Forty-one percent of entrepreneurs are women, according to a new Global Entrepreneurship Monitor (GEM) report on women’s entrepreneurial activity. The report was released today by The Center For Women’s Leadership at Babson College.
“The GEM study on women’s entrepreneurship emphasizes the critical role women have in new venture creation and provides insights to inform policies focused on increasing and extending the scope and reach of their entrepreneurial activities,” said Dr. Nan Langowitz, Director of the Center for Women’s Leadership at Babson College. “These findings support our goal of understanding, featuring and supporting the entrepreneurial efforts of women worldwide.”
Key findings:
– 73 million people are involved in starting a new business in the 34 countries that participated in the study. Of those, about 30 million are women. The average level of female total entrepreneurial activity varied from 39.1% in Peru to 1.2% in Japan.
– In every country in the study, men are more active in entrepreneurship than women. The largest gap occurs in middle income nations where men are 75% more likely than women to be active entrepreneurs, compared to 33% in high-income countries and 41% in low-income countries.
The GEM report shows that across all countries, a strong positive and significant correlation exists between opportunity recognition and a woman’s likelihood of starting a new business. Women who perceived the existence of business opportunities were more likely to make the decision to start a new business.
Additionally, across all countries, a strong positive and significant correlation exists between a woman’s belief of having the knowledge, skills and experience required to start a new business and her likelihood of starting one. Conversely, a strong negative and significant correlation exists between fear of failure and a woman’s likelihood of starting a new business.
“In order to be effective, policies with respect to entrepreneurship need to be tailored to a country’s specific context,” said Prof. Minniti. “This is particularly important for women since they tend to be much more sensitive than men to conditions in their local environment. Nonetheless, across all countries, it is clear that support policies by themselves are not sufficient to increase women’s involvement in entrepreneurship. Women are particularly sensitive to their social environment. Mentoring and network support, especially at the local level, are at least as crucial in boosting women’s attitudes with respect to business leadership and new venture creation as financial support.”
While the findings of this report are fascinating at face value, the “So what?” questions are the where it gets really interesting.
Policy Implications for High-Income Countries
From the Babson Authors: High-income countries need to sustain innovation rates and encourage the involvement of women in entrepreneurship, especially when faced with an aging labor force. Areas of importance for policy makers should include promoting entrepreneurial education at the college and post-graduate level and encouraging more women to pursue technical degrees and to commercialize their ideas. Coordinating policy to encourage equal benefits for women in the workforce, whether in traditional or entrepreneurial business roles, is vital.
While I agree on the critical role that education plays in improving the success rates of business start-ups, I am concerned where the authors are headed with their other recommendation for high-income countries. What do they have in mind in terms of “equal benefits” in “entrepreneurial business roles”? Are we talking mandates or quotas? That would be a sure fire way to stifle entrepreneurial activity overall in these countries. Such governmental social engineering related to economic activity just never has proven to work. In fact, it has the opposite impact over time.
Policy Implications for Middle-Income Countries
From the Babson Authors: More than in other groups, women in middle income countries shy away from starting their own businesses. Areas of importance for policy makers should include to instill fundamental aspects of the entrepreneurial mindset and to increase the attractiveness of entrepreneurship as an income producing activity for women even when they have access to jobs in manufacturing or in the public sector.
I recommend that we avoid the temptation to micro manage public policy based on any particular findings of this report. Why? The devil is always in the details on such research. In this case, the middle-income countries in this study tend toward more socialistic policies, which have been shown to be anti-entrepreneurial.
Policy Implications for Low-Income Countries
From the Babson Authors: Much female entrepreneurship in low-income countries is motivated by necessity, thus starting a new business represents an effective and flexible way for women to emancipate themselves and provide for their families. Areas of importance for policy makers should include literacy and financial assistance.
Amen to the role that entrepreneurship can play in pulling all citizens in these countries out of poverty. My only comment is that we let the private financial markets, both for-profit and non-profit, provide the kinds of micro-credit programs that have proven to be so successful. We don’t need governmental agencies getting into the credit business. Leave it to the experts.
(Source: The Center for Women’s Leadership at Babson College).
Author: Jeff Cornwall
Dr. Jeff Cornwall is the inaugural Jack C. Massey Chair in Entrepreneurship at Belmont University in Nashville, Tenn. Dr. Cornwall's current research and teaching interests include entrepreneurial finance and entrepreneurial ethics.
ChoicePoint Fiasco
Anita at Small Business Trends offers her take on the ChoicePoint fiasco.
“ChoicePoint could have done a better job limiting the use of sensitive personal data to legitimate ‘consumer-driven’ transactions in the first place. If it had done that, and vetted its business customers with the same level of detail as the individuals it reports on, there would be no need to take the action it is now announcing.”
Top Givers Have Entrepreneurial Roots
Slate magazine has released its list of 60 top philanthropists. And according to National Dialogue on Entrepreneurship, once again many have entrepreneurial roots.
“The 2004 list shows that most of the big givers are active or former entrepreneurs. Overall, it was a good year for philanthropy as the combined contributions of the Slate 60 reached $10.1 billion, smashing last year’s total of $5.9 billion. Bill and Melinda Gates always rank high on the list; they top this year’s Slate 60 with $3.4 billion pledged to their foundation last year.”
Entrepreneurial Showcase: Facility Planners, Inc.
Nancy Leach is President of Facility Planners, Inc. a Nashville, Tennessee based office furniture dealership. Facility Planners is a full service company providing furniture solutions to companies in the markets of: healthcare, finance, manufacturing and legal including city, state and federal government agencies.
