Women in Business – a gender or youth issue?

Discussing issues around gender is always a politically charged issue and entrepreneurship is no different. In a recent Radio 4 appearance, Rebecca Harding of Delta Economics introduced some interesting statistics which were further discussed at a ‘Women in Business’ event sponsored by White and Black in London last week. This article seeks to highlight the key findings whilst posing some interesting questions.

There is vast literature which looks at the skillsets of entrepreneurs suggesting women are equally able and equipped to run a business as men and often their ‘natural’ financial risk-aversion makes women more investable.

Men say they will create more jobs as they start up and also say they will create more jobs as they grow their business. However, women create more jobs when they start up a business and also as they grow: in the Delta survey women employed on average 14 people while men employed 9 which suggests that they are not as likely to have let people go during the downturn. As a result, their costs have been slightly higher and therefore profitability has been lower. Furthermore, 29% of women compared to 19% of men said that their business had grown faster than expected.

However, women are just under half as likely as men to set up a business.  As the business grows (£250,000 to £7-10m turnover mark) Delta Economics’ COGS survey data  showed the number of women shrinks to around 17% whilst as the business gets bigger (> £150m turnover), the number of women still owning and running their businesses falls to 5%.

Access to finance is not necessarily the issue. Delta’s survey suggests that women are more likely to go to their banks for finance and actively seek their advice. Furthermore, banks do not collect gender data and key decisions on loans are now computerised so gender is not something that goes into the computerised credit rating system.

Having said this, women’s businesses are undercapitalised relative to their male counterparts and that they are less likely to access all types of funding (equity in particular). This could be a product of the smaller type of businesses women tend to own – on average, female run businesses have a turnover to half that of a male run business.

Distinct gender differences may not be the issue either. It can be argued that males are less risk averse and more self-confident which could drive growth, whilst conversely a more risk-averse female should be able to raise finance more easily.

Surely entrepreneurs are a certain type of person regardless of gender – it takes full dedication and a willingness to grow the idea from conception all the way to adulthood. Regardless of gender this dedication has to be there and both males and females have an equal probability of success so long as the other factors are equal – the above statistics seem to suggest this.

At the White and Black ‘Women in Business’ event last week the elephant in the room seemed to be that of pregnancy. This is a major factor to contemplate and can understandably stifle female entrepreneurship as the ages correspond and overlap with the most popular years to start up a business. Nevertheless this cannot be this sole factor otherwise we would not have any mother-entrepreneurs whatsoever.

If we take the difference between males and females - that males seem to be less risk-averse - to be true, then maybe the problem lies with education and youth, and not gender at all.

Without extensive exposure to entrepreneurship at a young age then the naturally less risk-averse people would be more likely to start businesses later on – i.e. males.

However, with the encouragement at this age and exposure in being able to understand the fundamentals of a business then girls could develop their confidence and skills on a par with boys. This would lead to a potential decrease in the risk-averse nature of females as they leave school/university and the gap between male and female owners would decrease.

Overall, the differences between male and female entrepreneurship should be looked at as there are significant differences in the statistics. Having said this, it is important not to attribute the difference purely as a gender issue, but rather look at how we engage with children from a young age. Opening up the possibility or opportunity of entrepreneurship to children could bridge the gap in the statistics between male and female entrepreneurs in the next few decades. Then what has been a gender issue becomes a youth issue – and one where males and females have an equal chance of becoming an entrepreneur.