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Businesses Started by Women Boomed During the Pandemic, AARP Finds

Women surveyed say they made the right choice becoming entrepreneurs

two business women touch elbows while wearing masks
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The COVID-19 pandemic gave women who dreamed of starting a business a unique opportunity to bring their visions to life, according to a new survey from AARP Research.

Two-thirds of women (67 percent) who have started a business since January 2020 said the pandemic was a motivating factor. The national survey was conducted in the summer of 2022 and included 608 women age 40 and older who started businesses with up to 100 employees between January 2020 and June 2022.

The survey found that while aspiring entrepreneurs quickly pivoted to passions over the past two years, they still had to grapple with many of the same challenges women who start small businesses often face.

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When Grim Kells — who uses they/them pronouns — was laid off from their job as a special education teacher in March 2020, music became a form a therapy and a business opportunity. Kells had cofounded a small record label in 2018 to help raise funds for a nonprofit organization to prevent violence against LGBT communities in Virginia. When other work opportunities dried up during the era of pandemic restrictions, Kells focused on making Grimalkin Records a success, they tell AARP. The music, and the label’s mission of nurturing queer and LGBT artists, struck a chord and built a grassroots audience. Kells’ satisfaction over the past two years matches the 98 percent of survey respondents who say they made the right choice going into business for themselves.

Many new businesses are doing well financially

A new wave of business owners is emerging in the wake of the pandemic: lifestyle-driven entrepreneurs. The face of retirement has changed and the notion of aging has been disrupted. Many entrepreneurs 40-plus are looking to ramp up, not down. The survey found that a quarter of women entrepreneurs said they always wanted to start a business, followed by a fifth who say they did it to follow their passion.

Still, many understand that passion alone doesn’t automatically equate to quick success. Expectations match reality for the 37 percent of respondents who said their business is performing as expected financially, 22 percent said performance is slightly better than expected, and 17 percent said it’s much better.

Funding can be difficult for women to secure

Forty-six percent of start-up respondents agreed with the statement that gender-based challenges affect their business growth. The top financial barriers cited include lacking available credit, securing funding and purchasing inventory.

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In general, women-owned ventures remain underfunded, with iFundWomen reporting that female founders receive just 2.8 percent of venture-capital investments. For women of color, who represent 89 percent of new ventures among women-owned businesses, less than 1 percent receive venture-capital funding.

Most female founders aren’t waiting on investors. The research shows 7 in 10 female entrepreneurs are self-funded. Such is the case with Latina founder Cindy Mason, who bootstrapped her way to a multimillion-dollar tech firm, Cynergy Professional Systems. She operated her business as a side gig for four years while working full-time before she could afford to take the leap into entrepreneurship, similar to 30 percent of survey respondents. Today, Cynergy Professional Systems has more than 30 employees and five small-business certifications, and was voted the Northrop Grumman 2019 supplier of the year.

Even though her business’ pathway to profitability was paved through minority certifications, Mason told AARP that a minority certification isn’t a magic wand that opens every door. She advises aspiring entrepreneurs to make the most of networking opportunities and training programs to build relationships with potential partners and clients. Even more importantly, she recommends freshman founders know where to find these networks.

The information gap can hurt women entrepreneurs

Mason’s advice reflects another barrier female entrepreneurs face: the information gap. Roughly 52 percent of survey respondents said they had not applied for funding due to a lack of awareness that opportunities exist in the first place. Additionally, 37 percent did not know where to look or the names of specific organizations that offer funding.

The data confirms that many small-business owners struggle deciding which key activity areas to prioritize. Female founders 40-plus cited acquiring customers, marketing, financing and navigating the appropriate licensures as the top areas of difficulty in finding information. A lack of trust also is also a contributing factor to the information gap.

Surprisingly, state and local small-business resources are not top of mind for the majority of start-ups. The first stop? Friends and family. Sixty-one percent of respondents trust friends and family for business advice, while 58 percent said they turn to the federal Small Business Administration. Industry networking groups fall in third place as a trusted resource at 38 percent.

Building new skills can help

Barb Taylor agrees with Mason on the importance of training. Originally a self-taught wood sculptor, her second act began with a shoulder injury. Taylor always loved to draw and work with her hands, but she was forced to take precautions while her shoulder healed. It was then that she turned to an animation class at 40 years of age. She quickly fell in love with 3D, gaming, digital and TV animation.

Today, Coyle Films is an award-winning animation studio creating equitable pathways for female and LGBT artists who are underrepresented in the field. For Taylor, education is ageless. She credits reskilling from wood sculpting to animation for her success. However, she emphasizes the importance of being coachable. Her experience is reflected in the data. Fifty-six percent of respondents said they use online training to close the skills gap in their businesses. The most popular areas of study include marketing, building a business plan and managing business operations.