Gender Imbalance in Small Business

We analysed ABS data and surveyed 1,000 Australian small business owners to discover how many small businesses are run by women, the industries they operate in, their earnings, and the challenges they encounter.

Gender pay gap and gender inequality in small business

In Australia, small businesses account for a massive 97% of all businesses, yet research often only focuses on the country’s largest corporations. Therefore, we wanted to better understand the experiences of female small business owners compared to their male counterparts.

Key takeaways

Female business ownership has increased by 77.4% since 1991, and male business ownership has increased by 43.2%.

Only two industries have a higher percentage of female business owners: Health Care and Social Assistance (64.4%) and Education and Training (62.5%).

Male business owners have a median salary nearly 1.5 times higher than that of women. Similarly, male business owners earn an average of $89,759, compared to females who earn $48,729 on average.

37.4% of female business owners do not take a wage or salary, compared to only 30.7% of men, and nearly twice as many men (13.4%) earn over $3,000 weekly, compared to just 7.4% of women.

‘Work-life balance’ is the most common business owner struggle, followed by ‘uncertainty and risk’, ‘financial pressure’, ‘time management’ and ‘burnout’.

‘Financial independence’, ‘following a passion or interest’ and ‘freedom and flexibility’ are the top three reasons for males and females deciding to start a business or side hustle.

How many women are starting a business in Australia?

Since 1991, female business ownership has increased by an impressive 77.4%. While male business ownership has also seen growth at 43.2%, the rise among women is notably higher. However, despite this progress, the share of female business owners has only climbed from 30.6% to 35.4% over the past 23 years. This highlights a persistent imbalance in the gender landscape of small business ownership.

Industries where women are starting businesses

Only two industries boast a higher percentage of female business owners: Health Care and Social Assistance (64.4%) and Education and Training (62.5%). There’s a clear connection between business owners’ fields of study and the industries they enter. The highest proportion of female entrepreneurs comes from studies in Education (74.5%), Food, Hospitality, and Personal Services (65.5%), and Health (62.6%).

In contrast, industries like Electricity, Gas, Water, and Waste Services are exclusively male-owned, with Construction close behind at 89.5%. A higher proportion of male business owners also have studied similar subjects in STEM, such as Engineering and Related Technologies (94.5%), Architecture and Building (90.8%) and Information Technology (77.9%).

Government assistance packages. New Zealand will be rolling out a range of support packages and assistance aimed at reducing economic impacts on businesses due to COVID-19. It’s one of the largest in the world on a per capita basis and businesses are being urged to make full use of what is available to them. Let’s review the primary business support measures being rolled out.

The characteristics of male and female business owners

The 45-54 age group is the most prevalent among business owners, regardless of gender. Nearly a quarter (24.1%) of male business owners belong to this age range, while 27.1% of female business owners also fall within the same group.

In regards to education, male business owners tend to have qualifications like a certificate III or IV or an advanced diploma, with 39.1% falling into this category. Meanwhile, two in five (40.1%) female business owners hold at least a bachelor’s degree, graduate diploma, or postgraduate degree. This higher level of education among women may be due to a belief that they need formal qualifications and skills development before entering the entrepreneurial landscape.

The gender pay gap among small business owners

Out of the participants surveyed, over half owned a small business (553), with a nearly even distribution between genders. Among these small business owners, 70% of women paid themselves a salary, compared to 77.9% of men.

For those who did pay themselves, men had a median salary nearly 1.5 times higher than that of women, at $59,500 compared to $40,000 per year. The average salary also showed a significant difference, with men earning $89,759 on average, while women earned $48,729.

The survey results were backed by ABS data that showed 37.4% of all female business owners do not take a wage or salary, compared to 30.7% of men.

Looking at all small business owners, including those who didn’t pay themselves a salary, the average take-home earning as a percentage of revenue reported by female business owners was 46%, five percentage points lower than their male counterparts (51%).

Among those who reported owning a “side hustle,” the results were similar, with women earning only 40% of what men made. Women had a median annual income of $4,000 from their side hustles, while men earned $10,000.

