Global governments must wake up to the $multi-billion opportunity which women in business represent.
Government investment in Female Entrepreneurship policies is an Economic Imperative.
With more women than ever before taking up Entrepreneurship, I would like other nations to consider the value of their Female Entrepreneurs.
In the United States alone Women-owned businesses are growing at twice the rate of all businesses, generate more revenue per employee than their male counterparts and turnover more than $1.3 trillion in revenue each year.
(Wondering why Entrepreneurs and Entrepreneurship get a capital E? – Read our blog post on Entrepreneurship.)
This blog post focuses solely on the role of the State towards Female Entrepreneurship and does not address the wider dimension of female engagement in the labour market, nor how to become a Female Entrepreneur which we will cover in future blog posts.
So, let’s focus on:
§ Celebrating the Success of Female Entrepreneurs
§ The Role of the State in Female Entrepreneurship
§ The Business case for Female Entrepreneurship
§ Obstacles for Female Entrepreneurs
§ Policy Recommendations to Promote Female Entrepreneurship
Celebrating the Success of Female Entrepreneurs
In recent years, there has been a dramatic rise in the number of Female Entrepreneurs in the United States. This is a trend that shows no signs of slowing down, as more and more women are taking the leap into Entrepreneurship. However, other nations are slow to recognise the multi-billion-dollar opportunity.
In 2012, as a Member of the European Economic & Social Committee in Brussels, an EU Institution mandated to represent the views of civil society, I was the rapporteur (author) of a report on Female Entrepreneurship.
This is a subject I have been championing for the last 30 years, and more recently I have started to see some small progress around the world.
There are many factors driving this current momentum:
· There is now a stronger ecosystem for Female Entrepreneurship,
· There is an increasing availability of resources and support for Female Entrepreneurs in many countries, although often difficult to access or locate,
· There is a growing acceptance of women in leadership roles, and
· There is an ever-changing landscape of the workforce which opens the opportunities for women in business to grow.
Whatever the reason, it is clear, that Female Entrepreneurship is on the rise – and it is here to stay.
So, what does this mean for a country’s economy?
For one, it means that there are more opportunities than ever before for policymakers to value this growing market of Female Entrepreneurs.
And it also means that governments and other businesses need to be prepared to adapt their strategies and policies to appeal to this increasingly powerful demographic.
As Female Entrepreneurship continues to grow, those countries able to successfully support the needs of these Entrepreneurs will be well-positioned for success; economically, socially, culturally and environmentally.
That said – we need policymakers to do so much more to address a large imbalance in the numbers!
The Role of the State in Female Entrepreneurship
There is a growing consensus that the current crop of policymakers is not doing enough to support the rise of the Female Entrepreneur. In fact, many believe that they are actively hindering progress.
The biggest problem is the lack of understanding of what it takes to be a successful Female Entrepreneur. Policymakers often assume that women are not interested in starting their own businesses, or that they lack the skills and experience necessary to be successful.
The worst excuse is that “Women lack the confidence” to succeed - This couldn't be further from the truth.
Policymakers have failed to recognise the importance of infrastructure that specifically supports Female Entrepreneurship. They are blind to the need for a gender lens, and the gendered issues of business ownership. Consequently, they have not identified the growth opportunities or diversity within the business sector (home-based, micro-enterprises, family-owned), and this has been to the detriment of their economies.
Women are too often invisible within the business arena – in the media, within business representative organisations, and when it comes to influencing policy. This continuing gender gap, especially the lack of visibility of women in business, translates into fewer Women Entrepreneurs. This adds to the unexploited potential for economic growth.
Today, with a predicted global recession, the role of women-owned businesses is more important than ever. Women operate across every sector of the economy, and more so these days, within the decaying social infrastructure where the public sector is unable to cope. Their role in growing the economy and creating and sustaining new jobs is crucial to recovery and growth.
Most worrying is that at a time when government funding for business support has been cut in many countries, and when many businesses are struggling to survive and grow, policies to support women-owned businesses have fallen off the agenda, despite government rhetoric.
One of the biggest challenges in quantifying women’s enterprises is the lack of data, both quantitative and qualitative. Business registers and many sources of government statistics (including tax registration) are not gender disaggregated. Similarly, gender information is not readily available from banks or business support organisations.
