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Is Choosing a Women-Owned 401(k) Provider Good for Business?

June 07, 2021

For women-owned businesses, 2021 has seen a consistent increase in self-investing practices. What’s perhaps even more important—more brands are waving their “women-owned and operated” flag than ever before. It’s become a badge of honor. And with good reason. Last year, the 12.3 million women-owned businesses in the US, generated $1.8 trillion. At 40% of the total number of businesses in the US, it’s apparent that women business owners have a significant impact on the economy.

At Leading Retirement Solutions (LRS), we believe there are a number of great reasons for women business owners to select a woman-owned 401(k) provider like us when they shop for a retirement plan. Aside from the fact that offering a 401(k) option helps your business attract and retain top talent, providers like LRS know first-hand the specific challenges that women business owners face.

Challenges for Female Entrepreneurs

While the overall trend toward more female entrepreneurship is highly encouraging, there are still obstacles that women continue to face. For example, access to credit and capital remains a significant challenge. In fact, this is often cited as one of the reasons for the disproportionally high failure rate among women-owned businesses.

Many women are more than just entrepreneurs —they have families, spouses, and other responsibilities. Demands from personal and professional commitments can pressure a woman to abandon either her business or family, more often than their male counterparts. According to LRS’ 2019 Retirement Savings Gap Study, women are more likely than men to spend on dependents over saving for retirement.

Struggling in business is often the result of a lack of adequate support systems. It can be very helpful for women to have mentors and sponsors to guide them in this new path. However, getting support can be a major stumbling block for women. This includes not having relevant business connections as well as lacking a support system that encourage business acceleration. Women also tend to encounter social and traditional constraints that restrict their access to capital and, in turn, participation in business.

Economic Headwinds for Women-Owned Businesses

With the economic effects of the Covid-19 pandemic still prevalent, it is important to point out that women business owners have been disproportionately impacted. In fact, according to a recent study by the U.S. Chamber of Commerce, the number of female business owners who ranked their business’s overall health as “somewhat or very good” fell 13 points (from 60% in January to 47% in July) during the pandemic. Businesses owned by men on the hand only fell five points in the same period (67%  to 62%).

Female small business owners are also less optimistic about their future success in 2021, with less than half of the female owners surveyed believing their revenue would increase in 2021. In comparison, 57% of male owners believe their revenue will increase.

Elevating Women-Led Companies

Despite all the hurdles they face, women-owned businesses are powerful — and largely untapped — drivers of economic growth. With women more likely to start a business than men, they are the ones who are bolstering the economic stability for both their community and their families. In fact, 62% of women business owners depend on the income from their small business as their primary source of household income.

When you support women-owned businesses, you are investing in women's economic empowerment, gender parity in commerce, vibrant communities, and the growth of the economy overall.

But supporting women-led companies is also good for business. Numerous studies show that women-led companies tend to perform better than those led by men. Not only that, but research conducted by The Harris Poll shows that half of Americans want to work for a female leader. It turns out that companies led by women aren't just good for business; they are also good for employees. A recent survey reveals that women-led organizations are more likely to have engaged, inspired and fulfilled employees than male-led firms.

Support Other Women in Business

As women business owners, we have a unique opportunity to overcome some of the challenges we face and create new opportunities by intentionally seeking to do business with other female entrepreneurs. 

When you support fellow women small business owners, you create strategic relationships that benefit both of your companies. As an example, by increasing your network of women-owned businesses, you may create hiring opportunities as other women business owners may have recruitment suggestions which could help you fill important roles. You may also gain a valuable sounding board from someone who has walked in your shoes. Having the opportunity to bounce ideas off knowledgeable professionals can provide an invaluable perspective that can help you refine your business practices.

Choose a Female-Owned 401(k) Provider

When it comes to selecting 401(k) vendors to do business with, there are many advantages to partnering with a knowledgeable, woman-owned provider like Leading Retirement Solutions. 

Firstly, having walked in your shoes we understand deeply what it means to be a female entrepreneur. Our Founder and CEO, Kirsten Curry started Leading Retirement Solutions in 2011 after helping to launch a financial startup where she learned the skills needed to grow an enterprise from seven to 150 employees over a 5-year period. Her team assisted clients with making investments and providing ongoing IRS and DOL compliance of retirement plans.

However, Kirsten felt that the company wasn’t focusing enough on encouraging companies to offer employer-sponsored 401(k) plans to help employees save for retirement and reduce the  tax liability for companies and their owners. This is much the same lack of focus that the retirement plan administration industry has had toward helping female entrepreneurs. After five years as an employee, Kirsten left to start Leading Retirement Solutions and take on the challenge of entrepreneurship..

She has experienced first-hand the highs and lows of business ownership and has had to make some challenging decisions in the past year to adapt to the new Covid-19 economy. But her commitment to helping women business owners prepare for their own retirement while ensuring that their employees are doing the same has never wavered. Kirsten and her team strategically succeeded through Covid and helped many of their clients do the same, particularly helping female entrepreneurs tap into the CARES Act and other Covid legislation that supported business owners.

This support for women business owners was not unique to 2020. Each year, Leading Retirement Solutions surveys male and female business owners to understand how prepared each group is for retirement. The results of our most recent study may surprise you:

  • 14% of women business leaders are not saving for retirement at all, which is 4% more than the previous year.
  • Only 80% of women business leaders are participating in 401(k)/403(b)/457 plans compared to 92% of their male counterparts.
  • Women business leaders who support dependents not only struggle to reinvest in their business, but 20% are not saving for retirement at all.

The study has helped our team develop a deeper understanding of the retirement planning needs and practices of women business owners. This allows us to work closely with our female clients to develop a plan that meets their needs as well as those of their employees. Our goal is to be a strategic partner to each client as we work together to ensure their success.

Partnering With a Company Committed to Gender Diversity

At Leading Retirement Solutions we are also committed to ensuring that women are included at all levels. Kirsten has intentionally set out to build a diverse organization. Today, 80% of her staff and 75% of her management team are women.

Research continually shows that gender diversity results in increased productivity, greater innovation, better decision-making, and higher employee retention and satisfaction. Having more women in executive roles is not only fair, but it's good for business and employees.

Creating an Ever-Expanding Circle of Opportunity for Women Business Owners

In our experience, when women align their interests, everyone benefits. When we support one another, we all do better. That is why we actively seek out opportunities to support women entrepreneurs with knowledge and resources as they work to grow their businesses and prepare for a secure retirement for themselves and their staff. We welcome the opportunity to partner with your organization to create a retirement plan that perfectly meets your needs today and in the coming years.

For more tips and information regarding retirement plans, contact us.

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