At a crossroads

Entrepreneurs are a different breed. Determined, innovative, fearless, inspired – perhaps even a little crazy. Here’s how Debbi Fields, founder of Mrs. Fields cookies, described her entrepreneurial spirit: “The important thing is not being afraid to take a chance. Remember, the greatest failure is to not try. Once you find something you love to do, be the best at doing it.” For women seeking to launch their own business, many of the traits are not only magnified but regularly challenged, as a business culture primarily influenced by men in crucial leadership roles resists female entrepreneurs in countless ways, from access to investment capital to a startup culture still dominated by an exclusionary “boys club” mentality. And just as women were making significant statistical strides in launching new business ventures in recent years, a massive elephant entered the picture in early 2020 – the COVID-19 pandemic and its disproportionate impact on women-owned businesses. That impact was due primarily to two key factors: The types of businesses owned mainly by women and the societal norms that continue to task women as caregivers and educational facilitators, forcing countless numbers to leave the workforce to handle family matters. So, where have women entrepreneurs been, and where are they going? The crystal ball is a bit murky, but many leaders say there’s substantial reason for optimism. Strong gains pre-pandemic Women-owned business numbers have been surging for several decades. As of December 2020, 12.3 million women-owned businesses were registered in the United States, as compared with just 402,000 in 1972, according to a Fundera report. The same report indicated nearly 40% of all U.S. businesses at the time were owned by women. Those businesses were generating $1.8 trillion a year. In addition, women were launching a net 1,821 new businesses every day in 2020. “Women in business are a driving force in the nation’s flourishing economy,” the Fundera report concluded. “The U.S. economy is increasingly reliant on the work and devotion of female entrepreneurs. Women are starting and running businesses at a stunning rate—and they’re doing so with demonstrable skill and expertise.” “The trend in general, pre-pandemic, was that women were opening businesses at an even faster rate than men,” said Michele Williams, assistant professor of management and entrepreneurship in the University of Iowa’s Tippie College of Business and John L. Miclot Faculty Fellow in Entrepreneurship at the John Pappajohn Entrepreneurial Center (JPEC). Ms. Williams also pointed to another stunning statistic from a 2019 analysis conducted by the Boston Consulting Group and encompassing 73 countries: If women and men worldwide participated equally as entrepreneurs, the global GDP could rise by approximately 3% to 6%, boosting the global economy by $2.5 trillion to $5 trillion. “However,” the report indicated, “unleashing the power of women entrepreneurs will require action from a range of groups, including venture capitalists, nonprofit organizations and corporations. These efforts must address a critical and at times overlooked issue: The lack of networks that effectively support and mentor women entrepreneurs.” Those networks have been historically slow to coalesce, and while initiatives have been launched on statewide and national levels, results have been mixed at best. Despite the successes on a national scale, Iowa lagged in national reports on women-owned businesses. For example, the OPEN report, released by American Express in 2015, ranked Iowa 51^st nationally in terms of the economic clout wielded by women-owned companies – a measure calculated by combining the growth of women-owned businesses with the growth in their revenues and employment levels. The same report showed Iowa also had one of the lowest growth rates in women-owned businesses from 1997 to 2015. At just 27%, the rate ranked 49^th nationally. The most recent version of the OPEN report, in 2019, improved Iowa’s ranking for women-owned businesses to 24^th nationally – a marked improvement, but not a direct comparison, since the two reports used different assessment criteria, according to Jayne Armstrong, director of the Iowa district office of the U.S. Small Business Administration. Pandemic’s massive impact Like nearly every economic demographic, women-owned businesses were hit hard when the COVID-19 pandemic slammed the figurative and literal doors on many business ventures. It’s still too early to glean detailed statistics on the pandemic’s overall economic impact. Still, it’s clear that women-owned businesses suffered a disproportionate body blow when the shutdown took hold. Many were forced out of business altogether, while countless others face an uncertain future as the economy crawls back into gear. The primary reasons were, and are, two-fold, Ms. Williams said – the traditional societal role of women and the types of businesses they predominantly own. “One of the biggest issues with the pandemic was that women have more responsibility for childcare in their homes,” Ms. Williams said. “When the schools closed, that put another burden on women-owned businesses because they were being tasked with homeschooling and running their businesses at the same time.” Also, Ms. Williams noted, “women-owned businesses tend to be more heavily in retail and restaurants and education and the areas of our economy that were totally closed down by the pandemic. So that hit women-owned businesses hard -- not because people had any animosity against them, but they do tend to be more heavily in the industries that were hit hardest by not having malls open and requiring social distancing.” More than 21% of women-owned businesses nationally have experienced pandemic-related revenue loss, according to a Guidant Financial report titled “Women in Business: 2021.” The report also indicated that 12% of owners temporarily closed their business during the pandemic, 11% reduced their budget, 9% cut their own wages, and 11% had to furlough or lay off employees. A brighter horizon Most experts agree that women-owned businesses are poised for a significant post-pandemic rebound, as service businesses, marketing firms, small retailers and other business categories with high women-owned proportions see their fortunes begin to rise. “Women-owned businesses are bouncing back,” said Ms. Williams of the Iowa SBA. “When you look at different industries where women-owned businesses are predominant, the economic devastation a lot of them faced was is very real. But we were doing a lot of work with them. Everybody was reaching out to us, and we were connecting them to resources. It was truly a collaborative model. The old African proverb ‘it takes a village’ is really true, and I think everybody is coming together to support the local small business communities around the state.” Cami Hunter, president of the Women in Business student group at the University of Iowa, pointed to her group’s focus on mentorship programs pairing UI students with female business leaders, as well as professional development opportunities and guest speakers, as reasons for optimism from her generation. However, she also noted that it’s incumbent on the community to support female entrepreneurs’ efforts. “Shining a light on their stories and trying to lift up women entrepreneurs and women business owners is really important,” Ms. Hunter said. “As for our organization, a lot of times, the entrepreneurial perspective gets overshadowed by speakers that don’t necessarily own their own business. One of my goals moving forward is to try to have more connections with women-owned businesses within the Iowa City community. “There are more opportunities for women to succeed in the business world today, and I think that’s an exciting thing,” she added. “There are always obstacles and barriers that can be further broken down, but from my perspective, I feel empowered that there is a lot of opportunity out there for me. It’s excited me to be a part of Women in Business because I feel like we’re breaking down barriers for future female leaders.” “It’s challenging, to be certain, what the current overall health of the women-owned business environment looks like until 2022,” said Jamie Toledo, economic development relationship manager with the Cedar Rapids Metro Economic Alliance. “What we do know is that before COVID hit, women-owned companies were growing five times faster than the national average and accounted for 42% of all U.S. business. As a critical component to overall economic health, disparities such as access to financial support, childcare and mentoring are essential. The Economic Alliance is working collaboratively in this space with our economic development partners, as alliances for women-owned businesses will be crucial for their survival.” Ms. Williams struck a particularly optimistic tone. “There are so many opportunities,” she said, “and the more that we pull together as a community to support women-owned businesses, the more positive the future will be. I don’t think we realize how much women-owned businesses benefit from just our patronage, as well as considering women-owned businesses as a good place for employment. If we focus on those factors, we can really support our women-owned businesses moving forward.”