Unequal entrepreneurs:
Why female enterprise is an uphill struggle

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 economic prosperity."

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."

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