A new eye-opening report shows that women are falling behind men when it comes to entrepreneurship. We look at the numbers and possible reasons.
By Rieva Lesonsky
“The most notable fact our culture imprints on women is the sense of our limits. The most important thing one woman can do for another is to illuminate and expand her sense of actual possibilities.”—Adrienne Rich
Forty-three percent of Americans believe there are good opportunities to start a business today—the highest number since 1999, according to the latest Global Entrepreneurship Monitor (GEM) report. But there’s one group of entrepreneurs lagging behind: women. Women are less likely than men to want to start businesses, are less likely to actually start businesses, have less confidence in their abilities to start businesses and have lower expectations for the businesses they do start. What’s the deal?
Big opportunities can make or break a business.
See how these small-business owners got the job done.
First, the number of women business owners is shrinking:
- The ratio of women to men participating in entrepreneurship dropped from 8:10 in 2011 to 7:10 in 2012.
- The percentage of men involved in early-stage entrepreneurial activity rose from 13 percent in 2011 to 15 percent in 2012, while women held steady at 11 percent.
- 11 percent of men are established business owners, compared to just 7 percent of women.
- One in five men plan to start a business in the next three years; just one in 13 women do.
So, what’s holding women back? We take a deeper dive into the numbers to find some possible culprits.
Life stage. No matter what age, men were more likely than women to say they were planning to start a business. However, the gap was widest during the early career years (ages 25 to 34), when women are likely to be considering having children.
Opportunity. In 2012 both men and women were more likely to say there were opportunities for starting a business than said so in 2011. But women still lagged behind men in their perception of entrepreneurial opportunity. The gap was wider for younger women, and widest during the mid-career stage of 35 to 44. If women have found flexible work situations allowing them to juggle work and family obligations, they may be reluctant to risk that for the 24/7 demands of business ownership.
Attitude. Most entrepreneurs (about three-quarters of both men and women) start businesses to capitalize on an opportunity, not out of necessity. However, men are more positive about these opportunities and their own abilities. Nearly two-thirds of men think they have the ability to start a business, but fewer than half of women think they do. This gap holds true even when women have similar levels of education and training. Interestingly, the gap was widest in the youngest age group: 45 percent of men aged 18 to 24 think they have the capabilities to start a business, while just 21 percent of women do.
Fear. In the 18-to-24 age group, both men and women had a roughly equal fear of failure, but after that, women’s fear increased and held fairly steady until they hit 55. Women seem to see entrepreneurship as risky “throughout most of their working lives,” the study concludes.
Lack of role models and networks. Men are more likely than women to know an entrepreneur (33 percent vs. 26 percent for women). In terms of support networks, men are more likely to have wider networks that include more business connections, while women’s networks were smaller and focused on friends and family.
Less potential. The industries women choose may be hampering them, with nearly half of them starting or owning consumer-focused businesses, while men were more likely to start business service companies. Since consumer-focused companies typically have less growth potential, women could be limiting their own success.
Lower aspirations. Male business owners are twice as likely as women to say they expect to add more than five employees over the next five years. Do women expect lower growth because of the industries they’re in, or is it something else, such as the desire to balance work and family, or a lack of access to capital?
Make a Difference
The debate over why women lag men in entrepreneurship is a long-running one, and I’m not saying every woman needs to dream of starting the next Facebook. But it does bother me that women seem to be putting limits on themselves in so many ways. “Women, especially young women, may benefit from thinking big with their entrepreneurial dreams,” the GEM report concludes. Here are a few ways you can help.
- Be a role model. Get involved with organizations that support youth entrepreneurship, college entrepreneurship and women entrepreneurship. Encouraging entrepreneurship is especially important during high school (when many young women who may have been excited about business in middle school suddenly default to other interests) and college years (when young women are figuring out what they want to do with their lives).
- Encourage women in your life and your business. You also don’t have to be a woman to encourage women. Whether you’re a man or woman, examine your own attitudes and expectations. Do you treat women in your business differently? Do you expect men to be more independent and self-directed and reward women for following orders and being “good girls”? This is how most of us are trained, so make an effort to get past it and prod women on your team to think like an entrepreneur. Your business will benefit from it as much as they will.
- Put your money where your mouth is. Financing is a huge problem for women business owners, so if you’re at the stage in your success where you’re able to give back, consider becoming an angel investor to a woman-owned startup or business.
I have to admit these stats disappoint me. I’ve been advocating for entrepreneurial women for nearly 30 years, and I thought we’d have made more progress by now.