18 October 2001 - Britain's businesswomen are an underfunded minority according to a new report
published by The Industrial Society. The report - Unequal entrepreneurs: why
female enterprise is an uphill struggle - shows that the UK government has failed
to support an increase in the number of women-owned businesses. The report recommends
greater government support for UK businesswomen including:
- a national centre for women's enterprise
- an Office for Women's Business Ownership in the DTI
- a women's business charter to encourage better treatment for
women from law firms, banks and financial advisors.
The report indicates that women business-owners are younger on average than male
entrepreneurs - 43% are under 44 compared to 30% of men. Compared to their male equivalents,
women entrepreneurs also have:
- less access to start-up capital
- less management experience
- are less welcome in the informal business networks that often provide vital support
to small firms.
The report concludes that these gender differences stifle both start-up and growth of
businesses owned by women.
Increases in numbers of working women, 'feminised' markets and
the expansion in service sectors, have all failed to generate the expected
growth in women-owned businesses. Currently women make
up just 26% of the UK's self-employed - a figure that has barely changed since 1990.
The report's authors attribute this, in part, to the inferior position of
women in the labour market.
Dr Eleanor Shaw of Strathclyde University said: "Most women hold low-paid,
unskilled or semi-skilled positions, women earn on average 72% of male
earnings and only 10% of the UK's 200 largest companies have female board
members. Women's experiences of the labour market are a major constraint on
their ability to set up their own businesses."
And women in business also find it more difficult (than men) to finance their
companies. The reasons include:
- guarantees required for external financing are often beyond
the scope of their personal assets and credit track record
- women face sexual stereotyping from banks
- there are informal financial networks, which they find difficult to penetrate
- women rely heavily on personal savings - between
80-99% of initial capitalisation compared to 30-59% for men
Dr Eleanor Shaw said: "The economic argument that self-employed people
create jobs and wealth is well-documented. Women constitute an
overwhelmingly untapped pool of entrepreneurial talent, and if we can
encourage more women to start their own businesses we can add to our
Women in the USA have benefited from a number of initiatives producing an
increase in women entrepreneurs increase rom 5% in 1970 to 38% of
all small businesses in 1999. The report urges similar initiatives in the UK, including:
National Centre for Women's Enterprise: The centre should take a lead in
advocacy, research and development, networking and dissemination of best
practice and awareness raising. Its key role would be to ensure there is a
cohesive and strategic approach to women's enterprise development in the UK.
National Policy on Women's Enterprise: Recognising the needs of
women as a diverse group and requiring high level government support to
overcome the piecemeal approach to support for women's enterprise..
Business support: Projects to improve women's experiences of small business
sould become a political priority, both centrally and locally. To achieve
this, female economic development professionals would have to be paid well and
rewarded well - providing an important signal.
Women's Business Charter - championed by the Small Business Service and, in
Scotland, the Scottish Executive. The Charter would encompass the complete
range of professional services supporting businesspeople - including banks,
accountants, lawyers and careers advisers - encouraging best practice for
supporting women's enterprise. It would also require its signatories to
monitor progress and outcomes with respect to their female clients.
Office for Women's Business Ownership: A similar body to the Office for
Women's Business Ownership in the USA (established in 1979) should be
established under the auspices of the DTI. The mission statement of the USA
Office is equally relevant to the UK: "to advocate for women-owned business,
one of the fastest-growing segments of the nation's economy" and "to create
programmes and policies that help women entrepreneurs become full partners
in the national and global economies". Acting as a policy development unit,
in conjunction with the National Centre, the Office would have overall
responsibility for ensuring the delivery of a cohesive approach to women's
enterprise development in the UK.
Access to finance: Traditional credit scoring mechanisms discriminate
against women because they tend to have a less detailed and more fragmented
financial track record. The report also recommends specific initiatives to
improve women's access to finance.
These include a microcredit programme, improved information on and access to
informal investment, as well as an on-line business credit union which would
attract savings and funds from existing businesswomen and provide financial
and networking support. The report further suggests that there is a need
for more female 'angels' for funding the creation and growth of women-owned
ventures. It says that 'business angels' are an important source of
capital, but only a small proportion of these are female.
According to Will Hutton, chief executive of The Industrial Society: "In the
British labour market, women are still second class citizens. They lag
behind men in terms of pay, promotion, benefits and more. They are
drastically under-represented in management, and routinely invisible in the
average boardroom. Less well-documented is the discrimination women
entrepreneurs encounter when it comes to establishing themselves in
business. For an economy whose lifeblood is new enterprise, and
particularly diverse enterprise, this situation is literally intolerable."