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We all have read dozens of articles on the lack of funding, support and resources for women entrepreneurs. And this year, the UN is reporting that the anticipated time to reach gender parity has increased to 300 years — partly due to the high toll the pandemic took on women in the workplace. From wages to leadership, the progress toward equality is going in the wrong direction.
At the same time, there is a lot of excitement around the recent increase in the number of women investors who have entered the market and created funds dedicated to providing capital to women-led ventures. On the surface, this is excellent news. Looking more closely at the data shows that within this time timeframe, women entrepreneurs received less funding in 2022 than in 2021. It makes you wonder where all those new, women-led investment funds are putting their money.
In addition to capital, women entrepreneurs need other resources. They need strong mentors. They need technology, active and influential networks and advocates, media coverage and supportive government policies.
Imagine what a thriving community of women and men-led businesses our economy would have if we all had the same starting line. Imagine the economic engine we could unleash if women were given access to capital without bias. It has been proven repeatedly that women-owned or led businesses outperform the market. The first result of women’s businesses getting funded would be a significant increase in returns on investments by VC, banks, and other funding sources. Why do these financial institutions continue to invest 98% of their funds in underperforming businesses — those owned and controlled by all male structures?
Imagine if women-owned businesses had real access to government contracts without the thousand-and-one hoops we have to jump through just to be “qualified.” As a small sample: to be eligible to apply for federal contracts, women-owned businesses must complete a comprehensive certification process to prove that they are at least 51% women-owned. The certification process is time intensive and costs thousands of dollars annually. Yes, you need to pay to prove you are at a disadvantage. There is no process for men-led businesses to be considered for federal contracts. Therefore there is no cost to apply.
The goal for government contracts awarded to certified women-owned businesses is 5% of total contracts. In the past three decades, that seemingly achievable goal has been reached only TWICE! Having BILLIONS of dollars in federal contract revenue would change the face of women-led businesses and allow them to reinvest in growing their companies, increasing their workforce, providing health and childcare to their employees, expanding their investment in current technology and untold other benefits to our economy and their lives.
In 2021, the US government spent $637 billion on contracts. If we could even reach five percent of that, it would inject almost $32 billion into women-owned businesses — and re-energize the fastest-growing segment of small business in the US.
What if women-owned businesses had other resources that typically are leveraged by their male counterparts? Mentors, business networks and referrals play enormous roles in the success of a business. Consistent feedback from women business owners is that they struggle to find mentors and that many networks established for women entrepreneurs end up being costly to join. They also can be insular, with the group members trying to sell to one another rather than collaborating and expanding the overall customer base.
Women are experts at building community. We couldn’t juggle our lives as deftly as we do without it. Expanding the number of strong, connected, active business networks to intentionally focus on bringing in women leaders would open the field. Let’s look at how networks operate and serve women business owners rather than the model of individualized coaching women to fit into established systems and processes. Coaching is great. We can all use it sometimes. But it won’t expand business networks and unleash amazing, creative and inclusive businesses.
With a supportive structure, more women-owned or led businesses would grow and become visible in the larger economy, rather than being the “unicorn” everyone points to as proof that women have “arrived,” despite the ugly stats that undermine that argument every single time.
What if corporations that pledged to set diversity, equity and inclusion (DEI) goals followed through and spent those funds on products and services procured from women-owned businesses? In 2019, 56% of Fortune 500 companies set DEI goals following the publicity of the #metoo movement. But less than 7% created a plan to follow through with those pledges. And there is no report on the actual dollars invested or progress made toward their goals.
Today, women-owned businesses (after achieving the difficult and expensive required certifications) are invited to list their businesses on these large company vendor portals. Still, there is no tangible measurement of how much business is transacted with these certified companies. Corporations spend millions of dollars each year on gifting alone. If even a small percentage of that spend was directed toward women-owned businesses, it could have a meaningful impact on the health and longevity of those businesses with a real impact on their local communities.
Enough imagining. Let’s look at the data. The question posed is: What if capital and resources were directed to women-owned businesses? The answer is simple. Data for over 20 years illustrates that women-owned or led businesses outperform the market (AKA men-owned businesses). There is plenty of evidence that women-owned businesses invest more heavily back into their communities and their families, resulting in better community health and education for their children and families and more prosperity in their communities.
Like many places in the world, the United States is facing a challenging economy. If we were to simply support the businesses that data tells us to outperform the overall market, it could jump-start a new cycle of growth and prosperity – and start moving us back in the right direction: toward equality.