How Women Business Owners Fuel the Economy
A study released in 2015 by McKinsey Global Institute discovered that advancing women's equality could add $12 trillion to the global economy in as little as ten years. That's a rousing statement, and one worth investigating. It means the potential of women in business is being overlooked worldwide. Essentially, women business owners drive the global economy. Women make up approximately half of the workforce-aged population of the world, but only generate about 37% of the world's GDP. There are three main factors at play:
1. Globally, there are 10% fewer women in the workforce than men.
2. Women tend to work fewer hours than men, in part-time positions. 3. Women are usually relegated to service positions in lower-productivity sectors, like healthcare, education, hospitality, and agriculture.
Women Are Underestimated in the Business World
Research shows that despite receiving less on average from investors, women-owned startups consistently deliver more than twice as much per dollar invested than companies with all-men teams.
Women Are Underrepresented in Business Ownership
As of 2017, there were 11.6 million firms in the United States owned by women. They employed nearly nine million people, and generated nearly $1.7 trillion in sales. These sound like big numbers, but they translate to only 39% of all privately owned firms, 8% of employment, and 4.2% of revenue. Only 4.2% of women-owned businesses have a yearly revenue of a million dollars or more, a disparity this free community of women in business actively fights to change.
Women Are Underrepresented in Leadership Roles
Women have outnumbered men on college campuses since 1988, earning more than 57% of undergraduate degrees and 59% of master's degrees. They earn nearly half of all law and medical degrees, and account for 52.5% of the college-educated workforce in the United States.
In the legal profession, women make up 45% of associates but only 22.7% of partners. In the medical world, they are 40% of all physicians and surgeons but only 16% of permanent medical school deans. They represent 61% of accountants and auditors, but only 12.5% of chief financial officers in Fortune 500 Companies. They hold only 7% of top executive positions in Fortune 100 companies, and lead only 9% of venture capital deals.
What the Economy Gains from Women-Owned Businesses
Aside from the aforementioned growth to the GDP, the economy stands to benefit a lot from making women equal to men in the workforce. Women tend to be more focused on teamwork and developing the careers of others than are men. This means women create future leaders within the company and build confidence and camaraderie among the workforce. Employee turnover of the millennial generation alone costs the US economy an estimated $30.5 billion annually, and millennials are going to make up 75% of the workforce in 2025. Keeping employees happy, and feeling as though they have a purpose and development potential within the company, are extremely important for employee engagement. And, statistically speaking, women in leadership roles facilitate this environment better than their male peers.
They also tend to be better at receiving and implementing feedback, while men are more likely to push back against criticism. And women are more conservative with their estimates, while men are more apt to be overconfident, and overpromise.
Women also come up with business ideas that are unique and challenging, and often relate to products or services that men, particularly wealthy investors and C-suite executives, cannot relate to on either a gender or socioeconomic level. When decisions are made by a room full of people with the same background and life experience, it sounds like an echo chamber. When you introduce other types of people, you introduce other types of ideas, and can really start exploring progress.
On assessments of essential leadership skills like problem solving, innovation, resilience, and teamwork, women consistently score higher than their male peers. Out of 19 categories determined by Harvard Business Review, women scored higher in 17 of them.
It is well-documented that women-owned businesses and women-led departments have high efficiency and lower turnover rates, which equal big profits for their businesses. If more companies were owned by women, then better decisions would be made more often, and the economy would be directly impacted by the success of these businesses.