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Women and entrepreneurship
Entrepreneurship is an important driver of economic growth, and it provides economic opportunity for women (and men) everywhere.
A report by Deloitte and the Business and Industry Advisory Committee to OECD shows that if women entrepreneurs are to make a greater impact across economies, special policy attention is needed on matters including but not limited to education, and non-discrimination, in areas such as access to finance and property rights.
Entrepreneurship is an important driver of economic development and growth, and a facilitator of empowerment for women around the world. The OECD Recommendation on Gender Equality calls on governments to reduce the gender gap in entrepreneurship activity. This Report seeks to offer practical experience to OECD, governments, companies and women themselves in identifying best practices, addressing obstacles and implementing policies that will help unleash the potential for women’s entrepreneurship activities. It is based on a BIAC Workshop held in Paris in June 2014 that brought together senior representatives from the governments of France, Japan, New Zealand and the U.S., as well as executives from multinational corporations and other business representatives. They discussed the financial, social, and cultural challenges facing women entrepreneurs and provided examples of policies and programs to help realize the economic and social benefits of women’s entrepreneurship.
A conservative estimate puts the number of women-owned businesses at between one-quarter and one-third of all enterprises worldwide. They populate all sectors of the economy and come in all sizes. Many of the issues confronting women entrepreneurs, as well as the qualities and skills important to their success, are the same as those that pertain to all businesses and business proprietors. The issues largely center on access to finance and markets, as well as a conductive regulatory climate for doing business. The skills include management ability, financial literacy, creativity, dynamism, self-confidence, and an appetite for risk. But many characteristics of women entrepreneurs and of their enterprises differ from those of men, and therefore demand separate and specific policy interventions.
The biggest obstacle to funding and growing any business is access to capital. Despite evidence that women tend to have better repayment records than men, they face higher barriers in this regard. These disparities are the result of the complex interaction of factors, including the way private equity works, the way financial institutions operate, and the behavior of women themselves. In some countries, gender-based legal and regulatory obstacles also pertain. But even where this is not the case, women face more subtle issues. For example, private equity financing entails extensive use of intermediaries. Women tend not to be strongly entrenched within the relevant investor networks. Lacking exposure to the world of private equity, women tend to structure their projects differently from men, which may itself affect their ability to attract capital. Men and women also have different styles in “pitching” for funds. Women too often lack the knowledge and confidence to ask for large enough sums and to negotiate well on terms.
Attracting funding is thus in part about relationships and trust. For women to break into this circle of trust requires a change in mindset and behavior from all participants – male and female. Women need to think bigger, ask for more, and seek out appropriate network relationships. Some funding sources are changing their offerings to gender targeted products, such as “women bonds” to fund women-owned businesses, or foundation support for women entrepreneurs. Business accelerators, programs that provide early stage development services such as mentoring and equity based funding to small and medium sized businesses, can also be catalysts of growth.
Many multinational corporations well understand the business and economic case for greater participation of women in the workforce and have proactively introduced programs aimed at supporting women-owned businesses and women entrepreneurs. Their efforts are driven by the critical role women-led businesses can play in the execution of their own business strategies. The report includes a number of company case studies describing these programs.
Public policies that foster women entrepreneurs are key to increasing their numbers and contributing to their success. Such policies require frameworks that can provide pathways for women to start and grow businesses, and to support gender equality more generally. Regulatory and legal frameworks should not raise barriers for women; rather, employment, education, taxation, finance policies should foster women’s’ business initiatives. Social policies including flex-time, parental leave, and access to affordable child care are essential for many women who embark as entrepreneurs. Other positive change agents include long-term education initiatives to address cultural stereotypes.
Such approaches will be shaped by national and cultural contexts. Any change will require the mutual commitment of men, women, business, government, and society.