The Business case for Female Entrepreneurship
Recent research from top international institutions and consultancies presents the comprehensive rationale for governments to invest in more women-owned businesses.
In short, Female Entrepreneurs often bring a unique perspective to the table:
§ Women are more likely to start businesses that solve problems they have personally experienced.
§ Whilst women operate in all sectors of the economy, they are more likely to start people-centric businesses.
This means that they are motivated by a personal passion to make a difference in the world, rather than simply seeking financial gain. As a result, female-led businesses are often more mission-driven and purposeful than those started by men.
The rise of female entrepreneur is good news for the economy.
Without building on stereotypes given to women:
· Women are typically better at multitasking and managing multiple priorities than men. This is a valuable skill in the ever-changing landscape of business.
· Women tend to be more risk-averse than men, which can lead to more conservative decision-making and a greater focus on long-term planning.
· Women are often more collaborative than men, which can be an advantage in building relationships with customers, suppliers, and employees.
· Women tend to be better at managing cash flow and controlling expenses. This is likely because women are used to managing household budgets and are accustomed to being frugal with their spending.
When more women enter the entrepreneurial ranks, everyone wins.
Thus, the success of women-owned companies has been achieved because they:
· Fail less than their male counterparts in business
· Have greater returns on investment than male-owned companies
· Create innovation which brings greater diversity and inclusivity into the workplace and the marketplace
· Invest more in training for their staff than employers in general, and invest in leadership capability
· Are more likely to invest their own money into their businesses
· Place a high value on work/life balance. This means they are more likely to start businesses that can be run from home or have flexible hours. This is ideal for mothers who want to raise their children while still running a successful business
Obstacles for Female Entrepreneurs
There's no denying that women have made great strides in the business world over the past few decades. But despite all our progress, there is still one area where we lag behind our male counterparts: Entrepreneurship.
According to a recent report by the World Economic Forum
· Women started 49% of new businesses in the US in 2021, up from 28% in 2019.
· Women Entrepreneurship is also growing around the world, but obstacles remain and men still outnumber women 3-1 when it comes to business ownership.
· The World Economic Forum’s Global Gender Gap Report 2022 shows more women than men continue to be impacted by the Covid pandemic.
The Global Entrepreneurship Monitor (GEM) highlights in its report that “Women tend to be somewhat less active globally than men when it comes to start-up activity (on average, 10.4% of women surveyed versus 13.6% of men). In other words, women represent two out of every five early-stage entrepreneurs that are active globally.”
The World Bank states in its blog that “in all economies, there are more men than women who own or manage limited liability companies. Women represent on average 1/4 of new business owners and directors while men stand for 3/4 of new business owners and directors. The rates of female participation for sole proprietors are slightly higher. The average share of female sole proprietors is about 1/3 compared to 2/3 for the average share of male sole proprietors.”
However, the World Bank gives us insight into the root of the problem when identifying the exact number of Female Entrepreneurs for the difference in figures presented by different organisations when trying to account for the statistics:
“The lack of comprehensive gender-disaggregated data on business entry and ownership presents an obstacle to the global analysis of female entrepreneurship. Due to insufficient standardized and internationally comparable data, the diagnostics of gender gaps in entrepreneurship are limited.”
Regardless of the differences in statistics, in an ideal world, if support for male and female Entrepreneurs was equal then the percentage of Female Entrepreneurship in a country would be similar to the percentage of women in the adult population. In many countries the percentage of women in a country is 50%, meaning that half of all Entrepreneurs, should be women!
Additionally, there is NO concrete and globally used definition of a Female Entrepreneur, which means all data used has no comparable benchmark.
As with our Domestic Violence blog post, the underlying factors which discourage women to set up their own enterprises are gender inequality and discrimination.
The biggest factors which women must overcome when starting their businesses in many parts of the world are:
· Rule of law challenges in the country – Many countries, (ACTUALLY ALL COUNTRIES!) discriminate against women even those who have signed up to the UN Committee on the Elimination of Discrimination against Women (CEDAW).
· Social and cultural norms in their communities – This includes women not being allowed to work, to travel alone, or to have to deal with family responsibilities before business.
