RBS commissioned a report on Women in Enterprise from Aston University to try to understand why women appear to be so under-represented in ranks of UK entrepreneurs. They wanted a detailed picture of gender and entrepreneurship in the UK so they could understand the challenges that women are facing and get a sense of what more can be done.
Women in Enterprise
Here is a summary of the findings:
A notable trend within developed economies since the 1950s has been women’s increasing labour force participation such that they now, on average, form around 48% of employees in developed economies and about 66% of women, compared to 80% of men, are economically active. However, this level of participation has not been reflected in levels of either women’s self-employment or business ownership where there are significant gaps between men and women.
Eventually, we should aim to stop referring to ‘women’ entrepreneurs but simply note there are segments of people within the population who are entrepreneurial but whose gender is no longer of interest or note.
Women entrepreneurs in the UK economy
Women in the UK are about half as likely as their male counterparts to begin new firms. This is a common finding throughout most developed and developing economies. Once in business however, few gender-related performance differences are evident amongst the self-employed or small firm owners. So, women are neither better nor worse entrepreneurs than men once we control for a number of other contextual factors such as education. However, amongst those firms which do grow, women are under-represented. Thus, the key gender-related differences within enterprise and entrepreneurship are start-up rates and growth rates. In summary, this report suggests that:
Women and entrepreneurship
- Women appear to “use” business ownership differently to men. They appear to be more willing to trade-off between their work and other areas of their lives. They are also more likely to use self- employment as a temporary solution within a wider career path.
- Women do not have any individual or collective ‘entrepreneurial deficit’ but their socio-economic position in society is highly influential in shaping their attitudes towards running successful small businesses.
- Women attribute their business exits less to failure and more to personal reasons, especially amongst the 25-34 age group.
- Women are more likely to own firms which operate from home, are part-time and are in lower-order services. This makes them more likely to have limited growth trajectories.
- Because of high rates of entry and exit in these preferred sectors, womens’ share of business ownership has barely changed since 1992, even though increasing numbers of women are now entering self-employment, or stating that they are self-employed.
- Although women-owned firms are less likely to exhibit growth there is no evidence to suggest that those women entrepreneurs who strategically target growth will be any less successful than their male counterparts.
- Women-owned firms outperform those owned by their male counterparts, when firm characteristics are controlled for (i.e., business age, sector and size) as well as the attributes of the individual (i.e. education, age and income).
- There are few gender-related differences in terms of sources of funding of start-ups.
- Once the business characteristics (e.g. size, age, sector, risk rating) are taken into account, women-ledbusinesses do not pay higher borrowing costs than men-led businesses.
- Women-led businesses are significantly less likely to be using external finance than men-led business. This is true even after business characteristics are taken into account.
- Amongst growth firms seeking equity finance, there are much fewer women-owned businesses (than men-owned). This evidence suggests that, combined with the very small number of women who are venture capitalists, women-owned business owners are constrained in their experience, consideration and use of such finance.
Redressing the image imbalance
- Prevailing entrepreneurial role models reflect masculine bias and this is reinforced in popular media, education and government policy. Whilst this is beginning to change – we are seeing an increasing number of female role models emerging – there is still a long way to go.
- Promoting and including more diverse role models is essential to encourage more girls and young women to consider self-employment as acceptable and achievable.
- Encouraging younger women with higher educational capital into enterprise will begin to dispel the myths that women are not suitable or talented entrepreneurs. It will also ensure that women-owned firms are distributed more widely across the general business population.
A summary of the recommendations are below:
Some specific recommendations for role models include:
- female ambassadors in key business sectors are needed to showcase achievements and encourage more girls/young women to engage in business ownership as a preferred career;
- Innovations in the portrayal of enterprise and entrepreneurial role models in the media are long overdue. It needs to move away from a preoccupation with pure entertainment and move towards the reality of starting and running a successful business;
- Challenging associations between gender and entrepreneurship is imperative. It should not be special or extraordinary for girls and women to be active in entrepreneurial activities.
Role models can only go so far. They raise awareness and inspire but they are unable to deliver the required outcomes on their own. Mentoring is seen as an important way of sustaining startups and building growth ambitions and current provision needs to be strengthened. Finding appropriate and challenging mentors for women business owners can be difficult. This means encouraging more women mentors but also raising awareness of gender bias among status of existing business support organisations. More schemes such as those within the Inspirational Journey initiative developed by RBS/NatWest would add value in this area.
Non-gender business networks
In addition to women business networks such as every woman, women business owners need to be connected to business networks which are not defined by gender but by a shared experience and trust as well as a shared ambition. Business Schools can provide an environment to enable that to happen but too often they are caught up in the male-dominated corporate world and are less connected to the host of successful women business owners on their doorstep. Building networks of growth-oriented small business owners (both women and men) through seminars, workshops, and short courses (delivered in novel ways embracing social media) should be high on the agenda of all UK Business Schools and colleges. The Gazelle Group of Further Education colleges is a relatively new and exciting development in this space.
Schools, colleges and universities represent a unique opportunity to foster entrepreneurial aspiration among girls and young women. There are many enterprise initiatives in the education sector across the UK, and these need to be supported more intensively and connected to tangible rewards for young people. The current generation of “born digital” or millennials provides new opportunities for virtual/online initiatives and “game-ification” to encourage engagement. Starting a business while in full-time education should not be seen as a side-line or extra-curricular activity by young people but integrated into the core curriculum with the appropriate rewards. The developing national network of ‘enterprise academies’ provide an opportunity for those with a specific interest in entrepreneurship to develop their skill sets in very different ways.
Funding remains an issue for business owners and there would appear to be a particular need to ensure that the financial institutions are responding to the needs of women business owners. However, the picture is complex and it is sometimes unhelpful to analyse simply by a gender split. A stronger emphasis upon evidence which challenges assumptions of gender discrimination is vital including developing amore robust analysis of data regarding the use of financial products, including term lending which looks at gender in the context of business age, sector and size.