The Gender Gap in Business Ownership

The gender gap in business ownership is a prevalent issue that affects the economic potential of many countries around the world.

Despite continuous efforts to bridge the gap, significant disparities remain in the distribution of business ownership between men and women.

This article aims to provide an in-depth statistical analysis of the gender gap in various business structures, such as Limited Liability Companies (LLCs) and corporations, and the factors that influence ownership and success rates.

By understanding these disparities, entrepreneurs and business owners can take active steps to promote diversity and create a more inclusive business environment.

Gender Distribution in Business Structures

According to the 2019 State of Women-Owned Businesses Report, women-owned businesses made up 42% of all businesses in the United States in 2019, equating to nearly 13 million women-owned businesses.

These businesses employed over 9.4 million workers and generated $1.9 trillion in revenue.

This growth is a testament to the increasing presence of women entrepreneurs in the business landscape.

Recent findings from the Entrepreneurship in the Population (EPOP) Survey provide a more current look at gender distribution in business.

Non-Hispanic Black women now own 19% of businesses established since 2020, a significant increase from 2% of businesses established before 1990, showcasing their growing influence in the entrepreneurial space (source).

Additionally, the EPOP Survey finds that 41% of businesses in the U.S. are minority-owned, a significantly larger percentage compared to previous estimates (source).

According to the Women Ownership Statistics 2024 report, in 2019, women owned over 12.3 million businesses in the United States, employing more than 10.7 million people and generating $2.1 trillion in sales.

Of these, 1.2 million were employer firms, generating $1.8 trillion in total sales, while non-employer firms generated $313.6 billion (source).

Factors Influencing Ownership

Several factors contribute to the gender gap in business ownership.

Some of the most common factors include:

1. Access to Capital:

Access to capital remains a key challenge for women entrepreneurs.

In 2018, only 2.2% of venture capital funding went to women-led businesses, compared to nearly 98% for male-led startups, a phenomenon described as the “second glass ceiling” (source).

Biases in venture capital and banking persist, with women often being perceived as more risk-averse, leading to fewer funding opportunities.

A 2021 report by the U.S. Census Bureau found that women-led startups received just 2.3% of venture capital funding in 2020, showing little change over 2 years.

This lack of funding can limit the growth potential of women-owned businesses and prevent them from entering high-growth industries.

Further reinforcing this, the EPOP Survey revealed that women, particularly minority women, often operate smaller businesses with fewer employees and lower revenue, limiting their potential to scale (source).

2. Cultural and Societal Expectations:

Social norms and expectations can play a significant role in the decision to start a business.

Women may face more pressure to prioritize family and caregiving responsibilities, which can make it challenging to dedicate time and energy to entrepreneurship.

The EPOP Survey showed that non-Hispanic Black women and Hispanic women, while increasing their presence in business ownership, are still more likely to have smaller businesses or be in specific sectors such as healthcare and social assistance (source).

3. Mentorship and Networking:

Networking and mentorship opportunities are vital for business success, but women may have limited access to these resources, especially in male-dominated industries.

Organizations like the National Association of Women Business Owners (NAWBO) and Women’s Business Enterprise National Council (WBENC) offer mentorship, networking, and educational opportunities to help women entrepreneurs overcome these barriers.

Disparities in Earnings and Business Growth

While the number of women-owned businesses has grown significantly, disparities in earnings and growth remain.

According to the 2019 State of Women-Owned Businesses Report, the average revenue for women-owned businesses was $142,900, compared to $474,900 for all privately held businesses.

This stark disparity highlights the challenges women face in scaling their businesses to the level of their male counterparts.

Gender Parity in Employment

The lack of gender parity is also evident in employment figures.

According to the 2019 State of Women-Owned Businesses Report, women-owned businesses employed 9.4 million workers, accounting for only 8% of the private-sector workforce.

This shows that, while women-owned businesses have a strong presence, their contribution to overall employment is still relatively small compared to their male-owned counterparts (source).

Industry Concentration

Women-owned businesses are often concentrated in certain industries.

According to the same report, 16.8% of women-owned businesses are in the Professional, Scientific, and Technical Services sector, compared to 14.3% for all businesses.

Women entrepreneurs are also well-represented in the Health Care and Social Assistance sector, with 19.4% of employees in women-owned businesses working in this field (source).

Practical Steps to Bridge the Gender Gap in Your Business

As an entrepreneur or business owner, there are several practical steps you can take to promote inclusivity and bridge the gender gap in your business.

