How are women business owners faring these days? Better, even though the Global Entrepreneurship Monitor (GEM) 2018-2019 Women’s Report, coauthored by researchers from Babson College and Smith College, says the number of startups by women worldwide still lags that of men.
Total Entrepreneurial Activity (TEA) represents the percentage of the adult working-age population, ages 18 to 64, who are new entrepreneurs. The global TEA rate for women in the GEM Report was 10.2%, about three-quarters of that for men.
GEM studies the economies in 59 countries, and the report shows approximately 231 million women are starting or running new businesses in those regions. There’s been progress in the number of established businesses owned by women. (GEM defines a business as “established” if it has been operating for more than 42 months.) Worldwide, 6.2% of women-owned established businesses, compared to 9.5% of men.
Globally, younger women (ages 25-44) had the highest entrepreneurial participation rates.
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Reasons for startup
The intention to start a business within the next three years is approaching parity between male- and female-owned businesses. The global average for women with that intent is 17.6%, about four points less than men. The lower the average income in the country, the more women planned to become entrepreneurs. For example, in low-income countries, 37.8% of women intended to start within three years, while in high-income countries, only 12.6% planned to do so.
More women (27%) around the globe started their businesses “out of necessity,” compared to men (21.8%). Conversely, fewer women (68.4%) started their companies “to pursue an opportunity” than men (74%), resulting in what GEM calls a “7% gender gap.”
GEM notes that there are vast differences by region in the necessity and opportunity motives. In North America, just 9% of women started their businesses out of necessity, compared to 79% who started to pursue an opportunity. But there are differences in North America as well. In Canada, entrepreneurial women are 10% more likely than men to say opportunity is their motive for starting a business, while in the United States, women business owners are about 10% less likely than men entrepreneurs to cite opportunity as a startup motivator.
American women
The picture is brighter when focusing just on the United States, according to the annual State of Women-Owned Businesses Report, commissioned by American Express. In 2019, American women started an average of 1,817 new businesses per day between 2018 and 2019, down only slightly from the record-setting 2018 number of 1,821.
These businesses represent 42% of all American businesses—nearly 13 million—employing 9.4 million workers and generating revenues of $1.9 trillion. The report, which is based on U.S. Census Bureau data, found that over the past five years:
- The number of women-owned businesses increased 21%, while all businesses increased only 9%.
- Total employment by women-owned businesses rose 8%, while for all businesses the increase was far lower at 1.8%.
- Total revenue for women-owned businesses also rose slightly above all businesses: 21% compared to 20% respectively.
Also, over that five-year time period, there’s been a lot of growth in the number of women who are operating side gigs or hustles. The Amex reports calls these women “sidepreneurs” and says they’ve grown at a rate that is nearly twice as fast as the overall growth in female entrepreneurship: 39% compared to 21%, respectively.