Women Entrepreneurs

Originally blogged for Virgin.

Entrepreneurship is being heralded as the possible saviour of the world’s economies. It is being hailed as the solution to youth unemployment. Legislation is rapidly being drafted to force institutions (like banks) to increase lending to SMEs. And, if the rhetoric is to be believed, achieving work / life balance is the cherry on the top.

You can almost hear the violins starting up!

But if it is so easy, then everyone should be an entrepreneur. The reality is that this is a tough gig. Serial entrepreneurs liken it to riding a rollercoaster. Of course it is about the idea and raising the capital. Of course you need to know your market, leverage the technology and be able to build a stellar team. But more than anything else, you need to be tenacious, resilient and have oodles of self-belief and confidence.

If you were reading those requirements in a single corporate job description, you would think that the recruiter had to be kidding! And, given what we know about the gender stereotypes, if an additional requirement was that the applicant had to be a woman…well, I can hear air being sucked through teeth!

But the stats₁ suggest that there are increasingly more brave women out there than there are men. With over 200m female entrepreneurs worldwide, 50% of SMEs and 25% of 2-3 year old businesses being led by females and women establishing more than double the number of businesses last year than men, the rise of the female entrepreneur cannot be ignored.

And this is not just in the West. Women are blazing a trail in the traditionally male dominated societies as well. The Global Entrepreneur Model reports that Ghana, Nigeria and Thailand have majority female entrepreneurs. Fortune 500 has listed 5 of the top 10 global, self-made female
billionaires as residing in China and Hong Kong.

What is driving the generally ‘risk averse, lacking in self-confidence’ gender to embrace this challenging career? Christina Ioannidis and Nicola Walters interviewed hundreds of women who left corporate life to become entrepreneurs, for their book, “Your Loss”. They concluded that there are 4 principle reasons for what they called “side ramping”: fulfilment, flexibility (time and technology), chance to innovate and freedom. And, additionally, in all cases, the women wanted to make a positive difference – make money but in ways that are aligned with their personal values. And that means doing business in the right way, treating employees as they would want to be treated, really listening to and fulfilling the customers’ needs, and working their networks to connect people, ideas and concepts.

Typical female characteristics, you might argue. All this sounds soft and fluffy, but is there any hard commercial delivery? Catalyst has reported that in 2013, businesses run by women had a 53% higher return on capital and 42% higher sales revenue. And between 2002 and 2012, 57% of businesses with turnover of $10m+ were run by women.

This, together with increased female employment, results in women controlling 51% of private global wealth. And they are not keeping this to themselves. Women, generally, take a more holistic approach to wealth management: investing into education, local communities and causes with a social impact.

Micro finance has long reported that providing finance to women provides a good return on the initial investment. It also always bolsters the immediate community and micro economy. And more importantly, often lifts the next generation out of poverty. Whilst the impact is perhaps less
dramatic in the developed countries, the evidence suggests that the effect is the same. So I find it surprising that last year, of the total amount lent to entrepreneurs by venture capitalists, GEDI reported that only 6% went to businesses established by women. Female entrepreneurs state that their principle business challenge is raising finance, with many of the same organisations who provide micro finance to women in the emerging markets, shunning similar, less risky investments in
their home markets. Perhaps it’s time for a new funding structure for this rapidly growing and profitable sector of the world economies. And investment angels might just offer the solution that regular financiers are not providing.

Male or female, entrepreneurship is not for the feint hearted. But if women can find their inner self confidence, embrace their passion and harness their collaborative leadership style, they will provide the future economic growth. Both directly through the business that they establish and those they employ, and indirectly through the philanthropic investments and contributions that they make.

₁ There are plenty of stats, not always reporting the same absolute numbers but all emphatically reporting the same directional information.

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