The differences in difficulties faced when starting a small business

Regardless of gender, small business owners face similar challenges. ‘Work-life balance’ was the most common difficulty faced by men and women when starting a small business and/or side hustle. This was followed by ‘uncertainty and risk’, ‘financial pressure’, ‘time management’ and ‘burnout’.

The greatest disparity between women and men when it comes to difficulties starting and running a small business was ‘Imposter Syndrome’, with 16.4% of women reporting this experience, compared to only 5.8% of men.

When small business and side hustle owners were asked if they felt taken seriously by stakeholders when starting their ventures, only half (50.6%) of women reported feeling respected. In comparison, a higher percentage of men (57.9%) felt this way, though the difference was relatively small.

Despite men and women facing similar difficulties at similar rates, more than half (54.6%) of women who own small businesses believe that men have it easier when starting and running a business or side hustle, compared to just one-third (36.5%) of men.

The differences in hours worked by male and female small business owners

Both men (19.6%) and women (25.6%) who owned small businesses predominantly worked between 11 to 20 hours per week. However, a significantly higher percentage of men (27.9%) worked over 40 hours per week at their small businesses, compared to 13.9% of women. This may be due to women often balancing competing priorities, such as childcare or household management, compared to men.

Women who run a side hustle also work fewer hours than men. Over half (50.7%) of side hustlers surveyed spent less than 10 hours a week on their side hustle compared to 39.7% of men.

The differences in interpreted small business success levels between men and women

Three-quarters of male small business owners view their businesses as somewhat or very successful, while 67.8% of women feel the same way. Interestingly, a larger percentage of women (27.1%) consider their level of success to be neutral, compared to 18.9% of men. Whether these perceptions truly reflect the success of their businesses or highlight differences in confidence between men and women is open to interpretation.

Why do women start their own business?

‘Financial independence’ is the top reason for both men and women to start a business or side hustle. Following closely are ‘following a passion or interest’ and ‘freedom and flexibility’. The greatest gender disparity was seen in the response to ‘I noticed a market opportunity’, with 17.2% of men citing this reason compared to 12% of women.

“While the number of female small business owners has grown over the last couple of decades, there is still a lot of work to do to create equality between small business owners. Women are not only running fewer businesses but also earning less than their male counterparts.

This highlights the need to support and empower female entrepreneurs. We need to create an environment that encourages female entrepreneurs to know their worth, as well as navigate challenges such as imposter syndrome and financial difficulties.”

– Jessica Morris, Head of People and Culture at Reckon

ABOUT THE DATA

Reckon has undertaken this research using the latest available data from the Australian Bureau of Statistics (ABS), along with a commissioned survey conducted by PureProfile of 1,002 people who own a small business or have a ‘side hustle’, which highlights the disparities and imbalance between genders in relation to small business owners.

For the purposes of this report, we have used the ABS definition of small business, which is that of non-employing and employing businesses with less than 20 employees.

The term “gender” used in this report is tied to the ABS definition of “sex” to determine sex characteristics, such as their chromosomes, hormones and reproductive organs, for their use in data collection and output.

There are instances data is used relating to all business owners, regardless of business size, as it has not been made available at the granularity identifying small-business owners specifically. These statistics have been utilised as 97.5% of all Australian businesses are small businesses (ABS Counts of Australian Businesses 2024), as such, the data can be considered a reasonable approximation for ownership/management of small business.

When analysing ABS data, Status in Employment (SIEMP) was used for owner manager classification to define business owners. Business owners included both unincorporated and incorporated enterprises, as well as both with and without employees. For the purposes of this study, data for owner managers was used only when listed as status of their main job.

The survey was conducted in October 2024, in line with the nationally representative percentage targets for age, gender and location. It consisted of 10 questions to understand the differences between those who own small businesses and/or have side hustles, particularly in relation to gender including their personal income and workload, as well as difficulties, motivations and successes in starting and running a business.

Please note that some numbers and percentages may not sum due to rounding.