline from 2.8 percent in venture capital support in 2019.
In addition, there remains a significant disparity in the average start-up loan granted by gender, with male-owned businesses securing an average of $156,000 in start-up loans, while women by comparison are approved for about $59,000 on average.
While these types of figures can indeed be daunting, there’s no reason to give up on entrepreneurial dreams. There are several benefits to being a women-owned business, as well as valuable support for women interested in striking out on their own. Here’s a closer look.
Perhaps one of the most valuable benefits of being a women-owned business is the opportunity to bypass the glass ceiling that continues to plague corporate America. Women run about 10 percent of Fortune 500 companies in this country, according to the Society for Human Resources Management (SHRM). While that figure represents an improvement over past years (when the figure was just 8.8 percent), it’s also far from parity.
It’s a point not exactly lost on women far and wide. Indeed, a study from Guidant Financial titled 2023 Small Business Trends: Women in Business found that one of the “top motivators for becoming a business owner among women surveyed is the freedom of being their own boss (27%) and dissatisfaction with corporate America (22%).”
Along with avoiding the glass ceiling comes the potential to earn more money and not be limited to a salary structure established in an environment where the gender wage gap continues to be very real. According to the Economic Policy Institute’s 2022 State of Working America Wages Report, women on average, were paid about 20.3 percent less than men in 2019. Rather than decreasing over time, by 2022, that gap will increase to 22.2 percent.
Accessing the freedom to chart your destiny both financially and professionally, is no small consideration.
Venture capital and loans have historically been more difficult to access as a woman-owned business. However, there are some notable programs available that were designed specifically to assist female entrepreneurs, which is another benefit of being a woman-owned business.
The website SCORE, whose mission is to “foster vibrant small business communities through mentoring and education” recently compiled a list of some of the most notable grants currently available for women entrepreneurs.
Some of the highlights of the SCORE list include:
These are merely two of the grants that appear on the SCORE list. There are many more worth investigating.
Separately, the personal finance website NerdWallet regularly compiles its own assessment of the best loan options for women in business. The list includes loans targeting startups and also businesses that may have bad credit or that have not yet established a substantial track record of credit usage. These types of lists can be a helpful starting point when searching for funding.
The Small Business Administration also offers a variety of loans designed to be more accessible for small businesses. The SBA Community Advantage loan program, for instance, targets minority- and female-run businesses in low-income and rural areas.
The training and educational support available to women-owned businesses is another important benefit not to be overlooked. There are many training and educational resources available that are designed to help address the disparities female entrepreneurs face compared to men.
This includes the SBA-backed Women's Business Centers, which offers “free to low-cost counseling and training and focus on women who want to start, grow, and expand their small business.” This program includes a network of centers across the United States that provide support for women who are starting or growing businesses. The goal is to “level the playing field” for women in this space.
Yet another important initiative to be familiar with this Women-Owned Small Business Federal Contracting Program. Through this program, the federal government seeks to award at least 5 percent of all federal contracts annually to women-owned small businesses. The contracts are for goods and services. What’s more, some of the contracts are specifically allocated for economically disadvantaged women-owned small businesses.
Again, these two programs are just the tip of the iceberg. Some of the additional programs worth investigating include Ascent, which is an online learning platform created jointly by the White House, SBA, U.S. Department of Treasury, and the U.S. Department of Labor’s Women’s Bureau; and DreamBuilder, which was created to provide entrepreneurial training for women.
Obtaining certification as a female business owner is an important step, one that makes it far easier to access some of the programs and benefits mentioned in this article, while also raising your company’s visibility as a women-owned business.
There are three key certifications to be familiar with:
The WBE certification is used in the private sector, while the WOSB certification is important to federal government agencies when they’re looking for women-owned businesses to award contracts to. Similarly, the EDWOSB certification is largely used by federal agencies and indicates that a business has met the standards for being considered economically disadvantaged.
Taking the time to obtain these certifications, if your business qualifies, will allow you to access many important benefits designed to support your success.
While more than a few reports and industry studies reveal that being a women-owned business continues to face many unique challenges, at the same time, female entrepreneurs are “on the rise, boosting the economy and shaping the landscape of small businesses,” according to the Guidant Financial report. “From transforming industries to empowering communities, women business owners are leaving a lasting impact across America.”
If you’re already a female small business owner or have your sights set on becoming one, it’s important to be familiar with the many benefits—ranging from financial resources to educational and training resources—that are available to make your journey more successful.
With the right plan and partner, businesses can benefit from improved employee engagement and loyalty while helping them build their retirement savings. Get started today with a free, no-obligation consultation with a 401(k) retirement specialist.