Editor’s Note: In honor of National Equal Pay Day here is an article that reminds us of the importance closing the gender pay gap is to the success of women entrepreneurs.
Increasing economic gains for women continues to be a significant challenge in narrowing the business ownership gap and the gender pay gap. Institutionalized pay inequality not only puts women at a long term financial disadvantage but it also stifles our nation’s entrepreneurial growth. Pay equity is a crucial pillar in affording women the opportunity to start their own businesses. When it comes to women starting a business, numerous studies indicate the majority of women rely on personal savings— such as savings from previous employment.
As the booming start-up culture continues to fuel America’s job creation, innovative policies must be implemented to support gender pay equity in order to promote women’s economic security and entrepreneurial independence. As women-owned businesses continue to be the fastest growing sector in the small business community, strategic pillars must be put in place to support women’s impact in shaping the national economy.
Most recently, the National Women’s Business Council (NWBC) outlined 4 pillars to advance women’s entrepreneurial independence, including: Access to Capital, Access to Markets, Job Creation & Growth, and Data Collection. NWBC’s 4 pillars lay the groundwork for policy makers, the private sector, and the women’s business community to act strategically towards stimulating economic gains for women business owners.
U.S. women-owned businesses are growing in number at an unprecedented rate. Between 1997 and 2012, the number of new female-owned businesses grew by 54 percent, while the nationwide average saw only 37 percent growth. Despite the difficult economic climate during the recent recession, women-owned businesses performed just as well as men-owned businesses during 2007 – 2010, and in many cases outperformed their peers. Women are making substantial strides in the entrepreneurial sector. Although women entrepreneurs are the fastest growing sector in the small business community, access to capital continues to be a major hurdle for women entrepreneurs.
#1 Access to Capital:
Numerous studies indicate women rely heavily on personal savings to start a business, a tendency that is associated with lower amounts of start-up capital. Access to capital trends could explain why male-owned businesses generally turn around higher revenues than female-owned businesses. Women’s economic impact is important; pay equity and getting more capital in the hands of women entrepreneurs will contribute to economic growth. The NWBC recommends 3 solutions to increasing women’s access to capital:
- Increase lending efforts by credit unions and community banks to women-owned businesses
- Increase resources available to women business owners on capital/financing strategies
- Address creditworthiness and capital challenges for startups through exploration of new ways of credit scoring and promotion of crowdfunding
As access to capital remains a critical focus for women entrepreneurs, policy makers and the women’s business community must continue to focus its efforts on the issue of undercapitalization.
#2 Access to Markets:
More women supplying products and services in the federal marketplace and in corporate supply chains will result in more competition, choice, and quality. The NWBC has identified 2 ways to promote increased access to markets for women entrepreneurs:
- Identify and promote concrete best practices in government procurement
- Identify industries and links in supply chains that are ripe for entry of women-owned businesses
#3 Job Creation & Growth:
Women are bringing great ideas to the market and show potential to scale, impact, and innovate. Increasing the participation of women entrepreneurs in programs designed to support the successful development of start-ups and established companies is key to scaling women-owned businesses. The NWBC encourages:
- Increasing participation of women-owned businesses in incubators and accelerators
- Developing a targeted strategy for participation of women-owned businesses in all government program areas.
#4 Data Collection:
Women’s economic impact is growing but we cannot count what we do not measure. An expansion of government data available on women-owned businesses is essential to tracking the economic progress of women entrepreneurs. As the government’s only independent voice for women entrepreneurs, the NWBC houses vital research to advance women business owners. Important and reliable data enables those in the women’s business community to identify key factors to spur economic gains for women.
Data collection is crucial to identifying and rectifying issues that prohibit women entrepreneurs from thriving. The NWBC recommends:
- The Consumer Financial Protection Bureau (CFPB) begin collection of gender data on demand for credit
- The Census Bureau to implement an annual Survey of Business Owners to track progress on an annual basis
When it comes to broadening the pathway to success for women business owners; pay equity and access to capital must be at the forefront of the women’s entrepreneurship agenda.