Why must we increase representation for female entrepreneurship?

Although we live in a diverse world working towards equal opportunities, the statistics show that females are less likely than males to start businesses. Shalini Khemka, CBE, explores why female entrepreneurship is essential to foster sustainable economic growth

There is plenty of evidence that women are more than capable of setting up and running successful businesses, but the statistics reveal a disappointing situation. While there has been a slight increase in female entrepreneurship, women are still only 60% as likely as men to be self-employed in the EU, according to an OECD survey. (1)

It does not appear to be an age issue as young women (20-29 years old) were not any higher up the rankings in relation to either confidence in their abilities or in comparison with their male counterparts.

Despite the rapid increases in educational qualifications, the World Economic Forum’s Global Gender Gap Report (2) predicts that we have another 99.5 years to wait before we achieve gender parity. This is not only for the UK; the charts show a similar pattern worldwide across the 40 countries that participated in the survey.

Female entrepreneurs in countries of different economic statuses

Gender gaps in startups are more significant in middle-income countries but tend to be narrower in lower-income countries. This may be due to many women starting businesses out of necessity.

Interestingly, women in poorer countries tend to be more self-confident about their abilities (skills and knowledge) to become entrepreneurs and less afraid of failure than women in middle and high-income countries. This may be due to the still evident societal influences, generating subjective and, possibly, biased perceptions about self-confidence and fear of failure. It may also be affected by the existence of or access to fewer opportunities.

Despite the evolution of the working woman and the two-income family, it is still more likely to be the male partner who embraces entrepreneurship. Married women with young children are more likely to enter entrepreneurship than take a paid position and are more likely to be entrepreneurs than unmarried women.

This may be because it is the only way they can earn money without being tied to a regular schedule, so they can be available to meet family needs without having to beg for time off. There is also the issue that, sometimes, when women start a business, it is seen as work partly supported and made possible by having a partner who can provide the funds that support the family.

Like their counterparts in more developed countries, women in developing countries rely more on their husbands and extended families. This is often constraining since women’s marital status, assets, and incomes are brought into their marriages. These are important influences on their entrepreneurial decisions.

Of course, there are exceptions to every rule, and there are women who are the main breadwinner in the family, but they are exceptions.

The potential for female entrepreneurship

In the book, We See Ourselves as Entrepreneurs, But Others See Gender and Race by Trish Cotter, there are some interesting statistics on female entrepreneurship, albeit for the US sector:

• Women started an average of 1,817 new businesses daily, representing 42% in the US – generating a revenue of $1.9 trillion;
• Women-owned businesses are growing two times faster on average than all businesses nationwide. In particular, women of colour are starting businesses at 4.5 times the rate of all businesses; and
• The most significant growth in women-owned businesses happened at the extremes of low-revenue and million-dollar-plus businesses.

The demise of the services provided by (UK) organisations such as Business Link and local Enterprise Agencies (axed in 2011) has removed some opportunities for UK-based entrepreneurs to get invaluable advice and support. Today entrepreneurs are mainly dependent on private sector consultancy for these services.

New female entrepreneurship demands support to help women establish and grow robust businesses that embrace best practices. That is where strong networks are essential.

In the right network, new female entrepreneurs will have access to the people who can help them negotiate the business minefield and get support, advice, and feedback from people ahead of them on their journey.

References

1. https://www.oecd.org/cfe/smes/inclusive-entrepreneurship/gender.htm#:~:text=Women%20are%20under%2Drepresented%20in,self%2Demployed%20as%20young%20men
2. https://www.weforum.org/reports/gender-gap-2020-report-100-years-pay-equality