Entrepreneurs create considerable value for the UK economy. Yet, like in many other sectors, consider disparity exists between the number of men and women launching new endeavours. The disparity continues, with relatively fewer women led startups scaling successfully in successful self-sustaining businesses. Reducing the barriers that women entrepreneurs face has the potential to add an additional £95 billion in women contributed GVA to the UK by 2025 a new report finds.
With more and more startups being founded, finding ways to improve the value added by women led businesses has become a topic of research. A new report from Deloitte, commissioned by Women’s Business Council, explores the current early stage entrepreneurial landscape and considers barriers faced by women entrepreneurs as well as some ways of tackling the issue. The report, titled ‘Women entrepreneurs: Developing collaborative ecosystems for success’, is developed from a range of auxiliary research and interviews with stakeholders.
The number of new startups in the UK, registered with Companies House, broke records again in 2015, reaching 608,100. Last year was the fourth consecutive year in which records were broken, with new venture numbers last year hitting 40% above those recorded in 2011.
The number of women engaged within the startup market too has seen – relatively – big gains in the years following the financial crisis. In 2009, in line with the long term average, 3.7% of women within the UK labour market were engaged in early stage entrepreneurial activity. In the years that followed there was a trend upwards, first to 4.4% in 2010, then 5.3% in 2011, and peaking at 6.3% in 2012. The subsequent two years, however, have seen a drop of activity within the segment, to 5.8% and 5.7% respectively - likely as a reaction to the financial crisis abating somewhat.
The number of men engaged in entrepreneurial startup activity has remained relatively stable in line with long term averages, according to the report. The number of men stood at around twice that of women in 2014, at 11.5%.
Women led GVA
According to analysis from the Women’s Business Council, the contribution made by women led SMEs stood at £85 billion in Gross Value Added (GVA) to the UK economy in 2014. Increasing that number, in line with bridging the gap with male engagement in the segment, has the potential to create significant GVA for the UK economy – Deloitte estimates that women-led SMEs (with a 10% participation rate) could potentially contribute in excess of £180 billion GVA to the UK economy by 2025.
It is not merely fewer women taking on the risks, and rewards, of entrepreneurship that the reports finds to be an issue for the segment. Women led SMEs also tend to have lower scaleup rates beyond the early stage activity – highlighting that, even within the segment, barriers may exist to full participation within the wider SME ecosystem.
Barriers to success
The report sought to identify the barriers inhibiting or limiting women from becoming entrepreneurs as well as the success of women led entrepreneurial activities scaling. The research finds three underlying barriers which are impacting the GVA of women, namely a lack of self-belief, a self-perceived lack of key business skills and limited access to quality role models, business mentors and networks.
Lack of self belief
The Global Entrepreneurship Monitor (GEM) finds that among those surveyed, in a 2012 study, 33% of women believe in their own capacities and 45% fear failure, compared to 50% and 35% respectively for men.
Self-perceived lack of key business skills
A research by GEM, a survey by Barclays and Deloitte's interviews all show that a large number of women believe that they lack key business functional skills to build a strong foundation for their businesses. These include skills in, for example, financial management and market development, which are crucial to scaling a business successfully.
Limited access to quality role models, business mentors and networks
Research by Deloitte and a report by Barclays finds that, relative to men, women entrepreneurs lack strong role models and mentors to help develop and inspire them. The risk of isolation is particularly critical for those who are looking to scale up their business. The research finds that, although women are often great social networkers, this does not automatically transfer into professional networks. Having access to a strong network of business partners can increase the chances of entrepreneurial success.
The report highlights that a number of measures exist which are able to support women through the barriers they face. Many of these support programmes are one sided, however, and a holistic approach is likely to be more effective than individual initiatives. According to Denis Woulfe, co-author of the report and Vice Chair at Deloitte: “One of the barriers we identified to women setting up their own business was limited access to relevant role models, quality mentors and professional networks. These are vital for anyone looking to set up their first business. We need a more focussed and connected programme of initiatives, involving a systematic approach to supporting women entrepreneurs to scale their businesses."