Seven critical learnings about women entrepreneurs

Funding remains difficult for women-led businesses. That’s holding leaders back from progressing toward a more sustainable future for all.

In brief

• Women entrepreneurs continue to struggle to raise capital compared to their male counterparts. However, emphasizing their sustainability policies can help.²
• We cannot afford to lose out on the possibilities that female-driven entrepreneurship creates.
• These business visionaries generate purposeful solutions that our communities and society so desperately need to create a more sustainable future.

Women-owned businesses that secure funding show better returns on investment (ROI) and tend to be in business longer than those owned or founded by men. What’s more: they purposefully develop goods and offer services that seek to make life better for everyday people.¹ But year after year, and decade after decade, the world is losing out on the full lift of that potential. Why?

Seven critical learnings on women-led entrepreneurship

1. While access to capital for women in fundraising is still lacking, sustainability activities can help.

2. Integrating profits and purpose matters to women.

Among the entrepreneurs and founders we interviewed, all showed a distinct focus on connecting profits and purpose. Most indicated that their lived experience directly influenced the decisions they’ve made regarding their business. This is not a new finding. Other research indicates that women start businesses to address gaps they see in daily lives, layering in nuance and depth as to how the business operates. Still, too often, the idea that women focus businesses on gaps is relegated to assumptions about the type of products and services they deliver (i.e., personal care services, health and welfare services, educational assistance). But that’s not necessarily the case. Through interviews and survey results, we found that women-owned businesses often address gaps not through specific products, but rather, specific hiring. For example, one entrepreneur surveyed said that her Texas-based sales consultancy company specifically hires mothers with children who have experience in sales support and empowers them with flexibility and autonomy to get projects completed. Another entrepreneur in Maryland said that her roofing company focuses on hiring women and people of color to build long-term workforce stability. In Wisconsin, the entrepreneur behind a public relations and media company explained the internship program she’s started with Historically Black Colleges and Universities (HBCUs) and local high schools. The goal? Ensure diverse hiring.

3. Business leaders define sustainability differently.

In many ways, sustainability definitions are still taking shape in the market itself. But through our research, we saw a significant disconnect between the way women business owners and founders understand sustainability and what is actually included in the industry-facing definitions we used as part of our framework. Nearly all survey respondents shared actions and efforts they’re undertaking to support communities — which is a critical aspect of sustainability itself. And yet, just over two-thirds (68%) of survey respondents explicitly said they had some formal plan to impact their environment or community. It seems many of the entrepreneurs we spoke to may not have a clear enough understanding to correlate their concerted efforts across this space back to sustainability itself.

4. Women value and prioritize diversity.

Across our research, we saw a vested interest in fostering diversity. Some 89% of the entrepreneurs we surveyed have committed to hiring diverse individuals. Another 86% say they’re purchasing from diverse suppliers; the majority are focused on buying from other women and women-owned businesses. Women-owned businesses frequently source from diverse suppliers and are key to economically accelerating other businesses owned by people from historically marginalized backgrounds.

5. Virtual services enable wider reach and fuel environmental benefits.

The women-owned businesses we polled don’t necessarily work in close geographic proximity to suppliers and customers. By the numbers, only 13% of enterprises said at least half of their suppliers are within a five-mile radius of the business. Just 12% cited that 50% or more of their customers are that close. Still, the increased ability to deliver services virtually is enabling these businesses to widely share economic gains while addressing environmental concerns. What’s more, they’re focused on making a positive impact on the environment. The majority of our survey respondents have formal plans outlining community and environmental components of their operational impacts. It was more common to see the community and environment interconnected in a holistic plan; fewer businesses had stand-alone plans exclusively focused on environmental efforts.

6. Giving back plays a starring role at women-owned businesses.

Making an impact can take all sorts of shapes and forms. Among women-owned businesses we surveyed, this aligns to the US national average of small business charitable donations, pegged at about 6% of pretax revenue (although our survey also included volunteer hours). Those contributions go a long way to making a sustainability impact that the market is looking for — including top talent. In fact, the benefit of volunteering for enterprise is becoming more accepted and is now a key element in millennials’ choice of employer. This is good news for women-owned businesses, who overwhelmingly told us their primary means of giving back is through volunteerism. This is consistent with the trends in the US that suggest women are more likely to volunteer than men.¹⁰ The value of an hour of a business owner’s time is significantly higher. The average for our respondents is 12 hours a month (approximately $400 value). It is important to note that many reported that mentoring other women and other entrepreneurs was important to them as well. This could be a major factor in attracting and retaining talent, all while making a positive sustainability impact.

7. Women entrepreneurs feel responsible for community-building.

While it was critical to understand what the businesses provide, we also examined the level of commitment by the owners themselves. Seventy-four percent of respondents stated they feel an increased level of responsibility to their community because they own a business. Those who indicated they felt an increased level of responsibility to their community, demonstrate their commitment with personal action.

Where do women-owned and founded businesses go from here?

In many ways, women-owned and founded businesses are already making significant strides and positive sustainability impacts. As the market continues to underfund female entrepreneurs — and a business landscape where stakeholders are increasingly interested in sustainability outcomes — that represents a meaningful opportunity for these enterprises.

Formalizing existing sustainability efforts can catalyze additional positive outcomes for the customers, clients and communities these women-led businesses serve. Doing so with an eye to reporting clearly and consistently can also help these businesses carve out a competitive advantage with decision-makers — including investors, employees, allies and more.