2022 is an important year for women as it marks the 50 year anniversary of female entrepreneurship in the USA. Though the history of women-owned businesses goes way back to the 1700s, the US Census Bureau first mentioned minority- and women-run businesses in their report in 1972. At that time, women owned 4% of businesses in the US.
Skip to today—40% of all businesses (that’s over 12 million) are women-owned, and that number keeps growing. And we are all the better for it! According to research, businesses run by women and companies with gender diversity on executive teams are 21% more likely to outperform on profitability. Women are great leaders capable of passion, compassion, flexible management styles, and efficient mentorship. They are shaping a brighter future, helping to close the pay gap, and becoming role models for the younger generation.
However, while figures may be impressive and inspiring, female entrepreneurs and leaders still face many challenges that their male counterparts cannot relate to. Here are the 6 biggest (and the most frustrating) obstacles women have to overcome on their way to success:
#1 Lack of Funding
Funding is often the key ingredient for business scaling and success. While women-led entrepreneurship grows exponentially, only 7% of venture funds go to women-led startups as of 2021. This clearly speaks of a deeply-ingrained gender bias toward women in business, as many investors tend to trust men startup founders more: men receive funding after their first round in 35% of cases. Venture capitalists often invest in people of ‘their own tribe’, gender playing a big part in their decision. Women-owned businesses, on the other hand, are still perceived as risky.
However, there’s another side to this coin. Women do get less funding, but they are also less likely to ask for funding. Only ¼ of female entrepreneurs seek out investor money against ⅓ male business owners who do the same. The reasons behind this are mainly lack of knowledge and confidence. Women have fewer opportunities to practice presentation and pitching skills to defend their business ideas. Also, they are well aware of the statistics above and don’t want to waste their time and resources on reaching out to investors.
‘When I work with men, they are not scared to ask for money even if what they’re working on is mediocre. Women can have something phenomenal, but it’s like we hold ourselves back.’ Angela Benton, CEO & Founder of NewMe
Thankfully, there are new opportunities emerging every day. Women-empowering organizations such as Astia, Female Founders Fund, and BBG Ventures focus on investing in women-led startups. Run by women, these companies are dedicated to supporting women's talent and growth. Bank loans and crowdfunding can also be great ways to raise money without going to investors.
#2 Gender Bias
It’s widely established that women can be outstanding leaders—perceptive, transformative, compassionate, and bold. Recent research even shows that countries led by women handled the pandemic better. However, very often traits essential for building a successful business, such as decision-making, risk-taking, high self-esteem, and confidence, are considered to be ‘man-only’. As a result, some women even struggle to be taken seriously. A great example of this is the story of two female founders who had to invent a male co-founder to escape sexism when talking with potential employees and collaborators. As unbelievable as it may sound, it worked—and this exposes real issues with perceiving women as bold and independent entrepreneurs.
#3 Limited Support
Mentoring, sponsorship, as well as networking, are all indispensable tools for building a successful business. The waters of entrepreneurship may be treacherous, and without guidance business owners are bound to make costly mistakes.
Unfortunately, it’s much harder for women than it is for men to find the support they need. With the support system being costly ($1000 a year on average) and with the general lack of women in leadership roles, female entrepreneurs tend to lose out on mentorship and networking opportunities. For some, this can limit or even stall their professional growth, which could be easily avoided with a little help and advice.
“It feels really important to me to remember that we don’t have to do it alone, and there’s no lone-wolf way of doing entrepreneurship. We need each other.” Sonya Renee Taylor, Founder of The Body is Not an Apology.
However, there’s no need to feel discouraged. There are numerous networks for women such as The Female Lead, Women Who Startup, and Girls In Tech, not to mention professional groups on LinkedIn and free groups on Facebook. Joining even a small community can be extremely helpful and give you the confidence boost you need.
#4 Limited Access to Knowledge
This one may sound odd, as data shows that women actually have higher levels of educational accomplishments than men. The problem lies in the fact that women and men traditionally choose different fields of education. While men pursue degrees in the more popular and promising STEM sector (Science, Technology, Engineering, Math), many young women tend to self-select out of it. This has nothing to do with their abilities though—rather the way girls are traditionally raised, their lack of confidence, and STEM fields still being male-dominated and viewed as hostile by many women.
This is a big issue, as computer science, technology, and engineering are at the core of entrepreneurship and provide a lot of lucrative business opportunities. Women tend to avoid them and choose to focus on e-commerce, healthcare, and education, which results in gender segregation and pay inequality.
We can solve this issue by encouraging the girls of today to pursue the careers they want, not those they are expected to have. In order for this to happen, not only should education systems change, but policymakers and educators should also recognize the importance of driving more women to the STEM sector. Luckily, UNICEF as well as numerous other organizations around the globe are working together to make this transformation possible.
#5 Work-Life Balance
Women traditionally have more social responsibilities than men. They are viewed as primary caregivers for their children, they’re expected to manage the household and devote time to their families. If a woman also wants to advance in a challenging, focus-demanding career or build her own business, she may soon find herself struggling to keep up. Especially, if she doesn’t have a social support network and has to deal with all the tasks single-handedly.
Entering the path of entrepreneurship while juggling a whole load of other responsibilities may sound risky and unwise, but in reality, it is a great way to arrange more flexible working hours and get more freedom. So women shouldn’t be discouraged from building their own businesses because of social demands.
#6 Lack of Confidence
This challenge may feel small in comparison with some other obstacles, but it is very real. Confidence is a critical quality that helps battle fear of failure, take on risks, and make bold decisions. It’s indispensable, yet lacking in many creative and brilliant women. Research shows that only 63% of women believe they can rise to senior levels when entering the workforce, compared to 75% of men. This phenomenon is known as a ‘confidence gap’ and it’s hurting women’s performance and the scale of their abilities and talents.
The good news is that confidence can be developed in adulthood through practice, knowledge, and experience. But what is important is the fact that confidence stems from childhood and is based on what we are told, the number of available role models and mentors. So the best way to empower women is to support girls from an early age, make female leaders more visible, and provide more opportunities to try and excel at traditionally men-dominated fields and disciplines.
"I used to not like being called a 'woman architect’. I'm an architect, not just a woman architect. The guys used to tap me on the head and say 'you're OK for a girl.’ But I see an incredible amount of need from other women for reassurance that it can be done, so I don't mind anymore." Zaha Hadid, an internationally renowned architect.