Here are some ideas:

1. Foster a Culture of Inclusivity:

The first step toward creating a more diverse and inclusive workplace is to foster a culture that values and celebrates differences.

Encourage open communication, listen to feedback, and create opportunities for all employees to participate equally.

2. Provide Mentorship and Networking Opportunities:

Mentorship and networking can significantly impact business success by providing valuable guidance and support.

As a business owner, consider offering mentorship opportunities for women entrepreneurs or sponsoring networking events that prioritize diversity.

In fact, many corporations are already leading the way in supporting women entrepreneurs through diversity and inclusion efforts.

Below is a list of the top corporations recognized for their commitment to women-owned businesses in 2023.

America's Top Corporations for Women's Business Enterprises (2023)

Source: WBENC Top Corporations for Women's Business Enterprises

4. Offer Flexible Work Arrangements:

Offering flexible work arrangements, such as remote work or flexible hours, can help accommodate the needs of employees who may have caregiving responsibilities outside of work.

5. Prioritize Diversity in Hiring Practices:

Diversity should be a priority in all aspects of your business, including hiring practices.

Consider implementing blind hiring practices or actively seeking out candidates from underrepresented groups.

By taking these practical steps toward inclusivity and diversity, you can help bridge the gender gap in your business and promote a more equitable environment for all employees.

Resources and Programs for Women Entrepreneurs

Despite the challenges faced by women entrepreneurs, numerous resources and programs are available to help support women-owned businesses.

These programs offer financial assistance, mentorship, and networking opportunities designed to foster growth and sustainability for women entrepreneurs.

1. Association of Women’s Business Centers - AWBC

The Association of Women’s Business Centers (AWBC) is a nonprofit organization that partners with the U.S. Small Business Administration (SBA) to support and promote Women’s Business Centers across the U.S.

With over 100 centers nationwide, AWBC offers training, mentoring, and educational resources specifically for women-owned businesses.

AWBC also hosts events and webinars focused on networking and industry education.

2. National Association of Women Business Owners - NAWBO

Since 1975, the National Association of Women Business Owners (NAWBO) has advocated for women entrepreneurs across the U.S.

NAWBO provides its members with resources including an online institute and various business events to help women-owned businesses grow and thrive.

The organization also promotes public policy solutions to government leaders on behalf of women entrepreneurs.

3. Women’s Business Enterprise National Council - WBENC

The Women’s Business Enterprise National Council (WBENC) is the largest certifier of women-owned businesses in the U.S.

WBENC offers a variety of events and programs that educate and support women entrepreneurs.

They provide access to networking, financial resources, and growth opportunities through certifications and partnerships.

4. Center for Women & Enterprise - CWE

The Center for Women & Enterprise (CWE) is one of the largest regional nonprofits dedicated to empowering women entrepreneurs.

CWE serves businesses in Massachusetts, New Hampshire, Rhode Island, and Vermont by offering education, technical assistance, microloans, and certifications.

The organization has helped over 45,000 women-owned businesses since its founding in 1995.

5. SBA Women-Owned Small Business Federal Contracting - SBA

The U.S. Small Business Administration (SBA) provides guidance and support to women-owned businesses competing for federal contracts.

The SBA’s Women-Owned Small Business Federal Contracting Program allows certified women-owned businesses to access set-aside federal contracts, offering a crucial financial opportunity for growth.

6. SCORE for Women Entrepreneurs

SCORE for Women Entrepreneurs provides free business mentoring and educational resources tailored to women entrepreneurs.

The organization offers guides, confidential business advice, and a variety of events and online courses to help women at all stages of their business journey.

These organizations provide critical support to help women business owners overcome challenges like funding and access to networks.

By taking advantage of these resources, women entrepreneurs can gain the tools and knowledge needed to grow their businesses and achieve long-term success.

FAQs - Frequently Asked Questions About the Gender Gap in Business

In Summary…

The gender gap in business ownership remains a pressing issue that limits the potential for economic growth and innovation.

By understanding the current landscape and the factors influencing ownership, entrepreneurs and business owners can take proactive steps to promote diversity and create a more inclusive environment for all.

If you’re an entrepreneur or business owner, consider joining or supporting organizations that advocate for women in business, such as the National Association of Women Business Owners or the Women’s Business Enterprise National Council.

Together, we can work towards a more equitable and diverse business landscape.

Want to start your own business?

Business Initiative can help you make it happen!

Schedule a consultation call and let’s get the ball rolling FAST!

Have questions?

Reach out here or send Business Initiative a message @BisInitiative on X.