Gender Bias in Small Business: How People Unknowingly Judge Businesses Owned by Women

Business isn’t just a man’s world. The number of women who own small businesses in the U.S. has stayed steady for the past decade — women run over a third of all privately held firms. In 2009, while only 9% of startups had women at their helm, that figure doubled in 2015 to 18%.
Despite their growth and success in running U.S. small businesses, women continue to face bias against their skills and capacities as entrepreneurs — and even in how they’re funded.

To understand how people perceive small businesses when owned and operated by women, we showed over 1,000 people 10 unique business plans and asked them to rate each company’s success, how well they believed it was managed, and if they would consider patronizing the business. For each business plan, half were shown with a woman as the owner, and half with a man. No other details were modified.

Keep reading to see what we learned about the perception of female-owned businesses by people of different genders, ages, and political affiliations.

How Women Are Seen in Business

In the eyes of those surveyed, women were perceived to be less successful than men in accounting, fashion, and finance.

In some cases, this is unsurprising, as many major fashion houses are run by men, which has affected women’s ability to find success in this field.

In technology — where women have struggled to gain ground in startups and existing companies — female-owned businesses were viewed just as successful as male-owned companies, but women were seen as less capable of managing. However, despite this perception, many women have gone on to revolutionize the tech industry in executive positions.

Finally, respondents were more likely to patronize a business owned by a woman in all industries except finance.

Perceptions of Female Ownership

When it comes to the perception of success, management skills, and the likelihood of gaining customers — female-owned businesses were viewed much more positively in female-dominated industries.

In fact, women were seen as four times more successful when presenting business plans if their focus was in a female-dominated job sector. And there were no differences of opinion regarding the management skills of men and women in male-dominated industries. However, women’s management skills were perceived as being more apt in a female-dominated industry.

The study also found that female-owned businesses were much more likely to gain customers if they operated in fields already dominated by women. In fact, respondents were nearly four times as likely to support a female-owned business when it existed within an industry dominated by women.

How Women’s Success Is Judged, by Industry

In some instances, female participants were more critical of a woman’s business plan than men were.

For example, in advertising and finance, men perceived female entrepreneurs to be more successful than if judged by women.

However, women expressed greater positivity toward business plans developed by other women in education and medical fields, while men rated women’s success highest in design and education. Both male and female respondents felt women would be less successful in male-dominated industries overall when compared to female-dominated industries. And even within job sectors dominated primarily by women, men were more likely to perceive women as successful.

Female Management Skills

Men were more positive toward women’s management skills in female-dominated industries and more negative toward their management skills in male-dominated industries

Regarding accounting (a female-dominated industry), women were less likely than men to positively view the management skills of female business owners, while in the fashion profession (a male-dominated industry) men were more likely than women to perceive women’s management skills as more befitting than their male counterparts.

However, women believed the management skills of female owners would be better suited for construction than when judged by men. In fact, U.S. construction businesses owned by women grew 56% between 2007 and 2016.

Patronizing Female-Owned Businesses

Perceptions of skill and success aside, being more or less likely to support a small business owned by women might be one of the most significant factors in the success of female entrepreneurs.

Of the industries listed, both men and women were more likely to support women in female-dominated sectors.

Further, men were twice as likely to patronize a female-owned operation in education and nearly five times as likely to patronize a business owned by women in the design industry.

But men were less likely to patronize female-owned businesses in male-dominated industries. Women, though, expressed the lowest overall likelihood of supporting other women in the finance sector.

The Generational Success Divide

With the number of women owning small businesses on the rise, millennial women are having a positive impact on this trend.

It turns out, baby boomers most negatively perceived women’s success — particularly in finance, restaurant management, and advertising.

While Gen Xers tended to have a more negative opinion of the success of female-owned businesses than millennials, they were most confident of female success in the advertising, restaurant, and education industries.

Millennials had the most favorable opinion of female success compared to men, rating their success highest in design and education. Despite challenges in Silicon Valley to overcome gender bias, baby boomers and millennials rated women just as successful as men in tech-related ventures, while Gen Xers felt women were more capable than men in the technology industry.

Patronizing Female-Owned Businesses, by Generation

Millennials were the most likely to rate women as more successful than men in some industries, but Gen Xers were the most likely to patronize their businesses.

For example, in the education industry, Gen Xers were significantly more likely to support female-owned establishments than any other generation.

Overall, baby boomers were the least likely to patronize businesses owned by women in construction, education, and finance.

While construction and finance are male-dominated industries, education has long been seen as a female-dominated sector. Baby boomers were also likelier to patronize tech-related companies owned by women than millennials and Gen Xers.

How Democrats and Republicans See Women in Business

Democrats and Republicans had different opinions in business where numbers and money were involved. While accounting might be a female-dominated industry, Democrats were significantly more likely to prefer working with a man on those matters, while Republicans were partial to women for their accounting needs.

However, regarding finance, Republicans greatly preferred to patronize male-operated establishments, while Democrats were more likely to utilize accounting companies owned and operated by women.

Despite their differences, Democrats and Republicans agreed female-owned businesses in education and design were the way to go and that construction-related jobs were better suited for male owners.

Overcoming Gender Bias

Despite women-owned businesses being perceived, in some cases, as less successful, well-managed, or even less likely to be patronized by men and women of all ages and political affiliations, women are some of the most successful entrepreneurs in small business today. In 2015, there were more than 9 million women-owned companies in the U.S., employing over 8 million people and earning over $1.4 trillion annually.

Methodology

We asked over 1,000 people to read 10 different business plans and rate each plan on the likelihood of success, how well the business was managed, and how likely they would be to patronize the business. At the end of our survey, participants answered demographic questions including age, gender, and political affiliation.

For each plan, half the respondents were shown a plan with a man’s name on it, and the other half were shown the same plan with a woman’s name. Each plan was written for a unique industry. Five industries were more male-dominated and five were more female-dominated.

The female-dominated industries are accounting, advertising, design, education, and medicine. The male-dominated industries are construction, finance, fashion, restaurants, and technology.

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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Originally published at www.fundera.com on May 8, 2017.