Last year, the U.S. experienced record entrepreneurship levels. For the first time ever, the nation surpassed a million establishment openings.
Women, in particular, drove entrepreneurship in the country. According to a report by American Express, 42 percent of all businesses are owned by women, employing 9.4 million workers and creating $1.9 trillion in revenue.
The report found that the number of women-owned businesses increased by 21 percent over the past five years — more than double the growth of all businesses. Revenue from women-owned businesses also climbed 21 percent, compared to 20 percent for all businesses.
“Women entrepreneurs are bolstering the overall economy and will make the economy more resilient should there be a downturn. For both reasons, women are contributing dramatically.” explains Geri Stengel, research adviser for American Express. “And there’s a disparity in the U.S. economy and four million new jobs and $981 billion in revenue would be added if minority-owned women matched white women in the size of their businesses, so that’s bolstering the economy.”
Women of color represent a substantial 89 percent of net new women-owned businesses per day over the past year. Businesses owned by women of color jumped by 43 percent last year. As of this year, women of color comprise 50 percent of all women-owned firms.
“Women of color are really driving the tremendous growth in the women’s entrepreneurship sector. To some degree, it’s catching up,” Stengel said. “Women of color previously weren’t entrepreneurs and now they’re becoming entrepreneurs by the droves.”
Stengel notes that a central driver of this growth is the strength of the economy. After the recession, many women struggled to find substantial jobs and subsequently started businesses out of necessity. But as the economy recovered, more women returned to “activity entrepreneurship” or “sidepreneurship” and pursued ventures that aligned with their passions.
Over the past five years, the number of female sidepreneurs has grown by roughly 39 percent — almost twice the amount of overall female entrepreneurship growth.
“Maybe they want to be semi-retired or they have a passion for crafts or something else and they start a business but don’t want it to be a full-time business,” Stengel said. “Another category is called flexibility entrepreneurship: those are, in particular, women that are starting side businesses because they have caregiving responsibilities. So either their mother is taking care of children or they have elder care responsibilities.”
Arizona is seeing a growth in women entrepreneurs, as well. The number of women-owned firms in the state has climbed by 15.9 percent in the past five years, and revenue from these businesses has grown by 10.5 percent. As of the beginning of 2019, more than 220,000 firms in Arizona are owned by women.
Stengel believes that the growth is tied to the expansion of the Arizona economy. Because of Arizona’s record job and wage growth, more women are able to pursue “sidepreneurship” or “activity entrepreneurship.” That is, they have the financial stability to do so.
“Arizona has a strong economy, so the fact that you have strong growth in women’s entrepreneurship would indicate to me that they’re opportunity entrepreneurs as opposed to necessity entrepreneurs,” Stengel said. “Also, you have a high degree or high percentage of Hispanic women entrepreneurs, so those are women that, on average, would have larger-sized businesses, and it would lead me to think that many of them are flexibility entrepreneurs, so they’re doing this part-time business so they can also manage their caregiving responsibilities.”
According to Stengel, the expansion in entrepreneurship will help bolster the economy should there be an economic slowdown. Because women make up 42 percent of all businesses, this is crucial for both the U.S. and state economies.
“Again, resiliency is really critical, so the more people that you have starting small businesses, the more likely the economy will be resilient should there be a downturn,” Stengel said.