How are women entrepreneurs around the world doing these days? According to The Global Entrepreneurship Monitor (GEM) 2016-17 Women’s Report, things are getting better and better for female business owners.
Here are some of the highlights of the recently released survey of women entrepreneurs in 74 economies worldwide.
In the past year, 163 million women worldwide started businesses:
- 111 million women currently operate established businesses.
- Since the last report in 2014…
- Total Entrepreneurial Activity (TEA) among women grew by 10 percent
- Women’s ownership of established businesses grew by 8 percent.
- The gender gap (that is, the ratio of women to men participating in entrepreneurship) shrank by 5 percent.
This continues the positive trend revealed in the previous report, which showed an average 7 percent increase in women’s TEA rates and average 6 percent reduction of the gender gap.
Why women start businesses
Entrepreneurial intentions—that is, the intention to start a business—among women increased by 16 percent from 2014 to 2016. The highest participation in entrepreneurship among women is in the 25-34 and 35-44 year old age groups. (This is also true for men.)
What prompts women to start businesses? On average, women in the survey are 20 percent more likely to start a new business out of necessity than are men. However, spotting entrepreneurial opportunity still accounts for the majority of women’s business startups. In innovation-driven (developed) economies, women are over 3.5 times more likely to start businesses of opportunity rather than necessity.
Women in factor-driven (undeveloped) economies are more likely to see opportunities for starting a business than women in innovation-driven economies. Fifty-seven percent of women in factor-driven economies say there are plenty of good opportunities to start a business, compared to 39 percent of women in innovation-driven economies.
Innovation and women entrepreneurs
Overall, women entrepreneurs are 5 percent more likely to start innovative businesses than are men, the study reports. The highest level of innovation occurs in North America, where 38 percent of women say their businesses involve innovative products and services. North America also has the highest education rates among women entrepreneurs; 84 percent have a post-secondary or higher education.
What kinds of businesses do women start?
Overall, just 10 percent of women entrepreneurs are sole proprietors with no plans to add any employees in the next five years.
Over half of women entrepreneurs in innovation-driven economies are in the government, health, education and social services fields. In fact, at all economic development levels, women dominate this business category relative to men: On average, they are 2.25 times more likely than men to start businesses in this sector.
Women still remain less prominent in information and communications technology, however. Overall, fewer than 2 percent of women are starting business in this sector—slightly more than one-fourth the percentage of men starting IT/communications businesses.
Room for improvement
Despite all the positive news the GEM survey reports, there is still room for improvement in one key area: Confidence. Surprisingly, women’s confidence seems to be lower the more developed the economy in their countries. In factor-driven economies, for example, more than two-thirds (67 percent) of women believe they have the capabilities to start businesses based on the opportunities they see. However, fewer than 35 percent of women in innovation-driven economies believe the same thing.
This is partly because businesses in innovation-driven economies are more complex. But is it also due to a lack of confidence about our abilities? The gender gap in capabilities perceptions is widest in the innovation-driven economies, at just over two-thirds the level reported in men.
Perhaps part of the problem is that despite the attention paid to entrepreneurs in American culture, just 27 percent of women in the U.S. say they know an entrepreneur personally.
How can you change things?
- If you want to start a business: Get a role model—male or female—or more than one. Find someone you admire and learn as much as you can about how they did it. Get a real-life mentor, too.
- If you own a business: Be a role model to girls, young women and any woman interested in starting a business. Look into local organizations in your area or industry that help women learn the ropes of entrepreneurship.