In 2010, women became the majority of the U.S. workforce for the first time in the country’s history. Also, 57% of college students are now women. While men continue to dominate the executive ranks and corporate board rooms, women now hold a number of lucrative careers: they make up 54% of accountants, 45% of law associates and approximately 50% of all banking and insurance jobs. These statistics, which appeared in Hanna Rosin’s Atlantic article “The End of Men,” have prompted considerable attention and debate.
Women are advancing in entrepreneurship as well. An American Express OPEN State of Women-Owned Businesses report found that between 1997 and 2011, the number of businesses in the U.S. increased by 34%, but the number of women-owned firms increased by 50%. That compares to a growth rate of just 25% for male-owned firms and has allowed businesses owned by females to reach 49% of U.S. firms — near parity with their male counterparts.
Why exactly are women advancing so quickly as business owners? Are women better equipped to thrive in this digital age? Is today’s business climate more inviting for aspiring women entrepreneurs?
The “Man-cession” and the Fall of the Single Income Household
The growth in women-owned businesses can partly be attributed to sheer necessity. Increasingly, families must rely on a dual-income household. Following increased unemployment rates and a higher cost of living, women stepped in to supplement household income, often to compensate for an out-of-work spouse.
Men took a bigger hit in the employment market during the recession. Traditionally male-dominated industries, like construction and manufacturing, have been severely affected by the economy. On the other hand, fields traditionally dominated by women, such as healthcare and education, have added jobs. The Bureau of Labor Statistics calculates that women make up more than two-thirds of employees in 10 of the 15 job categories projected to grow the fastest in the coming years.
As the recession hit, job-holding women worked more hours to support their households; and more women became the family’s sole wage-earner. In 2008, employed women contributed to 45% of household earnings — the highest figure in that decade.
The Digital Age and Childcare
Entrepreneurship in the digital age lends itself to childcare, a consideration that affects any discussion of women in the workforce. Young, single, urban woman are outearning their male counterparts; however, this trend reverses as workers age and start families. And even though many companies are replacing “maternity leave” with more gender-neutral “flex time,” it’s clear that working women will always be seeking that balance of career and family.
Virtual workplaces and digitally mobile lifestyles give aspiring women entrepreneurs the flexibility to achieve that balance. Digital tools mean that women can now build a business from home and create unique work schedules.
Essential Skills in the Digital Age
Do women’s strong communication and social skills make them more equipped to thrive in our post-industrial digital age? In short, do women have specific skills — whether the result of biology or social conditioning — that can help them succeed as entrepreneurs? In my experience helping entrepreneurs and small business owners launch their brands, I believe there are several traditionally “feminine” leadership qualities that are more significant now than ever.
1. Women possess strong communication skills and social intelligence. The digital economy requires these skills, and women enjoy a slight edge over their male counterparts (according to numerous studies). Rosin’s article discusses a Columbia Business School program that teaches sensitive leadership and social intelligence, including a lesson in reading facial expressions and body language. “We never explicitly say, ‘Develop your feminine side,’ but it’s clear that’s what we’re advocating,” says Jamie Ladge, a business professor at Northeastern University.
2. Women make good listeners. One study found that the collective intelligence of a group rose if the group included more women. Anita Woolley, assistant professor at Carnegie Mellon University, asks, “What do you hear about great groups? Not that the members are all really smart, but that they listen to each other. They share criticism constructively. They have open minds. They’re not autocratic.”
Whether due to biology or cultural conditioning, women tend to be better listeners and are stronger at drawing people into conversation. This translates to several advantages for the entrepreneur, who can better attune herself to customer needs and build more effective teams of employees, contractors and partners. In fact, many women entrepreneurs often describe building their business as building a team.
3. Women collaborate. Women have worked well together since the earliest female enterprises, whether dividing grains in the village or working in quilting bees. Even some of today’s cultural stereotypes have legs, for instance, women’s joint trips to the restroom!
A 2009 Time magazine article by Claire Shipman and Katty Kay says, “[Women are] consensus builders, conciliators and collaborators, and they employ what is called a transformational leadership style — heavily engaged, motivational, extremely well suited for the emerging, less hierarchical workplace.” The article, entitled “Women Will Rule Business,” cited projections from the Chartered Management Institute in the UK. Looking ahead to 2018, CMI believes the work world will be more fluid and virtual, and the demand for female management skills will be stronger than ever.
4. Women prefer lower risk. Researchers have begun focusing on the relationship between testosterone and excessive risk, thus evaluating whether groups of men spur each other toward reckless decisions. Whether testosterone influences decision-making or not, research shows that, as a whole, women prefer lower risk opportunities and are willing to settle for lower returns.
Risk aversion may go hand-in-hand with motivations for starting a business. A 2007 study from the Small Business Administration (Are Male and Female Entrepreneurs Really That Different?) observes the differences between male and female entrepreneurs in the U.S. The results found that male owners are more likely to start a business to make money, and have higher expectations for their business. Women are more likely to prioritize that business and personal lives work in harmony.
The digital age offers a wealth of low-risk opportunities. Ventures like blogging, web-based services, ecommerce and software development require smaller upstart costs than manufacturing-based, brick and mortar type businesses. Cloud-based tools and virtual workforces further lower the cost of entry, making the idea of starting a business more feasible and/or palatable for risk-averse entrepreneurs.
But a strength can also be a weakness. Yes, the tendency to minimize risk can lead to higher success rates for female entrepreneurs (that 2007 SBA study linked above found that woman-owned businesses were more likely to have positive revenues). However, risk-phobia can also mean women are more likely to limit the size of their businesses, and less likely pursue outside funding from investors to fuel growth (which might partially explain the abysmal discrepancy in VC funding between the sexes).
On average, men-owned firms are larger than women-owned firms. In firms owned by men, twice as many have 10 or more employees, and three times as many have reached the $1 million revenue mark.
It’s up to each individual business owner to define the goals of his or her business. If a woman chooses to pursue a smaller business venture that lets her balance her business and personal life in more harmony, more power to her. For now, I think we should celebrate the growth in women entrepreneurs, but also wonder if woman-owned high growth startups are an under-utilized resource in our economy. It’s time we made space for the underdog — if that term even applies anymore.
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