Seeds of Change: How Women Owners Are Driving Business Growth in the Wellness Sector
The wellness sector represents the second-largest sector of women-owned businesses in the U.S. As consumers of every generation increasingly focus on health and wellness, female entrepreneurs and business leaders are poised to be big beneficiaries.
Each day, women launch around 850 new businesses in the U.S., and the number of firms headed by women has increased by more than 40% since 2007. Women are now the majority owners of an estimated 11.6 million businesses in the country—39% of all U.S. businesses — according to the 2017 State of Women-Owned Businesses Report.
The growth in women-owned companies is marching in unison with another major trend — the rapid expansion of the healthy living sector. According to data from the Global Wellness Institute, the wellness industry grew by 10.6% worldwide between 2013 and 2015 and accounts for revenue of $3.72 trillion on a global basis. It is now a key part of the second-largest sector of women-owned businesses in the U.S., following services such as nail and hair salons and pet services.
With U.S. healthcare costs forecast to rise around 5.8% every year through 2025 according to the Centers for Medicare and Medicaid Services (CMS), more people are evaluating alternative, preventative approaches to health, which is expected to drive a big segment of the wellness market. And the focus on healthy living will also continue to build as companies and entrepreneurs reach out to a broader audience, particularly to consumers lower down the economic spectrum.
As Susie Ellis, Chairman and CEO of the Global Wellness Institute, noted in the Institute’s Global Wellness Economy Monitor, the U.S. ranks a “depressing” 85th among countries in equality in well being among its people, according to the UN’s 2016 World Happiness Report. “And because the U.S. wellness market is so vast, consumer-driven and innovative, the industry will respond to these new needs and opportunities,” predicts Ellis. As the healthy living market continues to expand, women entrepreneurs who enter the sector and already-established women-owned businesses in the sector can benefit from that market growth.
Increased interest in healthy living and healthy lifestyle choices across different age segments are driving the strong growth in the wellness sector. The rise of social media has increased image-consciousness among Generation Z and millennials — pushing them to be their “best selves” on social media. And the growing millennial parent segment is also driving interest in the wellness space, as they focus on whole foods and a healthy lifestyle for themselves and their families.
For the baby boomer generation, the focus on wellness is more about having a happy and healthy retirement – one that allows for time with grandchildren, and maintaining fitness and mobility. Numerous wellness concepts that have launched or grown over the past few years — such as cryotherapy, strength and mobility programs, and infrared saunas — are geared to helping older consumers improve quality of life.
Asma Ishaq, CEO of Modere, a global consumer goods company with a range of scientifically tested nutritional, personal care, health and wellness, and household care products, says technology is also big driver of growth in this market. “Consumers are increasingly health conscious and label-savvy. Having access to more information — including product science and efficacy — about what we ingest or put on our bodies is really helpful in deciding what we use each day,” she observes. Technology also enables easy access to products that were once niche and unavailable to most shoppers, allowing companies to sell to a broader consumer base.
Women in the Driver’s Seat
This incredible growth story provides a solid foundation for new business development, which women entrepreneurs are taking advantage of. But there are also a number of other reasons why this sector works well as a destination for female business owners. Amanda Freeman, owner of fitness chain SLT (Strength, Lengthen, Tone), believes women are particularly well-suited to lifestyle businesses. “They want their work to be meaningful and enjoyable,” she explains. “They’re focused on healthy living themselves, so the transition from seeing wellness as not just a lifestyle but a business opportunity makes sense.” Freeman, a serial wellness entrepreneur and former trend analyst in financial services, launched SLT in 2011 in New York and now boasts more than 20 studios in the mid-Atlantic region.
While being in a leadership role is demanding, the flexibility also appeals to women, says Ishaq, who started her company after business school when she was living in New York City as a single mother.
“My career demanded quite a bit of time from me, and I was conscious that the flexibility I needed to tend to my daughter would be perceived as less devotion to my work than that of my male counterparts,” she recalls. “The only path I could see without compromising my career aspirations and advancement goals was in leadership roles or owning my own company.”
In 2008, Ishaq founded Jusuru International — a company she set up to launch products into the U.S. market based on ingestible collagen-based technology, which at the time was an uptapped space in the U.S. Her company was acquired by Modere in 2017 and she joined the team to head up the Collagen Sciences division. Less than a year later, she was appointed global CEO of the combined company.
Access to Capital
According to Stefanie Sacks, MS, CNS, CDN, culinary nutritionist, Author of What The Fork Are You Eating and Founder of Reboot Food, Speaker and Consultant, one of the key challenges for women in this space continues to be the lack of available capital for growth. “I have a huge network of people in the health and wellness arena who all need capital to grow their platforms to inspire and motivate positive change. These women all need the opportunity to connect with other women — but those with a strong background in business, finance and marketing.”
Access to seed, venture, and private equity capital – often provided by firms that are run by men – can be challenging for some healthy living sector enterprises, in part due to lack of understanding of the concepts and potential. They may not see the value of investing, or the growth potential, behind the sectors of interest, such as barre and yoga, whose audience is predominantly women. The 2016 State of Women-Owned Businesses Report noted that only 3% of venture capital funding finds its way into women-founded businesses.
There is also the inherent risk that accompanies starting any new venture. Freeman notes: “As an entrepreneur, you have to be almost blindly optimistic. We [women] see the potential upside, but also the potential downside — and we try to mitigate that risk.” Women tend to view risk differently than their male counterparts, and be less likely to look for outside financing, according to a 2016 study by the Bank of Montreal. The study found that women entrepreneurs “are not only interested in the earnings statement, but the impact of their business decisions on all aspects of their lives.” In addition, according to the report, women struggle more than their male peers to access bank loans, and are more likely to bootstrap or self-fund ventures.
But while viewing risk differently may lead to a different growth trajectory, women-owned businesses continue to flourish — and women are starting up new businesses in ever-increasing numbers, particularly in the rapidly expanding healthy living space. Women entrepreneurs and female business owners can, and will, benefit from this growing market as they continue to innovate within the dynamic wellness sector.