Women and Entrepreneurship: The Impacts and Challenges

An Opinion Piece by Brettany Shannon: Challenges women face in entrepreneurship and entrepreneurial activity; the impacts of the increased presence of women in the Canadian economy.

Do you remember what made you pursue entrepreneurship? For me, it was as a child. My mom would take me with her to work where I would set up pretend businesses or ‘help out’. Later, it was watching my parents begin their own companies or help/consult with other startups. They would entertain me by explaining their business plans, or what they were working on, and answer my endless questions. But, my exposure to startups in my formative years wasn’t limited to my parents. I was very fortunate, growing up, to have many family role models for business ownership. It was witnessing all of them exhibit a striking combination of determination, hard work, and an ability to create, which was vital in stoking my enthusiasm for entrepreneurial pursuits.

Now, admittedly I had a rather idyllic view of what entrepreneurship really meant for a woman. You see, I was raised by a strong and independent mother. She taught me the importance of self-reliance, and ‘if you put your mind to it, you can achieve it.’ Though she did not shy away from telling me the challenges she faced as a woman in business, I still retained an idealized vision of starting and owning a company. This was because, when she instilled these deep-rooted lessons, I believed the only thing truly holding me back from anything was just starting. It was only as I began to connect with more women leaders and entrepreneurs, gain more exposure, and research the Canadian entrepreneurial landscape in-depth that I saw how genuinely optimistic I had been. Realizing the challenges women-identifying entrepreneurs face, and the profound impacts on sociological, economical, and (in) equality levels were pivotal in a transition of thinking for me. I was led to discover a new passion — helping and supporting female entrepreneurs and startups, where I can, overcome these challenges. 

The implications suggested by many studies on the impact and numerous benefits of women in entrepreneurship and improved gender equality are monumental. A trend that’s applicable for not only Canada, but on a global scale. With the positive impacts looming for the Canadian GDP, the female-identifying population, and innovation in industry, we should be noticing a substantial increase of women in entrepreneurship. However, there remains a stark comparison in the ratio of women-owned businesses to those owned by men. In fact, female operating enterprises account for only about 16% of small-medium enterprises (SMEs).

I think it’s essential first to examine some of the challenges that could explain a low SME rate from female entrepreneurs.

Challenges:

1.    Attitudes, Perceptions, and Confidence

• I think it’s vital to understand women’s general attitude towards entrepreneurship for some insight on obstacles. The Women’s Entrepreneurship Report 2016/2017, states that in innovation-driven economies, like Canada, women’s perception of good opportunities around them is 39%. Meaning less than 40 percent of women see entrepreneurial opportunities in their economies that motivate them to start a business. When people feel as if there are little-to-no opportunities available to them in a specific field/area, they are less likely to pursue those avenues. 
• However, I can’t imagine this would account for the whole problem. Perception is a significant factor to consider in female entrepreneurship as well, in that only 39% of women perceive they have the capabilities to start a company [in innovation-driven economies, like Canada]. I believe this could, in part, be attributed to the number of entrepreneurs women know — for example, less than 30% in the US, and lack of visible mentors and role models. 
• Ultimately, it appears that confidence is a core piece of the puzzle. I would infer that poor perception of available opportunities and entrepreneurial capabilities can negatively impact [entrepreneurial] confidence.

A Positive Note: over recent years, there has been an increase in entrepreneurial activity and ‘greater optimism about entrepreneurship.’ in Canada.

2. Access to Resources

• The most substantial challenge in starting a business that Canadian female entrepreneurs report is the difficulty in ‘finding the tools to grow and manage my business.’ This leads me to believe that a) this could further impact confidence levels, b) lack of resources provide unnecessary challenges, and c) this could also attribute to a portion of the high rate of exit for female entrepreneurs.
• A) Impact on confidence [in entrepreneurship abilities]: I believe that women are generally calculated-risk takers. So, when there are fewer tools and resources available, the endeavour to start a business has a higher (or perceived) risk of failure. 
• B) Unnecessary challenges from lack of resources/tools: This makes starting a business more challenging (than it already is) and can lead directly to several hurdles. Lack of resources can make it difficult for companies to grow as they need too, find the right talent, develop a strong brand presence, and build a network. 
• C) Exit rate: Women tend to exit entrepreneurship at higher rates than men, at about ‘4 exits for every 10 women who start or run a business’ [Women’s Entrepreneurship Report; GEM; 2016/2017]. In part, the lack of resources and tools to start, grow, and sustain a business may be responsible for the exit rate. 

3. Capital/Funding

• In 2019, a shockingly low percentage (4%) of VC funding went to female-owned ventures. Furthermore, 37% of Canadian women find it difficult to obtain financing during the early stages, and 31% continue to have challenges raising funds after their business is established. Without easier access to funding, many businesses won’t be able to sustain growth over time and may stagnate or, unfortunately, close shop.

4. What Motivates Them

• If you were to think about what motivates most entrepreneurs to start a business, you would be inclined to say opportunity — and you would be right. However, many female entrepreneurs start businesses only if there is an identified need. In countries with developed economies, like Canada, the ‘“need” for entrepreneurship causes fewer people to start in developed economies.’ I believe this is a significant factor contributing to the low amount of women-owned SMEs (Canada) in culmination with a lack of funding and resources, confidence levels, and perception of opportunities.  

Impacts:

1. Canada could see a $150 billion increase in GDP by 2026 by narrowing the gender gap with the increased participation of women in the workforce and entrepreneurship,
2. ’37% of leaders in higher-performing companies are women’. By having more women in leadership roles, we would potentially see a substantial increase in company performance across industries. 
3. Visible role models, and access to mentorship, positively impacts an individual’s feelings of empowerment and belief in their capabilities. Empowerment is cyclical in nature — increasing gender equality and access to resources, we will increase the amount of overall female-identifying entrepreneurs (and continue to improve gender equality). I believe the impact of this would attribute to an increase in perceived opportunities and overall confidence to pursue entrepreneurial endeavours.
4. Women entrepreneurs are 5% more likely to implement innovativeness within their startups than their male counterparts. 

Final Thoughts

Though closing the gender gap is a major contributing factor, and its own much larger issue, I believe a crucial aspect of achieving it is addressing the topic of women in entrepreneurship. The challenges I’ve outlined imply the need for more resources, coaching, and training to be more widely available in the form of programs and mentorship. If female-identifying entrepreneurs have lower perceptions of their ability to start a business, ‘entrepreneurship-specific skills may be more relevant for inspiring confidence.’ This is further vital in the efforts of closing the gender gap in Canada and positively impacting women’s perceptions of opportunities. Ultimately, by shifting perceptions and supporting and training women with entrepreneurial skill sets, we will see an increase in women pursuing business ownership.

Personally, an essential element to my confidence in, and outside of, entrepreneurship was instilled from a young age. In large part, I attribute it to having many examples to look up to and the feeling of being empowered to attain my goals. Second to these, would be continued [entrepreneurial, economic, equality] education and networking. I pose that with more empowerment for (and visibility of) female leadership in industry and entrepreneurship, Canadians and our economy would reap the benefits.

Fellow entrepreneurs: What are your thoughts on the challenges and impacts of women entrepreneurship?