In this guest article for Clear Books, business journalist Nick Huber looks at the possible reasons why there are more male than female entrepreneurs, and looks at the groups and factors that are helping this gap close.
Entrepreneurial spirit is thriving in the UK. More of us are self-employed than at any point in the last 40 years, according to figures by the Office for National Statistics published in 2014.
The number of women in self-employment is increasing at a faster rate than the number of men but men still dominate the self-employment market. Why? And what’s being done to encourage more women to become entrepreneurs?
Rise of the freelancer
In 2014, 4.6 million people were self-employed in their main job, accounting for 15% of those in work, the ONS says. That compares to 1.9 million workers who were self-employed in 1975.
In 2014, women accounted for just under one third of the self-employed. Between 2009 and 2014 the number of self-employed women increased by 34% − more than double the increase in the rate of self-employed men for the same period, the ONS says. The top three occupations for self-employed women are cleaners and domestics, childminders and related occupations and hairdressers and barbers. (These occupations were less badly hit by the recession than male-dominated industries such as construction.)
There are still far more male entrepreneurs than women but this gap is closing. Understanding why there aren’t more women entrepreneurs may help governments and business encourage a workforce that better reflects the world’s population.
One possible reason for the shortage of women entrepreneurs is their attitude to risk, according to Tomas Chamorro-Premuzic, a professor of business psychology at University College London and Columbia University, who wrote an article in the Harvard Business Review in 2014.
Whether men and women think and act differently is a controversial subject, of course, but Chamorro-Premuzic cites research to back up his argument that women are more “financially risk averse” than men.
“The odds of success for start-ups are lower than 15%, so you need a fairly big appetite for risk to launch a new venture, especially when the economy is solid,” he wrote.
Another possible reason why fewer women than men are entrepreneurs is that women are typically more patient than men, other research suggests. Consequently, women tend to tolerate “incompetent, abusive, and bullish bosses for a longer time, instead of quitting their jobs to launch a business,” Chamorro-Premuzic also wrote.
Whatever the reasons are that more women aren’t entrepreneurs, governments, business groups and women entrepreneurs themselves are trying to deal with the problem.
In the UK, for example, the Government’s Business is Great campaign has a specific website for female-led start-ups. It includes training in business skills (such as recruiting staff, employment law and leadership), help in finding a business mentor and advice on finance and writing a business plan.
Other sources of training and support for women entrepreneurs include The Women’s Organisation, which says it’s the largest “developer and deliverer of training and support targeting women in the UK” and Prowess, a web site for “women-friendly business support, inspiration and information”.
Helping women entrepreneurs find the right contacts and know-how can help boost the growth of their business, according to Dr Muhammad Azam Roomi, senior lecturer in entrepreneurship and business growth at Cranfield School of Management. “One of my recent studies of women-owned enterprises in the UK confirmed that women entrepreneurs with higher social capital showed significant growth in terms of revenue, and profit compared to those with less,” he wrote recently.
Building contacts can also boost entrepreneurs’ confidence, which may be particularly important for women entrepreneurs. Fear of failure is a bigger factor for women than men in starting a new business, according to research by RBS bank published in 2014. It also found that women are also less likely to be confident they have the skills and ability to start their own business, and are unsure about where to go for more information about starting a business.
In the long-term, though, a healthy amount of self-doubt and caution may actually be to female entrepreneurs’ advantage.
As Chamorro-Premuzic, wrote, “risk aversion” protects entrepreneurs from failure by highlighting potential threats and anticipating problems. “Unsurprisingly, higher risk-taking increases the propensity to launch a business but does not correlate with greater start-up success. In fact, conscientious and prudent founders tend to do significantly better.”
If you’re thinking of starting your own business or have recently done so, take a look at our startup page to see how Clear Books can help your business get going!