The Gender Imbalance of Enterprise

 

A £250bn boost to the UK economy?

This has nothing to do with the new chancellor’s ‘mini’ budget. The stark reality is that £250 billion could drive serious economic growth if the potential of female-led businesses could be unleashed. It would unlock the value that women can bring to the economy, society, themselves, and their families.

A big imbalance exists between the number of women starting up enterprises compared to men. The proportion of women-led businesses is considerably lower throughout all stages of business development in comparison to male-led businesses; men are 3 times more likely to start a business. This means the UK has “a gender gap equivalent of 1.1 million missing businesses”.

Latest 2022 data from a major government-commissioned review¹ found that in total, over 20% of new firms are now led by women which is a record high, up from 16% in 2018. Although the proportion of women has increased, these figures don’t make good reading and much more needs to be done.

Interestingly, these figures refer to private sector business. In social enterprises, the gender imbalance is less marked with 47% of social enterprises led by women.

But what is behind these figures? Why are women less likely to start up enterprises?

According to research published in 2021 by the Accelerating Women in Enterprise Programme², issues of location and socio-economic status also interact with gender in the context of business start-up and development.

The research looked at the ‘entrepreneurial ecosystem’ for supporting women³. This means the diverse set of interdependent stakeholders within a geographic location, that impact on the setting up and journey of entrepreneurship. They play a vital role in supporting the development of new business ventures through the connection of entrepreneurs to expertise and resources and are influenced by prevailing policies and culture.

Interviewing 164 women⁴ in both the UK and France, the report found that many disadvantaged female entrepreneurs experience barriers that inhibit their entrepreneurship. They listed the following:

• The costs of childcare and managing entrepreneurial work with non-work roles, specifically motherhood, can create work-life conflict;
• Gender discrimination is experienced as a persistent barrier. When it comes financial support from the banking sector, only 13% of senior people on UK investment teams are woman, with 48% having no women at all resulting in a perceived bias among those who can provide access to funds.
• Women entrepreneurs located in rural areas tend to have less access to support, networks and the internet;
• There is a digital divide reported by women entrepreneurs who do not have internet connectivity because of costs, skill levels, age (older women used the internet less) and/or rural location;
• Types of business run by women entrepreneurs, including those with social goals such as social enterprises, are often not supported;
• Government bureaucracy and the welfare benefits system can create barriers for female entrepreneurs.

 

They found that:

• The well-being of some women is negatively affected by a lack of support, but engaging in entrepreneurial works is rewarding and has positive effects on well-being;
• The women entrepreneurs interviewed do not lack confidence; rather, their self-esteem is affected by discrimination;
• Women entrepreneurs draw much of their support from family and friends for their entrepreneurship, but this is different for disadvantaged women who have less professional support from their informal networks.

 

In the last 3 years, the AWE programme has supported over 700 women living on both sides of the English Channel, who have faced economic, social, and environmental challenges, to create businesses of their own whilst increasing the sustainability of early-stage women-owned social businesses.

What barriers need to be lifted for women and how can this be achieved?

• Drive extra finance to female founders. Reduce the bias among those who can provide access to funds as well as banks giving support for those with caring responsibilities. Women entrepreneurs are more likely to take on the care burden for adult family members with special needs, or ageing relatives. Considerably less funding is gained from the investment community despite evidence that women-led companies perform better than male-founded startups, generate 10% more in cumulative revenue over five years and are less prone to corruption.
• Network and support. An entrepreneurial ecosystem needs to be cultivated that encourages and supports women’s entrepreneurship, both generally and more specifically for disadvantaged groups of potential and actual female entrepreneurs.
• Roll out of entrepreneurship-related courses to schools and colleges to benefit young people with courses focused on entrepreneurship, financial literacy and self-belief.

 

At Action Hampshire we have trained and mentored entrepreneurs over the last 13 years as part of the School for Social Entrepreneurs, Hampshire. We are proud to be running the Accelerating Women’s Enterprise programme in Hampshire until March 2023. If you are interested in joining the programme, click on this link to find out more! We look forward to supporting these amazing women to make their impact and help close the gender gap!

 

————————————————————————————————————————————

¹The Alison Rose Review of Female Entrepreneurship – Progress Report 2022

²The Accelerating Women’s Enterprise (AWE) project, funded by the European Regional Development Fund (ERDF) and Interreg Channel Region Fund. Accelerating Women in Enterprise Opportunities Report 2 – Good Practice and Opportunities Evolution of the entrepreneurial ecosystem for disadvantaged female entrepreneurs – 2021. Research undertaken by University of Essex and University of Portsmouth. Click this link to view the report.

³Entrepreneurial ecosystem – Cohen, 2006

⁴Disadvantaged female entrepreneurs in this study were defined as experiencing additional challenges over and above their gender and relating to one or more combinations of the following: » Health (physical and/or mental illnesses, mobility, disability issues); » Family context (caring for children and/or other relatives); » Geography located in region of socio-economic deprivation; » Skills gaps and limited educational qualifications; » Low income or economic status (unemployed, economically inactive, low-paid and/or part-time); » Socio-cultural disadvantage (ethnic minority status, migrant, aged under 30 or over 50)