Why More Women Than Ever Are Choosing Entrepreneurship

Over the past twenty years or so, businesses which are owned and operated solely by women have dramatically increased in popularity. According to official reports, the rate of growth is at least 70% since 1997, with over nine million women-owned businesses operating in 2014 alone, an increase of almost a million new businesses when compared to the previous year. This significant growth pace, which has doubled in just three years and continues to see steady increases, has helped to generate over $1 trillion in revenues for female-owned businesses.

According to Randi Schochet, vice president of brand strategy at American Express, reports clearly show that entrepreneurship is becoming a path which is being chosen by women at record rates. This is exciting news to the center of women’s entrepreneurial leadership at Babson College. According to the executive director of the center, Susan Duffy, entrepreneurship is a key path to job creation and economic growth. She believes that women are now starting businesses at one and a half times the national average because they are ‘playing catch up’ due to starting from behind.

Female Entrepreneurs and Catching Up

Catching up is something that female entrepreneurs definitely have to do. Despite the rapid growth levels, statistics from the Census Bureau show that in 2007, female-owned businesses accounted for just under 30 percent of all businesses, and around 45% of all business partners. More recently, a study conducted by the Harvard School of Business showed that men tend to have a better chance than women when it comes to securing funds from investors.

The study reported that investors prefer pitches presented by a male entrepreneur than a female entrepreneur, even if the content of the pitch is exactly the same. The effect is also varied by male attractiveness, with attractive males being the most persuasive with their pitches. On the other hand, female attractiveness didn’t matter at all.

Why More Women in Business?

You may be wondering why the sudden surge in women who are looking to start and run their own successful business? Well, there are a number of reasons which could be attributed to why this is the case. For example, the rise of flexible and affordable learning options, for example affordable MBA programs that waive GMAT, make learning how to start up and run a business much more accessible for not only a lot of women, but men too.

It’s also important to understand that throughout history, women have not been allowed the same privileges as men. Women have had to fight for the right to do a number of different things, whereas men, on the other hand, have simply always had that right. Centuries ago, women would simply not be allowed to run their own business. Family businesses were passed down to sons and grandsons or left to another male heir if there were only female heirs in the owner’s children. Although no longer held today, this strongly sexist viewpoint definitely lingered in the world of business and many women felt that entrepreneurship wasn’t the best pathway for them, even now it is acceptable. Today, however, gender roles are all but abolished, and more women are actively encouraged to start their own businesses.

Challenges to Success

The traditional corporate environment continues to pose a range of risks to the success of female entrepreneurs. But, why is this? Experts think that it may be due to pattern recognition. Research shows that over time, humans begin to recognize certain patterns as being the norm. Anything which deviates from that pattern is an anomaly, which is seen as being dangerous or risky.

For example, if the historical pattern of business success is that successful business people are white males over six feet tall and with black hair, then any women will present an uncomfortable deviation and may be viewed as a risk. And the risks and challenges faced by women in business are more than the majority of male entrepreneurs. As a female entrepreneur, you can expect to earn around 25% of each dollar that your male counterparts earn.

When it comes to women in business, it is important to create an environment which recognizes and values the characteristics, competence and capabilities of these female entrepreneurs. Neither men nor women are better leaders than the other; in fact, the natural strengths and tendencies of men and women can significantly complement each other in the world of business. In order to grow and move forward on the world stage, it’s vital that institutions recognize this.