Julie Hall, founder of Women Unlimited, asks why women are less likely to set up fast-growth businesses
Much is written about the glass ceiling that exists for women in the boardroom, but no one is talking about the 'entrepreneurial glass ceiling' that exists in business ownership.
Only 14% of UK companies are majority owned by women. The average turnover for male-owned businesses is £360,000 yet for female-owned businesses this figure stands at £150,000 – depressing statistics for women in business, particularly when you consider that women account for 48% of the workforce and 51% of the population.
Questions I ask on a daily basis are:
• What is holding women back?
• Why is there such disparity between male and female-owned businesses?
• Why are women not achieving higher returns?
• Why do they choose to refrain from employing more people?
Studies have shown that given the same amount of starting capital, men and women have an equal chance of business success. So why aren’t they achieving the same level of business success? I’d argue that the answer seems to lie with women themselves.
1.
Women are more risk averse. From a venture capitalist’s perspective, a low-risk profile is not so attractive. Women tend to opt for a more steady approach as opposed to going at it ‘hammer and tongs’. A great example of where this has worked is Laura Tenison, founder of JoJo Maman Bébé. Laura has grown her company through capital re-investment to a point where it now has 45 stores across the UK and a £21m turnover. However, this growth has been totally organic, with no outside investment. The strategy is clearly working as the company continues to grow, even during the recession. Laura has never forgotten the values that her business is founded upon and this approach has enabled her to run her business, her way.
2. Women under-finance their businesses. There are many reasons for this: fear of debt, fear of risk, fear of losing control. A business needs money to grow. And usually the price for that money is either risk, via a bank loan or, equity, via venture capital or the angel route. In both cases, the finance provider wants their money back, but the terms and price paid often seem too high.
3. The vast majority of women build a business for purpose and passion not financial reward. If you speak to a roomful of male entrepreneurs quite often they will openly say that they want to build a multi-million pound company and exit within three to five years. While this is an objective for some women, you’ll find many of them want to create a business that fulfils a social purpose or social responsibility. The financial reward is something that they enjoy, but that is not their main reason for starting their business. They want to run their business and leave a legacy – a financial exit strategy, generally, doesn’t tend to be their end goal.
4. Women are usually responsible for the family. As the main caregivers in our society, caring for children and aging relatives can often take their attention away from the focus of their business. There are a few women such as Nicola Horlick, founder of Bramdean Asset Management and Janette Faherty, CEO of Avanta, who have managed to create extremely successful businesses while raising a family, but the path that they chose required great dedication and commitment. It’s my view that raising a family while growing a successful business can cause a conflict which means that women make some decisions based not on the future success of their business, but on how it will affect their family life.
It seems to me that ‘breaking the entrepreneurial glass ceiling’ is all about choice. We’re unlikely to change the way our society works, and I’m not sure that we would want to. I’m definitely in favour of helping women achieve their goals, and supporting them in their bid towards leadership, and I think the economic pay-off for this is enormous.
I’d like to see the government supporting more programmes which teach women about raising finance and how to build robust business models. I’d also like to see business programmes which focus on confidence and leadership. I’m not saying that men don’t need these programmes too, as I’m sure they would benefit as well, but with the right support we could start making a big difference in the amount of revenue that women owned businesses generate.
And a note to the government: another report on how we improve women’s enterprise is not going to move things forward. It would be nice to see some of the recommendations implemented rather than another task force created to look at the problem!
However, I firmly believe that those women that really want to succeed in their business have the ability and the capacity to do so. The entrepreneurial glass ceiling isn’t really a glass ceiling at all. It’s a natural level that has been created because of the choices that women have made. And that’s OK.
Julie Hall is the founder of Women Unlimited, a network for female entrepreneurs in the UK.
On Monday 8 March 2010, Women Unlimited will be running its annual conference, Stepping Into Success. Further information and tickets can be found at:
http://www.women-unlimited.co.uk/women-unlimited-conference-stepping-into-success/
