May 11, 2023
Women continue to be the driving force behind new business creation since the Covid-19 pandemic, and nearly 92% of women-owned businesses are micro businesses — those with fewer than 25 employees, according to a new survey released this week.
According to the National Association of Women Business Owners (NAWBO) and ADP, 63% of those micro businesses owned by women provide the lion’s share of the family income.
“Women business owners are the drivers of our nation’s economy and the leaders in our community,” said Karen Bennetts, NAWBO national board chair. “By supporting women business owners and providing them with necessary resources, we are building the bridge to wealth creation, allowing them to grow and scale their businesses.”
According to the 2021 Annual Business Survey, which covers the reference year 2020, women owned 1.24 million, or 21.4%, of employer firms in the U.S. Women-owned businesses account for $1.9 trillion in receipts, 10.9 million employees and $432.1 billion in annual payroll.
The NAWBO report found that the top women-owned small businesses faced several challenges, including hiring and financing.
According to the survey, 41%% of NAWBO members said hiring is more difficult than ever before and many reported losing an applicant to a competitor. Forty-three percent had no staff, so losing out on an applicant could mean the difference between missing or making an order fulfillment deadline.
One of the biggest hurdles women small business owners face is financing, the report found. Of the 560 respondents, just 10% reported having secured a small business loan, with more than half using personal savings to finance their business, and a small percentage using loans from family or friends or other private loans.
This is not the first report to find that women get shorted when it comes to financing.
Payroll and benefits provider Gusto Inc. recently found in its annual New Business Survey that while roughly half — 47% — of the new businesses in 2022 were created by women, men received private capital investments at rates 2.3 times that of women.
Despite the low percentage of private funds that go toward women-owned startups, a recent survey out of Kennesaw State University found that women tend to have more success as an entrepreneur.
The research team surveyed 990 entrepreneurs in three countries on how they made business decisions and found that women were more flexible and resourceful in their decision making than men, leading them to more success.
According to PitchBook’s fourth annual All In: Female Founders in the U.S. VC Ecosystem report, female-founded companies in 2022 represent only 25.5% of the total venture capital count within their broader ecosystem – a slight dip from 25.4% in 2021.
Laci Buzzelli, senior vice president of sales for ADP Small Business Services, said partnerships like ADP and NAWBO can help “propel women entrepreneurs into economic, social and political spheres of power worldwide.”
“Women-owned businesses create a huge impact on our economy and we recognize the importance of support and partnering with organizations like NAWBO so we can help further their opportunities for success,” she said.