The State of Women’s Entrepreneurship in Canada: 2020

New report from the Women Entrepreneurship Knowledge Hub shows women entrepreneurs face structural inequalities which are exacerbated by COVID-19.

Today the Women Entrepreneurship Knowledge Hub (WEKH) released The State of Women’s Entrepreneurship in Canada: 2020, our first annual report. The report synthesizes government, academic, and expert research to highlight some of the structural barriers facing diverse women entrepreneurs in Canada. The research shows clearly that COVID-19 has amplified structural barriers, has affected women entrepreneurs more than men and has affected Indigenous, racialized and other diverse entrepreneurs most of all.

Read the full report

“We risk turning back the clock on decades of progress if we do not take a hard look at the differences between women and men entrepreneurs and ensure that the programs and plans for recovery have a gender and diversity lens,” said the study’s lead author Wendy Cukier, Diversity Institute Founder and Academic Director of the Women Entrepreneurship Knowledge Hub. “Even the definitions of entrepreneurship can be a barrier to women and have impacted COVID-19 response support programs for women entrepreneurs.”

While the study showed that more data are needed on diverse women entrepreneurs, it highlighted some important issues.

  • Women are majority owners of about 15.6 percent of Small Medium Enterprises (SMEs) with one or more employee – about 114,000 companies (2017). But women account for over 37 percent of self-employed Canadians or 1,050,000 (2019).  
  • Women entrepreneurs are more likely to be in services, social, health and beauty, and food sectors than in manufacturing and technology. 
  • Women are less likely to seek and receive financing than men (32.6 % vs. 38 %) and firms owned by men are more likely to receive venture capital or angel funding and other forms of leverage such as trade credit or capital leasing.  
  • SMEs with under 20 employees have been the hardest hit during the pandemic and women are more likely to own newer and smaller businesses, making them the most affected. 
  • During the pandemic, the percentage of women-owned businesses that laid off staff, 40.6 percent, is about equal to the percentage of men-owned businesses overall (40.5%). However, the percentage of women-owned businesses that have laid off 80 percent or more of their employees is substantially greater than that of businesses overall (62.1% vs. 45.2%).

“Women-led businesses are a key driver of economic activity in Ontario, but persistent barriers continue to limit their growth,” said Michelle Eaton, Vice President, Public Affairs, Ontario Chamber of Commerce. “On average, they tend to be newer and smaller and have less access to capital. Challenges for women entrepreneurs were amplified during the pandemic, as many found themselves ineligible for business supports, working in sectors most heavily impacted by public health restrictions, and bearing child care responsibilities that disproportionately affected women. If we are serious about economic recovery, we need to better evaluate and address the challenges faced by women and other underrepresented groups of entrepreneurs. Entrepreneurial diversity is not only essential for women’s recovery but for that of the entire economy.”

The report highlighted some of the differences among them and the need for more disaggregated data.  There are a higher proportion of women among Indigenous, Chinese, Filipino, and Latin American people who are self-employed, compared to the general self-employed population.  “

There are structural challenges that are more prominent for Indigenous women entrepreneurs, particularly those who live on reserves, which often lack basic infrastructure and opportunities for financial support,” said Ashley Richard, Indigenous Partnership Coordinator for the Women’s Entrepreneurship Knowledge Hub at the Diversity Institute. “Key structural inequalities for Indigenous women entrepreneurs include: overall economic conditions, access to equity or capital and government policies, rules and regulations. WEKH consultations show that an additional barrier for business owners on reserves is Section 87 of the Indian Act, whereby corporations are ineligible for tax exemptions resulting in on reserve business being less likely to be incorporated.” 

The COVID-19 virus has impacted the Black community disproportionately in health care and the economy but it has shattered the she-economy profoundly, taking a harsh toll on women entrepreneurs,” said Nadine Spencer, CEO of the Black Business Professional Association and founder of Brand EQ Group. “Some of course call it a ‘she cession.’ The fact is that data is missing not only about the Black community but also about Black women, which greatly limits the kind of much-needed assistance that governments can provide. We need more disaggregated data to understand how the experience of Black women entrepreneurs compares to Black men and other women in terms of lack of access to capital, the right networks and managing unpaid work like childcare.”    

There are important areas of progress, we cannot ignore. For example, the proportion of women exporting has increased dramatically, doubling from 5.7 percent in 2011 to 10.8 percent in 2017, which narrows the gap with men (13.6% of men-owned businesses exported in 2017). And, when we compare women and men by sector the differences almost disappear and appear to be associated with an increase by women-owned business exports in manufacturing, a decrease in accommodation and food services, an increase in wholesale trade and a decrease in transportation and warehousing.

WEKH is funded as part of the Canadian government’s Women Entrepreneurship Strategy — an ambitious program aimed at helping to double the number of women entrepreneurs by 2025.  The Report will help track progress over time. WEKH’s research, platforms and campaigns support women entrepreneur organizations but also focuses on helping mainstream organizations in the ecosystem become more inclusive – financial institutions, incubators, service organizations and more. A previous report by WEKH on the impacts of COVID-19 on women entrepreneurs can be found here.

The sponsors of this project include the Government of Canada and Social Science and Humanities Research Council.

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