In the United States alone there are over 11.3 million female-owned businesses. But, how do they compare to those run by men?
From the get-go, women are more likely to start businesses than men with 47% of women following through on starting a businesses, compared with 44% of men.
Interestingly, from 2006 to 2016, in Australia the proportion of women as business owners/managers rose from 31% to 33%. This growth may have been small, but it is significant when considering that there was also a 7.6% growth in women as owners/managers when compared with a growth of only 0.3% for men. If this was a race, we would be catching up fast!
So, there’s a bustling community of female entrepreneurs out there. Let’s have a look at how we stack up against our male counterparts.
In general, women-owned and male-owned businesses follow gender stereotypes.
Women-owned businesses are more likely to be in professional services, retail, healthcare and education whereas male-owned businesses are more likely to be in construction and manufacturing.
To dig even deeper, those industries that are gender stereotypical to women, such as schools, jewellery stores, dance studios and florists, are more likely to out-survive those that are male-owned. Similarly, those industries that are gender stereotypical to men, such as repair services, sporting-good stores and vehicle dealers, are more likely to out-survive those that are women-owned.
Why do people start their own businesses?
Each gender has different motivations behind starting a business. For women, they start them to balance work and family life, to work independently, and to be able to bring their ideas to life. Wealth is not a primary focus. Men, on the other hand, start businesses with the goal of making money and increasing their status.
However, both genders share a common thread in being tired of the corporate grind and wanting to be their own bosses. I’m sure this is a relatable motivation for many – who wouldn’t want to set their own hours?
Approach to Business
When it comes to actually conducting business, men and women take different approaches.
In terms of employment, women tend to employ people more quickly than men because they are comfortable asking for help when needed. Men, on the other hand, are reluctant to ask for help and therefore do not employ people as quickly.
When considering their management style, women and men are very similar as business owners. However, subtle differences do exist. Women are more directive in nature – they give clear instructions and set goals. Men are more participative – they like others to participate and be engaged.When it comes to actually conducting business, men and women take different approaches. Click To Tweet
But what about decision-making? Women are viewed as taking more of a cerebral approach. They take the time to think through their options and they consider the facts. Men, on the other hand, take on a more aggressive approach to decision making, arriving at a decision much faster.
Women are as equally deserving of financial support, but we only receive 2% of venture funding. This goes back to implicit gender bias and the social taboo of women being bad with money. Consequently, women are more likely to self-fund their businesses by taking from their savings, their income or borrowing from friends and family.
But what is the underlying reason behind women receiving less funding?
When pitching their business to investors, men are asked questions about what could go right in the business, whereas women are asked questions about what could go wrong.
However, research indicates that if they were both asked the same questions they would be equally successful in gaining funding.
Dana Kanze, female entrepreneur and doctoral fellow at Columbia Business School, says “No one is sitting there saying, ‘Hey, you asked him different questions.’ This is the cycle of bias we are trying to break.”.
So, it’s time to break that cycle. If you’re presenting to investors and get asked questions about what could go wrong, switch your answer around to say how what could go right. For example, if you’re asked how you’ll deal with losing clients, tell the investors how you’ll gain more clients. In doing so, you’ll turn a negative into a positive, subconsciously increasing your chances of gaining funding.
Business Size and Growth
Women run smaller companies than men. 75% of female business owners are sole traders, compared with 60% of men being sole traders. This discrepancy in size could be put down to the fact that women often have to self-finance, limiting their resources.
Women-owned businesses also grow slower than male-owned businesses. This can once again be put down to the challenges women face in gaining finance. Consequently, they have to engage in conservative cash management strategies, stifling their growth.
Leading on from reduced size and growth, women-owned businesses generate less revenue than male-owned businesses. On average, they generate $68,000US less than those similar businesses run by men. This discrepancy can once again be attributed to the challenges in gaining funding and slow growth.
But, what happens at the bottom line? Who is more likely to succeed?
The results are in:
“…Women-owned businesses are equally as successful as [male]-owned businesses.”.
So, we’re just as likely to experience success or failure. Well… this all depends on how you classify success. If you consider it in terms of size, revenue or growth, we’re lagging behind. But a lot of this comes down to the challenges women face in gaining finance. If we were on the same playing field as men, I’m sure our businesses would flourish above and beyond what they already do.
If you’re an aspiring or existing business owner and need some advice, check out the Fempire Academy. Alternatively, if you’re stuck on how to make money and want to make a difference doing what you love, check out our Fempreneur Course. It’s a 3-day live touring event run across Australia!
Anna Gratte is a marketing intern at Fempire. She has a keen interest in social media and content creation and is passionate about creating engaging content that inspires women to achieve success and live a fulfilled life.