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Unlocking an Inclusive System for Women Entrepreneurs

The pressing case for supporting Canada's women entrepreneurs during the pandemic

Anil Wasif, Henna Hundal, Chunhong Chen, Shahid Mehmood, Yuting Fu | 28 Jul 2021

Policy Lab 2021

This executive summary lays out highlights from the report There's No Going Back: Unlocking an Inclusive Ecosystem for Women Entrepreneurs, written by Max Bell School Master of Public Policy students as part of the 2021 Policy Lab.

Access the summary and presentation below, and read their full report here.

The Policy Challenge

ISED Canada's mandate encloses entrepreneurial perspectives into macroeconomic policymaking at the federal level in Canada. Entrepreneurs with diverse backgrounds, skills, experiences, and connections create jobs for hardworking Canadians —promoting innovation, accelerating scientific progress, and generating economic growth from coast to coast to coast. Yet, the persistence of a gender gap in entrepreneurship has restricted Canadians from reaping the benefits long promised by a nation of women entrepreneurs.

To alleviate this issue and unleash the true potential of women entrepreneurs across the nation, ISED Canada launched the country's first ever Women's Entrepreneurship Strategy (WES), promising to double the number of women in business by 2025.

Just as the agenda was set to advance women's entrepreneurship in Canada, a pandemic rocked the policy landscape and questioned everything.

The year 2020 marked the 25th anniversary for the Beijing Platform for Action —a ground-breaking year for gender equality. Instead, COVID-19 rolled back decades of progress made by women in Canada. A “she-cession” furthered the disparities historically faced by women and diverse populations of women in Canada. As business confidence plummeted to an all-time low, the impact was tenfold for women who were entrepreneurs. The pandemic was risking their livelihoods, the survival of their businesses, and the wellbeing of the workers they employed.

Truly, a better future for women entrepreneurs ensures a better future for all. As the Government of Canada strives to build back better, the policy window has swung open to champion a renewed focus on Canada's women entrepreneurs.

The Status of Women Entrepreneurs

To inform policy interventions that safeguard Canada's progress in securing equity, diversity, and inclusion for all women entrepreneurs, it is critical to evaluate the landscape of self-employed women.

In Canada, almost seven in ten self-employed women own unregistered businesses where they operate alone(solo). A lack of data on unregistered entrepreneurs —coupled with a lack of visibility, exclusion from networks, and ineligibility for government supports —compounds challenges faced by unregistered women entrepreneurs. These problems are exacerbated for solo entrepreneurs. In comparison, less than two out of ten women own registered businesses with paid employees and navigate through systemic barriers day in and day out. An overwhelming majority (>90%) own micro-businesses that are prevalent in the service sector, which was hit hard by COVID-19.

Among the rest are registered women entrepreneurs operating solo and those with unregistered businesses with paid employees. These groups face their own unique set of challenges, like navigating through tax legislation or even questioning their role as entrepreneurs. Yet, interventions addressing the hurdles faced by the more prevalent groups trickle down to them as well.

Diversity plays a crucial role in determining women's success in their entrepreneurial journeys. To this end, while strides have been made, much work remains to be done to secure an ecosystem that works for all. Notably, Section 15 of the Canadian Charter of Rights & Freedoms safeguards equality for every individual regardless of "race, religion, national or ethnic origin, colour, sex, age or physical or mental disability". At the same time, diverse women entrepreneurs navigate through contrasting circumstances, in addition to the barriers faced historically by women in Canada.

The characteristics shared above are interlinked to broader policy areas touching citizens, businesses, and governments in Canada. As such, it is vital to understand where women entrepreneurs operate and the services they provide.

On average, eight out of ten women entrepreneurs operate in the service sector.26In breaking down the service sector by types of industries, the North American Industry Classification System (NAICS) reveals a new set of challenges. For example:

NAICS 62: Healthcare and Social Assistance includes activities ranging from medical services, residential care, and food banks.
NAICS 81: Other Services includes a range of undertakings, comprising childcare, funeral services, and even charitable organizations.

These classifications hinder the effectiveness of data collection and research informing policy interventions to promote women entrepreneurs.

On another note, a majority of unregistered women entrepreneurs operating alone are concentrated in these sectors (NAICS 62 & 81), while registered women are concentrated in retail, agriculture, and the food service industry.30As such, defining "entrepreneurs" as people with registered businesses overlooks the sectors in which a majority of women entrepreneurs operate.

The Gender Gap

The gender gap in entrepreneurship continues to persist. To this end, it is important to note that the number of unregistered women entrepreneurs working solo has grown five times faster than the number of registered women entrepreneurs with paid employees. Thus, recognizing unregistered women entrepreneurs operating solo and supporting them can play a crucial role in closing the gap. Value creation is value creation. Unregistered or working alone, any woman operating a venture with a profit-making motive embodies the true spirit of an entrepreneur and should be recognized as such.

Benefits of Closing the Gender Gap

Entrepreneurship creates economic impact via generating wealth, building assets, creating jobs, and circulating profits back into communities. Despite the progress and potential of women's enterprises, systemic barriers, historically short-sighted policies, and detrimental stereotypes have restrained entrepreneurial outcomes in Canada. To this end, there is a growing and concurrent body of epistemic communities currently gauging the value of closing the gender gap in this arena —promising billions of dollars to Canada's GDP.

The Policy Window

Women were left the most vulnerable in almost every aspect of the pandemic, with the disparities widening even more for marginalized women. Lockdown measures disproportionately hurt Canadian micro firms, especially in the service sector, where women entrepreneurs are more prevalent. Moreover, school closures constrained women's capacity to pursue entrepreneurship even further. As such, faced with the need to pivot their enterprises, many women opted out altogether. There's no going back. An equitable economic recovery plan must unlock an inclusive ecosystem that supports all women entrepreneurs.