Nancy Leach graduated from O’More College of Design in 1984 and earned her MBA from Belmont’s Massey Graduate School in 1992. Nancy had hoped that her MBA would help her break out of the design industry, but had little luck finding another type of position. She was unhappy with her current job, but one experience brought it all to a head.
“I was sent to Honduras to work on a hotel project there and we were met at the airport by men with machine guns who demanded to keep our passports until we returned. They could have killed me and left my body anywhere in that country so I decided that $35,000 a year and no benefits just wasn’t enough to risk my life for.
“One of my clients, just one, was a corporate client who was as disenchanted with my employer as I was. They were planning an acquisition that would give me 2-3 years worth of work which was promised to me if I opened my own business. Best decision I ever made. I borrowed $10,000 from my Dad and started Facility Planners in my living room on my 31st birthday. Happy Birthday to me!”
Nancy’s biggest challenge in the beginning was borrowing money. Most banks wanted everything secured by collateral. Eventually she was able to secure an SBA loan. She repaid the loan ahead of schedule.
Facility Planners is currently facing the ethical dilemmas created by the growth in imports from Asia and the decreased profit margins that have resulted in her industry. She must protect the profitability of Facility Planners, but she is concerned about the number of Americans who are losing their livelihoods when her business distributes Asian products rather than American made goods.
Nancy did not go to business school with the thought of starting her own business. But, as an entrepreneur she has found significant value in her formal education.
“Getting an MBA gave me a level of self confidence and security that I didn’t even know I was missing. There isn’t anyone I meet that I can’t find something to talk to about with because of the well rounded education I received at Belmont’s Massey School. When people think that you really listen to them and understand their needs they trust you. I am able to put my self in most any potential clients shoes and ask the right questions to get their true needs identified. My closing ratio is almost 90%. I can’t directly tie that to my education but I know that’s what has made me successful.”
Nancy’s education did not stop when she finished the MBA program. She is truly a life long learner drawing today on books such as Top Grading, Good to Great and the E-Myth to improve her skills and the success of her business.
Nancy does not see herself running Facility Planners for years to come. She has reflected on what it important to her, and has found that she has other aspirations she wants to pursue in life. Some of her plans may lead her toward the pursuit of even more education.
“I have almost finished creating a structure here that will run without me or anyone like me. I’m 40 years old and if I track against my parents and grandparents life lines I’m going to be here at least another 40. I want to go back to school and do something totally different, something that makes a difference in people’s lives. My husband can run the company as long as he wants to. I’m still playing with the idea of taking the LSAT or going to nursing school. I can see applying my MBA to both fields. There are huge management issues in the healthcare industry and there are so many bad people that need to be taught lessons and held accountable for their actions. I can’t decide which will be more fun.”
Blogging for P.R.
StartupJournal reports that more entrepreneurs are using blogs to create their own public relations.
“When GreenCine Inc. launched an online journal two years ago, the San Francisco online DVD-rental company hoped that a steady diet of film reviews, festival dispatches and filmmaker interviews would energize its community of cinephiles, turn regulars onto new movies and attract more members.
“It worked. The company’s blog, GreenCine Daily, sparked a 20-fold rise in hits on the GreenCine Web site to about one million a month. Even better, films critiqued by the blog’s two writers are often snapped up by renters. Despite little marketing, membership numbers and revenue have doubled in the past year.”
I made a post a couple of days ago about a couple of new entrepreneurs blogging on their experience.
Time to update my lecture on “Bootstrap Marketing”….
Toby Keith to Take the Plunge?
Toby Keith is think about taking the plunge and starting his own record label. (Keith is one of the top selling Country Music stars in recent years for those of you far from Nashville).
He would not be the first country singer to break with the industry giants. Clint Black made a similar move that has proven to be quite successful.
Entertainment is a dynamic, healthy market dominated by large corporations that are not adapting, and probably cannot adapt, to the incredible changes being caused by technological revolutions (see this Small Business Trends post from yesterday as an example) and rapidly changing customer expectations. In five to ten years the current industry giants will likely have faded and a new generation of entrepreneurs will have transformed the business of music.
Business Plans are Due Today
Well, today is the day that my senior students turn in their business plans. Jason gives us his thoughts on the pain and pleasure of this process. He is planning on opening his coffee shop in Montana this next fall.
On Entrepreneurship and Society
Anita at Small Business Trends and I have been offering our thoughts on the virtue of being an entrepreneur. Here is her latest offering.
eBay Slows Down Entrepreneurs
eBay has thrown a speed bump on the road to riches that many entrepreneurs are trying to navigate according to StartupJournal.
“Entrepreneurs on auction giant eBay are still struggling to deal with their latest loop on the business rollercoaster after the Web site increased fees Feb. 18. An estimated 430,000 Americans make a full- or part-time living from running a business on eBay.
“‘I’m going to pull everything,’ says TJ Wilson, of Ketchikan, Alaska, who sold Celtic and Gothic jewelry at her eBay store. She closed her store, Reef Media, Feb. 18. ‘One item I listed last week at 60 cents (in fees) will now cost me a buck and a half — and I had dropped the price of the item!'”
Over reliance on a single customer, a single supplier, or in this case a single source of distribution puts any small business at risk.
VC Firm Uses Blogs to Find Deals
One venture capital firm is finding blogs sites to be a good source of information on new opportunities for investment in technology and the Internet as reported in this story from Red Herring. Christian Leybold, a senior associate at BV Capital, found out about a conference called CodeCon that focused on software development.
“The conference caught our attention when we read about it in the blogosphere and we gave the organizers a call,” said Leybold. We actually find blogs to be a great source for up-to-date information on trends and developments on the Internet.”
I have also seen many entrepreneurs use blogs to keep track of current industry specific information and trends.