A study released in 2015 by McKinsey Global Institute discovered that advancing women's equality could add $12 trillion to the global economy in as little as ten years. That's a rousing statement, and one worth investigating. It means the potential of women in business is being overlooked worldwide. Essentially, women business owners drive the global economy. Women make up approximately half of the workforce-aged population of the world, but only generate about 37% of the world's GDP.
What the Economy Gains from Women-Owned Businesses
Aside from the aforementioned growth to the GDP, the economy stands to benefit a lot from making women equal to men in the workforce. Women tend to be more focused on teamwork and developing the careers of others. This means women create future leaders within the company and build confidence and camaraderie among the workforce. Employee turnover of the millennial generation alone costs the US economy an estimated $30.5 billion annually, and millennials are going to make up 75% of the workforce in 2025. Keeping employees happy, and feeling as though they have a purpose and development potential within the company, are extremely important for employee engagement. And, statistically speaking, women in leadership roles facilitate this environment better than their male peers.
They also tend to be better at receiving and implementing feedback, while men are more likely to push back against criticism. And women are more conservative with their estimates, while men are more apt to be overconfident, and overpromise.
Women also come up with business ideas that are unique and challenging, and often relate to products or services that men, particularly wealthy investors and C-suite executives, cannot relate to on either a gender or socioeconomic level. When decisions are made by a room full of people with the same background and life experience, it sounds like an echo chamber. When you introduce other types of people, you introduce other types of ideas, and can really start exploring progress.
On assessments of essential leadership skills like problem solving, innovation, resilience, and teamwork, women consistently score higher than their male peers. Out of 19 categories determined by Harvard Business Review, women scored higher in 17 of them.
It is well-documented that women-owned businesses and women-led departments have high efficiency and lower turnover rates, which equal big profits for their businesses. If more companies were owned by women, then better decisions would be made more often, and the economy would be directly impacted by the success of these businesses.
That's why it is so important to encourage women to pursue their goals of business ownership, and encourage investors to take women business owners more seriously.
Fundid is on a mission to get women owned business the capital they need to grow so that we can all close the business wealth gap. While 42% of business in the US are owned by women, they only account for 4% of revenue generated by private businesses. We spend our time at Fundid thinking about what the world would look like if women also generated 42% of revenue and how to get them the capital they need to make that happen. Fundid is a challenger business bank, business lender and grant marketplace built on from the feedback of women entrepreneurs.