Before the pandemic, things seemed to be looking better for women in the business sector. From only 402,000 in 1972, the number of women-owned businesses in the United States jumped to 12.3 million by 2018. This means that from 4.6% of all businesses, women now own roughly 40% of all businesses in the US, translating to a tenfold increase within five decades.
However, when the pandemic broke out in early 2020, it affected not just the healthcare sector, but the business and finance sector as well, leaving millions unemployed and thousands of businesses either bankrupt or buried in losses. Unsurprisingly, this includes a disproportionate amount of women-owned businesses.
Women in Business and Finance Sectors
Lost revenues were not unexpected, but many companies can still bank on business trends for 2020 to help them keep their businesses running during the pandemic. Some trends, like e-commerce and online gig work, not only remain to be true but have become even more emphasized due to the pandemic.
Sadly, most women-owned businesses do not get to enjoy the same benefits, mainly due to persisting gender inequality and underrepresentation in the business sector. In fact, while women-owned businesses are steadily growing in number, the revenue share of these businesses is still very minimal. Only $1.8 trillion, or 4.3% of the private sector’s total revenues, are earned by women-owned businesses.
This is especially true in the FinTech sector, where the gap between women and men remains wide. As of 2020, women amounted to only 37% of the FinTech workforce, out of which only 19% hold C-suite positions. Indeed, higher unemployment rates and a greater pay gap are caused by the lack of diversity in the FinTech sector.
Challenges Faced by Women Entrepreneurs Due to COVID-19
In all industries, history has proven time and time again that women tend to bear the brunt of economic impacts during crises, like the COVID-19 pandemic.
1. Increased Unpaid Care Work
Since other members of the household are confined to the house due to the pandemic, the care demands of the household have also increased. With support services like domestic help and daycare facilities affected by the pandemic, women, being the bearer of the majority of responsibilities at home traditionally, have increased in domestic workload.
Due to this, they’re forced to lessen the time they can spend on their own businesses. Studies show that women have been spending an additional two hours a day on unpaid work at home than men during the pandemic.
2. Disproportionate Gender Distribution In Impacted Sectors
In the US, half of the women-owned businesses are mostly in “other services” sectors such as salons, pet care, healthcare, and social assistance, as well as professional, scientific, or technical services. Women are also more likely to launch businesses within the healthcare or education sector, more so than men.
However, businesses in these sectors, especially in small and growing businesses (SGBs), have been severely affected by the pandemic, mainly because of the new physical distancing measures. The new regulations prompted the temporary closing of stores, and according to a recent survey, women-led businesses are twice as likely to consider permanently closing their shops.
3. Lacking External Investment
Even before the pandemic, there were already existing gender biases among investors. About 54% of female entrepreneurs in the US have experienced gender bias from investors while raising capital for their businesses, such as getting asked unnecessary questions about family circumstances and their credibility as business leaders.
Despite the persistent gender funding gap, however, more and more women are starting businesses. In fact, according to SCORE’s recent report on female entrepreneurs, The Megaphone of Main Street: Women’s Entrepreneurship, women-owned companies now make up 39% of the 28 million small businesses operating in the United States.
4. Assumption Of Equality And Equity
After years of campaigning against the social constructs imposed on women, female entrepreneurs’ challenges in their respective industries have become so subtle that gender inequality and inequity have gone unnoticed by many, even by other women.
Unlike their male counterparts, women entrepreneurs have plenty of social expectations to defy in the workplace. Respect and reputation are harder to earn for women, and the confidence gap between the two sexes is becoming even wider.
COVID-19 Support for Women Business Owners
It’s been 25 years since the Beijing Declaration and Platform for Action, once the most progressive advancement of women’s rights, was adopted to improve the situation of women in the workplace. While it did help women entrepreneurs to thrive better than ever, the playing field remains unequal, and men still have the upper hand.
As mentioned above, one major challenge encountered by women entrepreneurs, especially during COVID-19, is gaining enough capital for their businesses. Already burdened by investor bias, women have been hit by the pandemic with a significantly larger decrease in revenue than their male counterparts.
But luckily for women-owned businesses—many of which require low levels of capital and are more reliant on self-financing—there is a solution that could help alleviate their problems. And this solution comes in the form of FinTech innovations.
FinTech lenders have recently started a new model of lending for Small and Medium Enterprises (SMEs). Using advanced analytics platforms and artificial intelligence to assess the data available, FinTech lenders can quickly determine which businesses are worthy of receiving loans, regardless of whether a man or a woman owns it. The system merely has to look at how risky or creditworthy the venture is, and it can grant approved loans in as little as 24 hours.
This new model is not only easier and faster for lenders, but also more accessible to women entrepreneurs who want to take their business to the next level.
In addition to this, FinTech lenders are also creating new payment structures to allow SMEs and micro-entrepreneurs to make and receive payments easily. Subsequently, this makes online transactions easier to track. This is certainly helpful for women entrepreneurs since analyzing the consumer pattern for sales can help them develop an effective strategy for making their business even more successful and profitable.
For businesses, an online presence is now a must and not just an advantageous feature. Going digital allows businesses, in general, to remain connected to their customers through hygienic contactless transactions, despite strict social distancing guidelines and other pandemic-related regulations.
Getting Back Up
Businesses around the globe suffered greatly due to the pandemic, in more ways than one. But if women are enabled and given equal opportunities in entrepreneurship, the global GDP could rise by $5 trillion. This is enough to regain the world’s economic footing and at the same time, show that women entrepreneurs, crisis or not, can make it as well.