Why are there so few female entrepreneurs?

Why are there so few female entrepreneurs?

Entrepreneurship in Scotland is dominated by men, but why? There are exceptional examples of entrepreneurs whose drive, vision and accomplishments are an inspiration to the next generation of business leaders – so why do more men than women follow in their footsteps?

In Scotland inspiration is not the problem. Renowned inventions and discoveries by Scots have shaped the modern world.  

In recent years women in Scotland with entrepreneurial flair have been at the top of their game in life sciences, food manufacturing, tourism and social enterprises with the list of previous EY Scotland Entrepreneur Of The Year Award winners including Dr Deborah O’Neil with her medical science company NovaBiotics; Lucinda Bruce-Gardyne, who spotted a gap in the market with Genius Foods and Sharon Munro who has driven Barrhead Travel Service Ltd to success.

Is it wrong to want more women to achieve similar successes? The positive impact could be vast with Scotland’s economy predicted to increase by more than £7 billion (5%) if the number of women-led businesses increased to equal those of men, as shown by research from the Hunter Centre for Entrepreneurship.

Supporting women entrepreneurs is not the right thing to do it’s the smart thing to do.

Women are a crucial component of the Scottish economy. Female employment is higher (72.4%) than the UK average (68.5%), unemployment rates in Scotland are higher for men (6.6%) than women (4.1%) while the gender pay gap is also lower in Scotland (17.5%) compared with the UK (19.1%) as reported by the 2015 Womenomics review, commissioned by the Scotland Office.

Worldwide, women own or run 25% to 33% of all private businesses and in Scotland women account for 33% of all self-employed people, according to World Bank and Scottish Government data respectively. However, men in Scotland are twice as likely as women to start a business, the Womenomics review revealed.

For many women who do venture into entrepreneurship their efforts do not immediately translate into radical success.

Taking the US as an example, only 2% of women-owned companies generate more than $1 million in annual revenue. This is caused by a lack of equity investment in women’s businesses. While approximately 40% of US businesses are owned by women, only about 5% of all equity capital investments and just 3% of venture capital funding in the US go to companies headed by women. Is this because there is limited understanding of the economic strengths of women-led businesses or too few women making investment decisions?

It is also important to note the change in work dynamics when women become mothers. The Womenomics report revealed; a distinct move towards part-time work following the birth of a woman’s first child; a general transition into non-permanent, non-supervisory roles for women; relative wages for women steadily decline after having their first child and the pay gap between men and women is greater if they have children. Does becoming a parent present greater challenges for female entrepreneurs or does entrepreneurship allow for greater work flexibility?

If the talents of women around the world were embraced and developed the world economy would be stronger. A new survey commissioned by EY revealed undeniable evidence that accelerating women’s careers, creating gender-balanced teams, boards and governments produce better outcomes and generate prosperity.

Other studies have also found that more equality leads to increases in GDP and greater productivity while better gender balance on boards delivers higher share prices and financial performance. Additionally, more gender-balanced leadership results in better all-round company performance.

But gender parity is bigger than business. There needs to be a fundamental change in culture, society and politics.  

The EY Women. Fast forward report, ‘The time for gender parity is now’, found that increasing female representation on corporate boards can be speeded up by three mutually reinforcing factors: focused public sector attention, committed private sector leadership and corporate transparency to meet growing public demand for change.

Drilling down to the everyday, there are three main issues holding women back from corporate leadership and entrepreneurial careers. Unconscious bias continues to restrict individuals, companies and the wider economy from reaching full potential. Without unconscious bias we could expect an increase in investment in businesses led by women. The rigid structure at many companies remains one of the biggest barriers to women. More flexibility across the business sector could offer working environments better suited to women craving an alternative to 9-5. Finally, a major obstacle to career progression for women is access to affordable childcare. Childcare can be so expensive that it’s not worth the second earner (if not a single parent) going to work. Our gendered approach towards family responsibilities means that women are often the second earner resulting in many of them feeling locked out of the workforce or potentially prevent an entrepreneur from launching her business.

Progress in these three areas is certain to benefit women entrepreneurs. While Scotland is on the right track there is undoubtedly more to do.

Various reports and studies cite the importance of raising awareness, sharing positive perceptions and creating role models to help develop the number of women in entrepreneurship. Our Entrepreneur Of The Year programme showcases some leading female entrepreneurs and we encourage more to follow in their footsteps to help make Scotland the most entrepreneurial society in the world.

In 2015 The World Economic Forum estimated it would take 117 years to achieve global gender parity but let’s strive to bring that day closer, invest in women, support female entrepreneurs and drive change.

Applications for the EY Entrepreneur Of The Year are now open. You can register your entry at www.eoy.co.uk or for more information call the Entrepreneur Of The Year team on 0845 604 1012 or email eoy@uk.ey.com.

An insight by Mark Harvey, senior partner at EY in Scotland.