A new survey released this week by LegalZoom shows women taking the lead in launching new U.S. small businesses. This is in spite of challenges that include unequal access to funding support.
The survey of 1,009 conducted in June-July (including 505 business owners), found that 73% have been in business for three years or less. From this, LegalZoom infers that women have played a key role in driving recent growth in small business formation. The pandemic no doubt also contributed to this surge, which is not inconsistent with the growing number of women starting businesses.
As for access to funding, Legal Zoom cites a Congressional report that found that just 4% of women today have access to traditional sources of small business funding.
Legal Zoom cites this fact to explain why most (85%) female-owned small businesses begin as side hustles. The lack of access to funding also explains why so many women-owned SMBs are self-funded. In fact, 60% of women-owned SMBs are self-funded and another 15% rely on loans for friends or family.
“Forming a small business is empowering no matter what and when you see how many women are forging ahead with their business plans despite the inequities in funding and support,” said Catherine Davie, Head of Social Impact and DE&I at LegalZoom. “It inspires and empowers others who dream of doing the same thing.”
Keeping the Day Job
Many of these businesses remain side hustles, at least for now. The survey found that 69% of women still maintain their day jobs while running their businesses.
These hurdles have also played a role in convincing some women to forego the opportunities that come from entrepreneurship. Among women who have considered starting a business but haven’t done so, 55% cite lack of money as the reason.
Yet women don’t appear to be in it for the money. At least not primarily. “Being their own boss” was the top reason women cited for becoming entrepreneurs. And young women have entrepreneurship on their minds. Among millennials and GenZ women, 56% of those not already running their own businesses are considering doing so.
According to LegalZoom, women say the top three definitions of a successful career are work/life balance (60%), ability to work on a passion/interest (57%), and ability to control their hours (50%). Only 15% defined success as becoming a big shot in a corporate environment.
Committing $6M to SMBs
LegalZoom also announced the second “Fast Break for Small Business” grant cycle this week. The program, a partnership with the NBA, WNBA, and NBA G League, so far has awarded $10,000 grants to 50 U.S. small businesses. Nearly 40 of the businesses are women-owned. The grants are part of LegalZoom’s commitment to providing more than $6 million in grants and services to support U.S. small business owners.
