Why Women Are Leading the U.S. Small Business Boom, According to LegalZoom's 2022 Survey

After years of hearing how to "lean in" to have a successful career in corporate America, many women have chosen to ditch C-suite dreams for their own versions of the corner office.

Choosing to "lean out" now can mean leaving a full-time job with gender, racial, and disability biases, pay inequity, childcare problems, and a host of other issues.

If "leaning out" means running your own business, setting your own hours, and reclaiming your life, count these women small business owners in.

"[Women] were always leaning in. They stood up and said, 'Screw it,'" says Katie Donovan, founder of Equal Pay Negotiations, a consultancy specializing in best practices for all underpaid groups of people.

"You see [gender bias] in performance reviews," she says. "It's a different game [women] are playing, part of the reason why we're starting businesses." For example, 70% of women receive comments on their personalities in reviews, compared with only 1 or 2% of men, Donovan explains.

Women are not only starting businesses but also leading the current small business boom, according to the “LegalZoom: Women and the Boss Era Survey" released in 2022. 

The survey coincides with the "Fast Break for Small Business" grant cycle. LegalZoom awarded 50 small businesses with $10,000 grants and LegalZoom services.

"We're seeing historic records of women starting small businesses," says Geri Agilpay, Region V administrator for the U.S. Small Business Administration. The office oversees operations of SBA in Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

The "LegalZoom: Women and the Boss Era Survey" 2022 survey confirms this trend. Seventy-three percent of the survey respondents had started their businesses since 2019.  With 60% of women small business owners stating that “being their own boss” was the reason why they started their business, it’s clear that a new era of entrepreneurism for women across the U.S is here.

"Women and women of color" are leading the way, Agilpay says. "The pandemic afforded women to rethink the future of work (and) manage home/work life. They can set their own hours and create income."

"Two-thirds of women are breadwinners, taking care of children and/or parents. We have to meet them where they are … mothers, students," Agilpay says.

One of the biggest obstacles—for anyone—to surmount is funding a small business, but it's especially challenging for women.

A whopping 98% of venture capital funding goes to men, according to financial services firm Morningstar. 

Only about 4% of women today get access to small business funding from traditional financial institutions. The 2022 “LegalZoom: Women and the Boss Era Survey" found that a staggering 60% of women small business owners self-funded their business and 15% used a loan from a friend or family. For women who have considered starting their own small business, but have not, more than half name not having the money they need as the biggest barrier.

Women also disproportionately hold more student loans. This affects their abilities to get small business funding, Agilpay says.

The SBA continues to level the playing field for women-owned small businesses with a record investment of $26 billion in women-owned small businesses for the third year in a row.

Small businesses create two out of three jobs and support local communities, according to Agilpay. "[The investment in these businesses] is momentous as to what that represents for community growth, investment, and job creation," she says.

Sindy Warren of Shaker Heights, Ohio, has reaped the financial and personal rewards of starting her own business.

Warren practiced employment law in large corporate firms for 10 years. When she had her daughter, she found firms "not very hospitable to mothers," she says. She then started her own human resources consulting business in the early 2000s.

In 2021, after completing a Life Coach School certification, she decided to hang up a new shingle, Blue Tree Coaching, a life and business coaching service. She also runs Side Gig School, a group coaching program for aspiring entrepreneurs, and hosts a podcast, "Side Gig School."

One plus for service-oriented businesses such as hers is that they require very little start-up money, Warren says, as opposed to businesses that manufacture a product.

Women continue to redefine what success means to them.

The 2022 LegalZoom survey revealed the top three components of a successful career include positive work/life balance (60%), ability to work on things they're passionate about (57%), and having complete control over work hours (50%). Physical and mental health were issues important to a successful career for one out of three women in the Gen Z and millennial demographics.

Aspiring and current women small business owners have questions to ask themselves, Warren says: "'Am I a CEO? What does it mean to be a business owner?'

"It's fun to see that self-concept change," she says of her career's twists and turns as well as her clients. "I make money doing something I love. It's pretty mind-blowing … for [my clients] and for me."