Financial Considerations Put Women off Entrepreneurship

Western Mail (Cardiff, Wales), February 18, 2012 | Go to article overview

Financial Considerations Put Women off Entrepreneurship


Byline: DYLANJONESEVANS

IF YOU were asked to name any famous female entrepreneurs, who would you mention? Laura Ashley, Anita Roddick, Estee Lauder, Deborah Meaden? Compare this to the long list of male entrepreneurs you could name at the same time.

Yet, as the latest report from the GEM team shows, women are making a real impact on entrepreneurship across the world.

According to the latest data, more than 104 million women aged between 18-64 years old were actively engaged in starting and running new business ventures in 2010 in 59 countries.

In addition, another 83 million women were running established businesses demonstrating the real impact they have on the development of enterprising economies across the world.

Despite this, the rate of entrepreneurial activity by men remains far higher.

In fact, the study shows that women are less likely to consider entrepreneurship than men and when they do start a business, they are more likely to be motivated by necessity rather than an opportunity in the market-place.

During the last eight years, the GEM study has shown that women's perceptions about entrepreneurial opportunities have declined in most developed economies.

Women are also more likely to be discouraged from considering starting a business due to fear of failure and less likely to believe they have the skills to start and run a new venture.

As a result, it is not surprising that the growth expectations of women-run businesses are lower than for those run by men with twice as many men as women expected to add 20 or more employees to their companies.

Why is this the case? Much of the research in this area has tended to focus on gender differences in the access to, and use of, entrepreneurial finance, which is key to the birth and growth of new businesses.

For example, studies have shown that female-owned businesses tend to start with lower levels of overall capitalisation than that used by male-owned firms. They also have lower ratios of debt finance and are less likely to use private equity or venture capital.

So are women turned off starting a new business because they have different perceptions to men, especially in terms of accessing finance? That is the question that I have attempted to answer recently, along with my colleagues Dr Caleb Kwong and Dr Piers Thompson from the University of Essex and Cardiff Metropolitan University, respectively.

Drawing on data from 49,107 individuals questioned as part of the GEM adult population survey undertaken in the UK, the research examined "Differences in perceptions of access to finance between potential male and female entrepreneurs".

Not surprisingly given the conclusions of previous studies, the results from the study confirmed that women are more likely to perceive they are financially constrained than their male counterparts. …

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