· Education standard – Women and girls in lower-income countries and families tend to have a lower standard of education and literacy, limiting their options to set up and grow their enterprises.
The above factors then lead to the following constraints:
· Access to institutions (government administrations/banks/services) – Public sector institutions by their very nature are not entrepreneurial and adverse to risk-taking. This coupled with being faced with the still undervalued women in business, leads to a less welcoming approach towards Female Entrepreneurs.
· Access to finance/capital (banks/investors/public sector funds) - Women face unique challenges when it comes to securing funding. They are generally perceived as being less risk-taking than men, and hence receive less investment. And even when they do receive investment, it's often for smaller amounts than their male counterparts.
· Access to technology – Women have less access to the internet, smartphones and mobile technologies due to their financial, and often social constraints.
· Access to markets, local, national and international to be able to sell their products which tends to be dominated and controlled by men in business.
And the biggest one –
· Access to childcare.
Policy Recommendations to Promote Female Entrepreneurship
There is no one-size-fits-all answer to support women to achieve their ambitions of becoming Female Entrepreneur. However, there are a few key policy recommendations that can be done to support and encourage women to become Entrepreneurs.
There are four key concrete proposals for policy interventions to promote and develop Female Entrepreneurship to support sustainable growth in any country. This is already being achieved in the United States.
Such policy recommendations are not cost–neutral, but the small investment required by the State will be outweighed by the return on investment. This return on investment will come from the added economic benefit which results from the increase of female-owned businesses in the economy, and job creation within these companies.
It could also be argued that funds could be redirected from low-impact public sector projects to better support the objectives of economic and social growth through Female Entrepreneurship.
Furthermore, these policy recommendations do not require any new structures and can be integrated into current ministries for economic development, but must not be established in gender ministries, because Female Entrepreneurship is an "economic" issue, not a gender issue.
Create an office of European Women's Business Ownership within the government ministries and in competent departments (preferably not gender ministries to provide a distinction between economic activities and gender equality responsibilities), without establishing whole new structures.
Appoint a Women’s Enterprise Director/Envoy or High-Level Representative within the Business/Economic Ministry, with a cross-departmental role in raising awareness about the economic benefits of encouraging more women to start and grow businesses.
Collect data and produce annual policy and research updates on women's enterprises across the country, increasing access to gender-disaggregated data across government departments and agencies.
Enforce current legislation in areas of gender equality. This should include a focus on ensuring that the allocation of resources and funds is analysed by gender to deliver transparency, accountability and due diligence in terms of proof of genuine gender equality compliance.
These recommendations can be supported by evidence of return on investment. Similar actions in the USA in terms of doubling the number of female entrepreneurs, an increase in jobs created and economic input into society have all been proven through statistical analysis, using a concrete definition of what constitutes a Woman-Owned Business. It was the mandatory element of data collection and procurement policy which had the greatest effect in the US.
The fabulous National Women’s Business Council of America has the full story.
Please note that to create a fully enabling and equality environment, and an environment conducive to Female Entrepreneurship the following should also be considered:
· Include men in the debate and in the communication.
· Remove gender stereotyping, particularly in education and career paths.
· Promote academic studies which can lead to new business start-ups for women and girls
· Ensure fair access to funding and resources on equal terms; including the provision of financial support and resources specifically for women Entrepreneurs, such as grants, loans, and incubator programs that are designed to help women get their businesses off the ground.
· Implement provisions to provide supportive mentors, role models, and networks to help women navigate the challenges of starting their own business
· Improve social protection for the self-employed
· Create more awareness around Female Entrepreneurship and the successes of women who have started their own businesses. This can be done through events, conferences, media coverage, and educational initiatives.
Despite the challenges, there are many reasons why women become Entrepreneurs. In my case, as with millions of women across the globe, it was out of necessity.
Women are natural problem-solvers and are often passionate about making a difference in the world. When given the opportunity to lead, women have been shown to be more effective than men at creating businesses that are profitable and sustainable. In addition, women are often able to create a better work-life balance than men, meaning they can have successful careers while still maintaining healthy personal lives.
For global governments, it is an economic imperative that they understand the value of promoting female entrepreneurship.
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