A new study just released by Babson College offers some interesting insights into not only women entrepreneurs, which was the focus of the study, but entrepreneurs in general. The authors studied 215 woman-led firms in Massachusetts from 2000 – 2004. Here are some of the highlights:
– Women CEOs are ambitious and are primarily motivated by personal achievement (85%) and a desire for challenge (80%). Debunking the stereotype that women are driven to start businesses solely out of economic necessity, more than 54 percent stated that economic necessity was barely a motivator or none at all. Similarly, while nearly 32 percent cited the glass ceiling as a motivator, 48 percent said it was minimally a motivator or none at all.
One myth about entrepreneurs is that the growth in new business start-ups is from a growing number of people being displaced by their previous employers. This study reinforces what I see. The entrepreneurial economy we are in today is real and it is being driven by people who are highly motivated to be entrepreneurs, and not just being thrown into it by life’s circumstances.
– Establishing strong customer and employee relationships are considered the cornerstones to conducting business. The women CEOs cited customer satisfaction as the leading factor in doing business (97 percent), followed by key human resource issues: employee satisfaction (92 percent), company culture (81 percent) and work/life balance (67 percent). These areas were ranked higher as daily business priorities than rapid sales growth, high profitability, personal financial reward, high market share and personal autonomy and control.
These are interesting findings that support many other studies reporting that the meaning of “success” to entrepreneurs is very personal and much more complex than sales and profit growth. There are even deeper reasons people are driven to start new ventures.
– Of the 43 companies that consistently participated in the study over a five-year period from 2000-2004, the average company grew nearly 27 percent from revenues of $13.9 million in 2000 to revenues of $17.9 million in 2004. In the same timeframe, average employment increased by 9.5 percent, resulting in productivity gains of 15.9 percent.
– The woman-led firms are solidly focused on future growth. Ninety-two percent of the companies expect to grow over the next two years, and 59 percent are anticipating growth of five percent or more annually. The primary focus for growth is through new clients and customer accounts, followed by new products and new geographic markets. Most firms expect to finance growth through cash flow from operations, short-term debt and retained earnings reinvestment.
These businesses are part of the vast majority of entrepreneurs in this country. They are not financed by venture capital, but rather grow organically with minimal outside support. They are bootstrappers through and through.
-Women leaders have a long-term commitment to building their careers and their businesses. The typical CEO of woman-led companies has 27 years of work experience, and 13 years in her current position.
Real entrepreneurship is not a financial transaction, it is a commitment to build a business that “has legs” and builds real value.
– Seventy-seven percent of the woman-led businesses studied continue to be run by their founding entrepreneurs.
Entrepreneurs are not just starters, we are also builders. Another myth debunked.