New data from Gusto reveals that women started 50% of all new businesses in 2023, a significant increase from 29% in 2019. This surge contributes to a post-pandemic small business revival in the U.S., where more new businesses were launched last year than ever before.
Female entrepreneurs are key drivers of this growth. Women-led businesses have shown remarkable resilience to economic challenges, generating $2.7 trillion in revenue in 2023, despite high inflation and interest rates. This marks a significant recovery for women entrepreneurs who were disproportionately affected by the pandemic.
One primary reason women are starting businesses at record rates is the pursuit of flexibility. According to Gusto, 70% of women who started a new business in 2023 cited flexibility as their top motivation. They also mentioned the need to supplement household income, build financial assets, and address job losses in their households. Flexibility is crucial for women who disproportionately bear caregiving responsibilities, and the high cost of childcare makes flexible work arrangements essential.
Furthermore, women entrepreneurs are seeking to increase their earning potential. As of 2024, women in the U.S. earn 71 cents on the dollar compared to men. Women are also 15% less likely to receive promotions than men, despite having similar ambitions. Starting their own businesses allows women to overcome systemic gender biases and achieve greater financial success. Studies show that women-founded businesses generate higher revenue and create more jobs than those founded by men, stimulating economic growth.
Women’s interest in business ownership also stems from a desire to do meaningful work. Nearly 71% of female founders in the U.S. are motivated by the wish to make a difference. In 2023, a third of women-owned businesses were in Community Services, compared to 19% of male-owned businesses. Additionally, 40% of U.S.-based B Corps, recognized for their social and environmental performance, are run by women.
The motivations for women turning to entrepreneurship have evolved. During the pandemic, immediate financial concerns drove many women to start businesses. By 2022, flexibility became the primary reason. This shift suggests a sustainable increase in female entrepreneurship, rather than a temporary response to economic pressures.
However, systemic barriers such as inequitable access to private funding and high childcare costs persist. Recent Gusto data shows that among entrepreneurs seeking private capital, 54% of men received it compared to 28% of women. To sustain the growth of women-founded businesses, banks must build relationships with more female entrepreneurs, corporate leaders should advocate for paid family leave, and policymakers need to increase funding for Women’s Business Centers.
Women’s entrepreneurship continues to thrive, driving significant economic growth. Ensuring the right policies and practices are in place will be crucial for their continued success.
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