Gender inequality and the gender pay gap are not only moral and social issues, but they also present an economic challenge. Women account for half the world’s population of working-age adults, but they are not currently achieving their full economic potential. If this trend continues, the global economy could suffer.
In fact, according to a 2015 report by the McKinsey Global Institute (MGI), advancing women’s economic parity can add $12 trillion in growth to the global economy by 2025. That’s an 11 percent increase. These results would come from what MGI calls a “best in region” scenario. That would mean every country in a particular region–say the Caribbean or Central America–would improve women’s economic parity with men to match the rate of the fastest improving country in their region.
And that “best in region” approach wouldn’t even require women in small business to reach their “full potential,” according to MGI. To meet the “full potential” scenario, women would have to participate in the economy identically to men. If that were to happen, it would add up to $28 trillion to the global economy. That’s the size of the Chinese and US economies combined.
October is National Women in Small Business Month — a moment to reflect on what it would take for women in the US to reach that full potential. What are some challenges that women face in the workplace today, and how do we overcome those challenges?
What is National Women in Small Business Month?
Each October, the US celebrates National Women in Small Business Month. It’s a time when we recognize the contributions and successes of female small business owners in our country. According to the National Association of Women Business Owners, we have more than 11 million women-owned businesses in the US. They employ 9 million people and they’ve generated $1.7 trillion in revenue as of 2017. Of those women-owned businesses, 5.4 million are owned primarily by women of color.
However, 99% of women-owned businesses are small businesses and 89.5% employ no one other than the owner. Even still, women entrepreneurs have emerged as one of the fastest-growing business segments.
Unfortunately, revenues and employment rates for women-owned businesses haven’t kept up. Though women own 39% of all US businesses, they only employ 8 percent of business employees, and their businesses only make up 4.2% of sales.
This October, as we celebrate National Women’s Small Business Month, let’s remember not only the growth and accomplishments of female entrepreneurs in this country but also recognize the vital role they play in our economy.
When women seek out financing to get their businesses off the ground, they are likely to receive 80 percent less than male entrepreneurs in their first years.
Challenges for Women in the Workplace
It may seem like in 2018 we’ve moved past gender-based discrimination– as we certainly should have. But that doesn’t mean that women actually receive equal treatment at work. Despite centuries of advocacy and hard-won gains, women still face tremendous challenges in the workplace. Let’s take a look at some of the issues that are currently handicapping female workers and women-owned businesses.
- Pregnancy discrimination: Working mothers have a particularly difficult time achieving parity at work, and at no time is this more apparent than during pregnancy, or the employer’s presumption of an imminent pregnancy. Though it is illegal, pregnancy discrimination still keeps many full-time employees from being considered for promotions, and in some cases, being pregnant can cost female employees their jobs.
- Sexual harassment: Over the past year, the #metoo movement has forced American men, business owners, and employers to finally face what women have known forever: sexual harassment is a pervasive problem that is still very much alive. This problem isn’t limited to female employees and subordinates, but it’s faced by women in all stages of business. For female small business owners, it can come from clients, colleagues, contractors, customers, or anyone else they interact with. It is a form of intimidation that creates an extra hurdle for any woman trying to grow her business.
- The gender pay gap: It may seem like the gender pay gap shouldn’t apply to business owners. After all, they should be able to set their own salaries, right? Unfortunately, it’s not quite that simple. All businesses have to compete for clients, customers, and contracts. Despite years of efforts to level the playing field for women-owned businesses, they are still at a serious disadvantage on those fronts. For example, a 2016 report from the US Commerce Department showed that women-owned businesses were 21 percent less likely to win government contracts compared to other businesses with similar qualifications. And when women seek out financing to get their businesses off the ground, they are likely to receive 80 percent less than male entrepreneurs in their first years.
- Low-growth industries: One of the biggest challenges facing women in small business is that they have a tendency to choose industries with low potential for growth. Women are much more likely to start up a retail business than men, and banks are less likely to approve loans in that industry. In fact, women are 15 to 20 percent less likely to have their small business loans approved, and this has much more to do with their choice of industry than with their performance or business plan. However, it also raises a larger question about why industries that tend to be female-dominated are generally less respected and receives less funding.
Moving Forward as a Woman in Small Business
If you are a female entrepreneur and all of this sounds a bit daunting, you’re not alone. It would be easy to look at the facts and decide success is out of reach for female small business owners. But that would be a mistake. Here are our three best tips for succeeding as women in small business:
- Consider alternative funding sources: Banks are not your only option when it comes to funding for your small business. Look for grants from government agencies and foundations. Find independent investors who care about your industry or issue area and create a board of directors. There are plenty of sources for funding that don’t require a bank loan.
- Look for partners in your community. What is your business community? If you’re running a senior care facility, it might be health care workers, educators, and family members. If you own a beauty salon, perhaps it’s clients, beauticians, and product manufacturers. Own a pet care store? Your community is pet owners and veterinarians. Network with all of these people to find out what they can do for your business.
- Keep growing. Whatever you do, you can’t stop innovating. You must always be looking for that next solution that will disrupt your industry. Though women-owned businesses might have more hurdles to overcome, the most successful will be the ones who come up with creative, contemporary solutions to common problems.