If you were on a Zoom call with me in the last year, you've probably seen my kids run across the frame. Or my mom standing in between me and the camera. Or my dogs tossing a ball at me. Multitasking has become a constant as I try to juggle investor calls, monitor virtual schooling, and attempt to maintain my sanity.
Versions of this scenario are why many are using the term "she-cession" to describe the economic effects of the pandemic on women. We're the ones picking up the slack as mothers, educators, and caregivers--and we're the ones leaving the workforce. Job figures have recorded a steady rebound for men's employment, but recent data show that there are 2.1 million fewer working women than a year ago.
Previous recessions tell us that many of these women will become what's called "necessity entrepreneurs," who are pushed to start a business because it is the best (or only) option available. I see that behavior as a huge opportunity: How can we further incentivize small business ownership for women and add to the estimated 12.9 million woman-owned businesses that exist today?
With women at the heart of the New Majority of entrepreneurs, Hello Alice teamed up with EnrichHER and the National Association of Women Business Owners (NAWBO) to create an impact report examining the current state of female founders using anonymous user data compiled from the roughly 123,000 woman-owned businesses on our platform. The report identifies who female founders are, the challenges they face, and solutions to their greatest problems.
"Women face the same burnout, exhaustion, and strife as all professionals," writes NAWBO National Board Chair Cristina Morales Heaney in the report's opening letter. "But, for the woman business owner, it is a unique journey. Many face solitude and struggle to find confidence. Women business owners need trusted companions and a support network to tread the often lonely and challenging entrepreneurial path. Beyond the pandemic, we need to ensure that no woman feels isolated and is left trailblazing alone."
There's a lot of work to be done to live up to that future. Here are some strategies for us all to support the current batch of female founders and help thousands more follow in their footsteps.
Spread the gospel of entrepreneurship.
Becoming a small business owner is one of the best ways for women to reverse the damage of the last year. If you look to the aftermath of the last recession, minority and women-owned businesses kick-started the recovery through job creation, and it was Black women who became the fastest-growing group of entrepreneurs in the county (a fact I never get tired of repeating).
The U.S. Census Bureau already recorded a historic uptick in the number of new small businesses throughout 2020, and research shows that new companies will create the majority of new jobs. Growing the ranks of female founders will put women in the driver's seat of their own destinies, and create opportunities for the scores of women they will inevitably hire.
That uptick in female founders partially relies on individuals taking risks and betting on themselves, but a growing ecosystem is ready to help them succeed. Accelerators from EnrichHER, Female Founder Initiative, digitalundivided, and others develop female founders and connect them with investors. Organizations like SCORE are here to match them with a mentor. And there are more than 123,000 women in the Hello Alice community ready to share advice and find solutions.
Advocate for a woman-owned business.
You should never underestimate the power of a social connection. Around 83 percent of individuals trust recommendations from friends or family. Our data reflects that behavior, with 40 percent of women-owned businesses on Hello Alice ranking customer referral as their number one acquisition channel.
It may feel trite to say posting on social media about your favorite woman-owned business can make a difference, but the numbers don't lie. Share their posts on Instagram. Give their products as gifts. Leave them glowing reviews on Yelp. However small the act is, every bit helps female founders grow their businesses!
Claim every dollar.
At this point, we should all be aware of the stark gender funding gap. Only 2.3 percent of venture capital funding went to female founders in 2020, and women apply for and receive business loans at rates lower than men. Among Hello Alice users, 57 percent of female founders rely on personal savings, limiting their ability to grow and adapt to unforeseen circumstances like a global pandemic. One of our most predictable findings is that women on Hello Alice report raising capital as the biggest challenge they face as small business owners.
We are slowly closing that gap, one dollar at a time. Our elected leaders are rising to the challenge with recent rule changes to the Paycheck Protection Program, which benefit the industries and business structures most common among female founders. Grant programs from organizations like KKR and Fearless Fund are channeling dollars with an emphasis on women. Once you acknowledge these developments in tandem with February's wildly successful IPO of Bumble--a company led by the youngest woman to ever take a company public--and I simply can't wait to see what the coming boom in female founders will accomplish.