More U.S. women are business owners today than at any other time in history. Over the past 20 years, the number of women-owned companies in America has risen by about 114 percent and continues to grow at double the rate of non-female-owned firms. In addition, around 50 percent of women-owned businesses are owned by women of color.
These statistics are encouraging and speak to a cultural and economic investment in gender equality, racial equality, innovation, and female empowerment. However, women still face disproportionate challenges and roadblocks when attempting to start a small business or break into entrepreneurship.
Here are five of the biggest barriers that women face when setting out to be their own boss:
- Funding discrepancies. One report found that in 2020, only about 2.3% of venture capital funding went to women, representing a 27 percent decrease from the year before. Because female-owned startups and businesses receive less funding, they face more financial challenges and often need to scale their companies more slowly.
- Gender biases. According to the Pew Research Center, about 42 percent of women say they have faced gender biases in the professional world. While some forms of gender bias in the workplace are obvious, such as discrepancies in compensation or misogynistic comments, others are more subtle and therefore more difficult to address or prevent.
- Skills gaps. The World Bank reports that gender-based skills gaps provide a challenge for women in the workplace because women have less access to the resources and training necessary to lead a company. In addition, the World Bank found that male entrepreneurs are more likely to have been employed prior to launching their business, which gives them an advantage.
- Work-life balance. Women are more likely than men to stay home with their children and are also more likely to work outside the home part time while also trying to support their families. Because women so often default to the primary caregiver, it can make it more difficult to achieve work-life balance as the owner of a company.
- COVID-19. The coronavirus pandemic took a toll on the U.S. economy and workforce in general, but particularly on women. One report found that about 30 percent of working mothers are considering leaving the workforce, and that female managers and leaders are reporting more burnout than their male counterparts.
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