Women Entrepreneurs Bring Small Businesses to Life
Women entrepreneurs in Canada are a versatile bunch. Inspirations include Sarah Jenna, who started tech company My Intelligent Machine, and Manjit Minhas, who co-founded Minhas Breweries, Distilleries and Wineries, plus a lot of other hard-working, ambitious women in communities across the country. The Women Entrepreneurship Knowledge Hub (WEKH), a national network of 250 organizations, produces an annual survey that looks for trends of what’s happening. The 2021 WEKH report on the State of Women’s Entrepreneurship in Canada gathered insights into how women business owners fared during the pandemic.
The Big Picture on Women Entrepreneurs
To put things in context, here are a few findings from the WEKH report about women entrepreneurs in general:
1. Women entrepreneurs are less likely to be incorporated. Compared to men-led enterprises, their businesses are more likely to be structured as sole proprietors instead.
2. Women entrepreneurs tend to have fewer employees. According to the WEKH report, 92.7% of Canadian women-owned businesses are micro-firms with under 20 staff. In comparison, 86.5% of men-owned enterprises were micro-firms.
3. Women tend to start businesses in the service sectors. They tend to favour running businesses in education and healthcare (63.1% in this sector are women-lead companies while 36.9% are men-led companies); accommodation and food services (52.8% are women-led); information, culture, and recreation (44.1%); finance, insurance, and real estate (38.5%); and professional services (38.1%). They’re less likely to start businesses in high-growth industries like technology or manufacturing.
How COVID-19 Affected Women Entrepreneurs
There’s little surprise the pandemic affected Canadian businesses in wildly varying ways. On the negative side, the WEKH report notes more than one-third (36%) of women-owned businesses reported a revenue decrease of over 50%, compared to 26% of businesses overall.
While it may not be news to working parents, pandemic lockdowns also highlighted that, for entrepreneurs who are mothers, childcare is crucial to allowing them to run their businesses. During the pandemic, over 12% of women-owned businesses closed because childcare wasn’t available (due to daycare closures and household visit restrictions), according to a report on B.C. women entrepreneurs.
While the federal government rolled out financial support during the pandemic, including some geared specifically for businesses, one WEKH finding is that many women entrepreneurs “fell through the cracks” regarding funding. The Business Development Bank of Canada notes “The federal government has provided more than $52 billion in emergency relief support including programs for businesses, but in many cases, the size and structure of women’s businesses made them ineligible.”
Here are a few more surprising findings from the WEKH report:
- Official definitions of entrepreneurs can exclude many women. According to the WEKH report, “The definition of the entrepreneur matters; it determines access to programs, services, and benefits.” Frequently, the definition of an entrepreneur is the owner of an incorporated small or medium-sized enterprise (SME) with at least one employee. By that standard, only 15.6% of SMEs are owned by women. If the definition of “entrepreneur” is broadened to include self-employed people, that means 38.3% of self-employed workers are female.
- A principal challenge facing women entrepreneurs is barriers to financing. Lack of eligibility for financing forces women to give up on their business: “According to the 2019 Global Entrepreneurship Monitor (GEM) survey, 20.9% of women who discontinued their business reported lack of financing as the reason, whereas only 14.6% of men who discontinued their business reported the same reason.” According to the WEKH reporting, difficulty with financing is also why women start smaller companies with a shallower rate of growth.
- Businesses run by Black women entrepreneurs tend to be new. Almost 50% of the businesses were established in 2020 or 2021. About 80% of these businesses are online and are operated from home, with 75% having no employees.
- The number of Indigenous women entrepreneurs is growing at twice the rate of non-Indigenous women entrepreneurs. Like their non-Indigenous counterparts, Indigenous women-owned businesses tend to be smaller, in the service sector, and are sole proprietors without employees. However, in the last decade, the percentage of Indigenous women entrepreneurs with employees nearly doubled from 23% in 2010 to 42% in 2019.
- Women entrepreneurs in Quebec said COVID-19 severely affected their businesses. According to the WEKH report, in a study of 1,080 women entrepreneurs from Quebec, two out of three businesses were operating at 50% capacity or less. Over 18% of the women in the study said the pandemic created an opportunity for positive changes in their business, such as going digital, developing new skills, adapting sales channels, and making changes to the range of products or services offered.
The WEKH report helps to identify trends and it’s also a useful way to highlight the challenges that face women entrepreneurs. Government response to the pandemic has exposed gaps in how policies support entrepreneurs, which might be the next step in getting women entrepreneurs the backing they deserve in the future.