The impact of female entrepreneurs on the economy
The Women’s Business Council advise the Government on how contribution from female entrepreneurs can optimise the economy. The aim was to focus on areas with the greatest potential economic benefit and on recommendations with a clear economic case for action. In June 2013, a report was published by the Independent Women’s Business Council.
In much the same way that we wrote about Budget 2013 and What it Means to Startups, the recently published “Maximising women’s contribution to future economic growth” report by the Women’s Business Council (WBC) tapped perfectly into a topic we feel passionate about sharing. We will take a look at some of the findings of the report. We hope it helps in making that leap into self-employment.
General report overview
The WBC was set up in 2012 with the intention to help women contribute positively to the nation’s economic growth. They state that: “Our aim has been to focus on areas with the greatest potential economic benefit and on recommendations with a clear economic case for action.”
General key findings were as follows:
The urgent need to broaden girls’ career choices and aspirations by bringing together schools, business, career development professionals and parents
Flexible working needs to be embraced by business to offer support and greater opportunities for working parents
Offer women in the third phase of their working lives opportunities to expand their knowledge and unlock untapped potential
These findings, coupled with the comments on female entrepreneurship, seen further, should become a roadmap for “clear and achievable gains. The WBC also says that encouraging women’s economic development in this manner now is perfectly timed, as the Government struggles in its many initiatives to stimulate growth. To reach the UK’s economic potential, we need to utilise the talents, skills and expertise of all.
We are particularly interested in what the report had to say with regards to growing female entrepreneurs, and we will look into the findings in more depth now.
– The Strategy
The report states that economic growth could easily be supplemented by inspiring more women to enter the start-up landscape. It speculates that this can be achieved by helping women to understand how enterprise opportunities can increase their financial independence and workplace flexibility. Female entrepreneurs can also offer the assistance needed to help women gain the skills necessary for running a successful business.
– The Aims
Empower future generations of young women to consider entrepreneurship. For entrepreneurship to be considered as a viable career option is to embed entrepreneurship into the education system.
Encourage women who are currently in the labour market and struggling to find the necessary workplace flexibility. This should also be encouraged to consider enterprise as a realistic career choice.
– The Rationale
On a wider scale, British enterprise, in general, is vital for economic growth, innovation and competitiveness on the world market. This was reiterated in the recent “Growing your business” report by Lord Young, wherein he recognised the important role played by small and medium businesses in the economy.
Despite this, women are currently are about half as likely to be entrepreneurs as men. While this is an alarming figure – especially when combined with the fact that only 19 percent of small and medium enterprises are majority-led by women. It does mean there is a huge untapped goldmine of female entrepreneurial talent out there just waiting to be mobilised. Ultimately, if women set up and run new businesses as often as men, there would be an extra one million female entrepreneurs on top of the current figure.
So why the disparity between the sexes?
The report found that a large number of women see access to finance as the main barrier. Interestingly. despite women being less likely to seek external financing, they are more successful than male-led small businesses at getting the financial assistance when applied for.
The report also puts forward evidence that women are less likely to believe they have the skills to run a business. During a 2011 study, 45 percent of men felt capable of starting their own business, compared to 29 percent of women. Furthermore, the study argues that it is largely due to wider issues related to a lack of self-confidence.
Finally, the report found that for many women, there isn’t a diverse enough cohort of successful female entrepreneurs. Existing successful female entrepreneurs should become apparent to help inspire the entrepreneurial instinct.
Promote enterprise through education
To ensure such disparity does not continue into future generations, entrepreneurship needs to be promoted vigorously in an educational setting. The skills, networking opportunities and the gaining of self-confidence must be addressed from an early age to improve the chances of an enterprise being viewed as a viable option. The study cites Lucy Cohen and Sophie Hughes of Mazuma UK Ltd. This is an excellent case study of highly-successful female entrepreneurs who took advantage of Young Entrepreneur schemes during their school years.
To achieve this, the Government need to research which existing schemes help to produce the highest levels of successful entrepreneurs. Existing micro-finance schemes in schools also need to be evaluated and expanded if they are proven to stimulate entrepreneurship.
Women’s organisations such as Everywoman, Sistatalk and Enterprising Women among others should work together with the British Chambers of Commerce women’s business networks to help create an industry-led approach. The business world must also aid the development of a college and school module based on starting a business to ensure that it covers all the necessary skills.
Increase the availability of role models
As reported by the study, 83 percent of women who have started their own business was inspired by a role model. Clearly, this is an important factor in inspiring potential female entrepreneurs. The Government could successfully roll such schemes out by promoting female entrepreneurs through the newly-appointed Entrepreneur in Residence.
Successful female entrepreneurs can also help the cause by signing up to existing programmes and speaking at events in educational institutions and women’s networks, while also mentoring prospective entrepreneurs themselves – the Female Founders Programme is one to note.
Access to finance
Finance is the most common barrier preventing most women from starting their own business. Promotion of all the business financing options available to women needs to be more widespread. This should include alternative sources of finance such as those we have covered in detail in the past. This will mean that when a great idea arises, the knowledge of how such a venture can be funded is already there.
Promotion of available financing methods should come from Government and business level. Also, financial services need to ensure they are successfully marketing their services to women who want to set up their own business.
Promoting support from women wanting to start a business
The existing support for those wanting to start a business is not gendered specific, instead of operating under a “one size fits all” approach. To successfully mobilise this group, good quality, relevant information and support need to be more readily available.
The Government and businesses should work closely to create an advice portal with an achievable route map into an enterprise. The marketing of schemes also needs to be targeted towards men and women separately in order to be successful.
Clearly then, successfully addressing the current disparity between men and women with regards to an enterprise is a mutually-beneficial initiative. According to the study, closing the gender gap by 2030, around £160 billion would be added to the UK’s GDP. With traditional jobs thin on the ground, we all need to be doing all we can to help bridge this gap.
If you’re interested in setting up a business you should start with our company formations guide – they’ll explain how to get set up and the steps you should take to get there. For more interesting reads about the current issues facing startups and entrepreneurship in the UK, browse our blog.
Published Tuesday, January 1, 2013