Why women entrepreneurs (Part III) – It’s the economy, stupid

26 04 2013

Why women entrepreneurs?
(transcript of Common Business School lecture at Liverpool Hope University)

If the first two reasons weren’t compelling enough, then the third surely will be as economic argument often wins over claims for fairness of outcome or opportunity. As expressed so eloquently in Bill Clinton’s election campaign in 1992, It’s “the economy, stupid”.

I’ve said that most businesses in the UK are small, but exactly what do I mean by that?

Well, 71% of businesses in the UK have 0 employees.
That is to say an individual has work for themselves and employs no-one else.

A further 24% of businesses in the UK employ between 1-10 people

So, a staggering 95% of businesses in the UK employ less than 10 people
Perhaps Napoleon would still recognise the UK as “A nation of shopkeepers”. We are certainly still a nation built around small businesses.

We’ve seen how existing businesses are managed largely by men, but what about new starts? What would be the effect of encouraging more women to start businesses?

As early ago as 2007, in a report into the state of women’s enterprise in the UK by R Harding, it was stated that,

  • “any significant increase in (overall) business formation will only come from encouraging more women into business”

If we look at the US for inspiration, as we are often encouraged to do, then women there are twice as likely to be active entrepreneurially than women here in the UK. What would it mean to the UK economy if we could achieve that level of entrepreneurial activity here?

Former Prime Minister Gordon Brown, speaking at the Advancing Enterprise Conference in 2005, said

  • “If the UK could achieve the same levels of female entrepreneurship as the US, Britain would gain three quarters of a million more businesses”

750,000 more businesses!

Well, maybe that might be too ambitious; thinking that women in the UK could be as entrepreneurial as their US counterparts, though interestingly, the figures for male entrepreneurship are about the same on both sides of the Atlantic, so how about increasing activity in the UK?

What would it mean if women in the UK were as active entreprenerially as men in the UK?
Rt Hon Jacqui Smith, Former Minister for Women and Equality said that,

  • “In the UK, if women started businesses at the same rate as men, we would have 150,000 extra start-ups each year”

Slightly less impressive but still impressive numbers.

And it is not just about starting businesses simply for the sake of starting a business, to make the government statistics look better, but it is about sustainability. As Chief Executive of the Small Business Service, Martin Wyn Griffith put it,

  • “A pound invested in developing women’s enterprise provides a greater return on investment than a pound invested in developing male owned enterprise”

Why might that be?

We know from experience with the likes of the Grameen Bank, who put small, often very small, amounts of money into women led enterprises in developing countries, that the women use the money to grow their businesses and also to support their families and communities. I know from my own experience in Fair Trade co-operatives that Edinburgh based tea and coffee importer, Fair Exchange, buys only from women-led co-operatives as they also have shown that when you buy from women the money stays in the community rather than disappearing with the men to the nearest big town with a bar. Now I’m not suggesting that money invested in male-led businesses all ends up supporting cocktail bars in the city, though I would quite like to know what corporations do with all that money as it doesn’t appear much of it goes to paying tax, but we do need to take some of the learning from overseas developments into our own struggling communities.

And the 150,000 women-led businesses that Jacqui Smith felt could be created, there is likely to be a much more immediate effect on the economy than if those start-ups were from men as around one in five women come into self-employment from unemployment compared with around one in fifteen for men. Put simply, men are more likely to leave a job that they already have to start up on their own – net economic gain 0 jobs. Women entering the workforce from unemployment – net economic gain 1 job.

We have seen that 71% of businesses employ no-one but there is still the tendency to dismiss women in self-employment as running “life-style” businesses. A man with a white van and a ladder is entrepreneurial in setting himself up with a window cleaning businesses. A woman with a white van and a hairdryer is either working for pin money or biding her time waiting for mister right to come along – presumably bringing his ladder with him!

I’m in two minds as to whether we should try to reclaim the term “lifestyle business” or whether it is already so badly debased that it is beyond reclaiming. Fundamentally all businesses are lifestyle businesses, it’s just that Bill Gates has a different lifestyle to you and I. And why should a plumber be more respected than a hairdresser?

There is nothing wrong with running a business that provides work for just one woman in order that she can support herself and her family. And when it comes to hairdressers, mine employs more people than I do, and hires out space in the salon to beauticians and other therapists, creating and supporting jobs in the town. Yet it is me here talking about entrepreneurship! Something wrong somewhere?

And it is worth considering the types of businesses women start, and why, and I’ll do that next.

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