Today, there are more than 12.3 million women-owned businesses in the United States. As female-led organizations continue to grow year after year, so does the positive impact they have on our economy and the jobs they create. Here are five upcoming trends for female entrepreneurs and innovators to keep on your radar:
The rise of female startups
Over the last 20 years, we’ve seen a 114% increase in the number of female entrepreneurs working in the United States. Between 2020 and 2021 alone, the number of female entrepreneurs who own small businesses and franchises increased from 27% to 31%, proving that even a pandemic can’t slow down the rise of female startups. What’s even more interesting is the positive impact female-run organizations have on the economy.
Studies show that on average, female-led organizations show an 84% growth rate since their inception, compared to a 78% growth rate for male-owned companies. Considering only 23.8% of women receive funding (compared to 33.9% of male entrepreneurs), the difference between growth rates speaks volumes about the potential for female startups, the job opportunities they can provide, and the return on investment stakeholders may see if they choose to work with female entrepreneurs. In fact, the total global income of women is expected to increase by more than $5 trillion over the next five years.
Related: What Is the FemTech Revolution?
Embracing new business models
While the reasons women choose to start their own companies vary, the Small Business Trends Alliance (SBTA) reports that of the female entrepreneurs interviewed, 29% said they were ready to be their own boss, 20% shared that they wanted to pursue their passion, and 13% expressed being dissatisfied with corporate America as a whole.
This may be why we’re starting to see female-led companies emerge that are more willing to embrace new business models and non-traditional structures. Female-owned businesses are more likely to embrace remote and hybrid work environments and flexible schedules. They’re also more likely to give employees more autonomy over their work and develop diverse leadership teams. This encourages a broader range of perspectives, which often helps female-led businesses make more informed decisions about the product and services they develop and how they market them.
As more women choose to work for themselves, the number of micro-businesses opening around the world continues to increase. According to the Bureau of Labor Statistics, 90.3% of the organizations women own are considered micro-businesses, compared to 82.3% for men. While definitions vary, a micro-business is typically classified as an organization with fewer than 10 employees that earns less than $250,000 each year. Part of the reason we may see more women operating micro-businesses than men is that female entrepreneurs tend to work with freelancers and other service providers more often to fill gaps while focusing on improving their core business offerings.
Outsourcing can be an excellent way for female entrepreneurs to maintain balance and keep costs low while growing their organizations. According to SBTA, the most common services women business owners outsource include tax preparation, payroll, CPA services, bookkeeping, IT support, and marketing. According to Forbes, the freelance revolution has also picked up steam throughout the pandemic, with more than 40% of employees in the United States pursuing freelance work on the side. As freelancing becomes a more popular option for people who want to earn extra income, pursue their passions, and work remotely, there are plenty of opportunities for business owners to continue outsourcing services.
Creating more inclusive opportunities and benefiting communities
Between 1997 and 2016, the number of businesses owned by black women increased by 518% and the number of businesses owned by Hispanic women increased by 452%. As more women of color venture out on their own to create successful companies, we see they have a direct impact on their communities. Recent studies show that women-of-color-owned businesses employ more than 2,230,600 people and generate more than $386.6 billion in revenue each year.
According to Writers’ Block Live, African American and Latin American female entrepreneurs also own the fastest-growing companies. In fact, if the gains these businesses see were matched by all female-owned organizations, the United States’ economy would see an additional revenue worth $1.2 trillion—in addition to four million new jobs.
Related: 5 Female Inventors You Should Know
Increasing funding opportunities
While historically funding for female-run businesses has been scarce, investors can no longer ignore the positive impact working with women has on their ROI. While it’s challenging to make predictions regarding finances as we continue to navigate an ongoing pandemic, we are starting to notice an increase in funding opportunities for women. For example, We-Fi recently set aside $49.3 million in funding for female entrepreneurs who own small businesses. Similarly, Goldman Sachs created a $500 million investment fund dedicated to supporting women-founded and women-led organizations.
However, it’s important to note that the percentage of female entrepreneurs asking for business financing is still relatively low when compared to men. Today, only 25% of women seek business financing and they ask for $35,000 less than their male counterparts. As more funding becomes available, we hope to see this narrative shift to put more money in the banks of female-led businesses so we can continue to see an increase in job opportunities, improve the diversity of the products and services available today, and strengthen our overall economy.
Related: 7 Upcoming Megatrends To Tap Into
Learn more about upcoming trends for female entrepreneurs and innovators
Interested in learning more about upcoming trends for female entrepreneurs and innovators? Here are some articles that were useful when researching this topic:
- Women Entrepreneurs Statistics: Equality in 2022: Writers’ Block Live
- The Freelance Revolution Is Just Getting Started: Key Trends In 2022: Forbes
- Top 7 upcoming trends for female entrepreneurs in 2022: HerStory
- Where are all the women innovators? Here’s a start: McKinsey & Company
- Women in Business – 2021 Trends: Guidant Financial