By Margarita Hakobyan
In nearly any conversation about improving global economics, discussion comes around to the unique challenges that face women who want to pursue a path of entrepreneurship. Women are less likely to have access to capital, may face more discrimination, and find themselves facing different work life balance issues than male entrepreneurs.
But you may wonder why there is such a focus on bringing women into the entrepreneurial field. After all, if only 3 out of 10 businesses in the United States are operated by women, with those businesses employing 6% of the workforce in the country, and making just 4% of the GDP, is it possible that women are just not equipped to pursue entrepreneurial success?
Clearly, the answer is no. When women do have access to the resources necessary to become successful entrepreneurs, research finds that they, their companies, and their economies all benefit. Let’s look at why.
Increase global income per person
As economists around the world look to improve situations of global poverty, entrepreneurship is often the easiest way to do that. There are only 7 countries around the world where women are even close to participating in entrepreneurship in parity with men, although many women would pursue a business if they had the resources to do so. By helping women around the world start and succeed with their own businesses, the specter of global poverty can begin to lift. Tory Burch, a hugely successful woman entrepreneur, suggests that bringing more women into entrepreneurship could increase global income per person by 20% by 2030.
Increase overall GDP
Through the 1980s, as women in the United States began to join the workforce in huge numbers, the economy saw a huge boost in GDP. By bringing more women into entrepreneurship, there is a similar opportunity now.
Women, particularly women of color, are already starting businesses in large numbers, but because of the intersectional challenges women of color face in the economic market, those businesses are often smaller, are less likely to have employees, and may struggle to get sufficient capital. Without adequate entrepreneurial education, women starting businesses may struggle to make their business a success. They are also more likely to start a business in a lower income field, such as retail or healthcare.
As we create more opportunities for women entrepreneurs, and remove barriers to success for women owned businesses that already exist, we are likely to increase the global economy and drive economic success around the world.
Employ more workers
When businesses succeed, they employ more workers, which again increases wealth for all people. Women are more likely to be solopreneurs, operating businesses where they are the only employee. As they gain more entrepreneurial education and opportunity, their businesses will naturally grow and be able to employ more people, which creates jobs.
In the United States in 2014, around 3 million jobs were created as the country lifted out of the Great Recession; about 2 million of those jobs were created by small businesses. When big businesses were cutting jobs, small businesses were adding them, consistently, throughout 2014 and 2015. Small businesses are the economic drivers in the United States, and supporting them is good economic policy.
Startups with female executives are more likely to succeed
And as far as the old claim that women just weren’t “cut out” to succeed at business? Studies have regularly shown that claim to be biased and false. The Kauffman Foundation looked at businesses with female executives last year, and found without question that businesses with women in C-suites have:
• A more nuanced view of risk; women are more likely than men to self identify as financial risk takers, without losing caution about fool hardy risks.
• A greater chance of financial success; businesses with women executives show better business returns and payout ratios.
• Greater creativity. Women are more likely than men to become serial entrepreneurs, creating great ideas, getting them established, and then moving on to the next project. This wealth of creativity can only help the economy adapt and change during a time of great technological flux.
Businesses need women executives, and the economy needs women entrepreneurs, not just because of some fuzzy idea about diversity quotas, but because more diversity in the boardroom and the home offices translates into a better, stronger business. The more women succeed, the better off the global economy will be. Any business that wants to be part of the next great wave of entrepreneurship should be looking into how it can both attract and support female entrepreneurs going forward, through mentorship, Angel investing, and funding capital.