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Four Reasons Why Women Entrepreneurs Are a Force to Be Reckoned With

Women entrepreneurs are moving into the mainstream of American business—and changing it for the better. For women contemplating starting their own business, it may be time to take that leap of faith. Here are four reasons to be optimistic regarding the future of women in business.

  1. There is strength in numbers. Women-led businesses were once a rarity. Now, there are more than 9.1 million firms are owned by women. These firms employ nearly 7.9 million people and generate $1.4 trillion in sales, according to The State Of Women-Owned Businesses, 2014, commissioned by American Express Open. From 1997 through 2014, firms owned by women grow at 150 percent of the national average—which translates into an average net increase of 591 women-owned firms each day. What’s more, the Kauffman Foundation has found that start-ups have declined as the economy recovery has gained ground—but that the decline is largely attributable to fewer male-led startups. Women are continuing to found businesses, even as the economy gains steam.

  2. Venture capital is increasingly available. While male-led firms still receive the lion’s share of venture capital (VC) investments, the lionesses are starting to claim their portion. Peter Fogel, writing for PitchBook Blog, reported that women-founded businesses have increased their share of VC deals from only 4 percent in 2004 to 13 percent in 2013. Women have made the most dramatic gains in the Retail and Consumer Services sectors, which are traditionally the “sweet spot” for women-owned businesses. Funding in the technology sector continues to lag behind men, receiving only 10 percent of technology sector funding. Even that is poised to change with the emergence of VC firms, such as Astia, are focused on offering women entrepreneurs increased funding opportunities in technology, life science, and health sectors.

  3. Women-led companies “live long and prosper.” Although women are historically underrepresented at the senior executive or founder level in companies, those with women in power are more likely to succeed. Starting a company is a risky business, but having women at the helm dramatically improved the odds for success. According to “Women at the Wheel: Do Female Executives Drive Start-up Success?” (published by Dow Jones VentureSource), 61 percent of start-ups with at least five female leaders were successful; only 39 percent failed.  What’s more, a widely quoted study entitled “Women in Technology: Evolving, Ready to Save the World” found that women run more technology companies more efficiently (with a 35 percent higher return on investment) and profitably (with 12 percent more revenue than male-led technology companies).

  4. Women excel at business skills. Part of the success of women-led ventures can be traced to qualities that many women naturally possess: the ability to multi-task effectively, to operate in a relational manner and to build teams—soft skills that are increasingly important in today’s business climate. And, these innate abilities of women are not just an urban myth. A 2011 study conducted by Zenger Folkman, a company specializing in strengths-based leadership development, concluded that women scored significantly higher on 12 of the 16 leadership competencies explored. As expected women ranked higher on the competencies: “inspires and motivates others,” “builds relationships,” and “collaboration and teamwork.”  What came as a surprise to the researchers was the counter-intuitive finding that “the competencies with the largest differences between males and females were 'taking initiative,' 'practicing self-development,' 'integrity/honesty,' and 'driving for results.' Women, it appears, are well-suited to run businesses—a statement supported by the previously mentioned research on the effectiveness of women-led companies.

As the economy brightens, the environment for business success improves. For a woman contemplating starting a business, this could be an ideal time to take that leap of faith.

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